Limitation on Indebtedness Sample Clauses: 5k Samples

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 3 contracts

Sources: Credit Agreement (PRA Health Sciences, Inc.), Credit Agreement (PRA Health Sciences, Inc.), Credit Agreement (PRA Health Sciences, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided ~~that Holdings~~ that, the Borrower may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition or IP Acquisition) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition or IP Acquisition), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~stock that is, ifin each case, in an aggregate amount not in excess, as of any date of determination, the sum of (i) at any time prior to the Conversion Date, the maximum aggregate principal amount of such Indebtedness, Disqualified Stock or shares of preferred stock that can be incurred without causing the Annual Recurring Revenue Net Leverage Ratio, after giving effect ~~thereto~~to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis to exceed 3.60:1.00, and (ii) on and after the Conversion Date, the ~~Fixed Charge Coverage~~ maximum aggregate principal amount of such Indebtedness, Disqualified Stock or shares of preferred stock that can be incurred without causing (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a pari passu basis with the Liens on the Collateral securing the Obligations, the Consolidated First Lien Debt to Consolidated EBITDA Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness, Disqualified Stock or shares of preferred stock and the use of proceeds thereof, on a Pro Forma Basis would ~~be at least 2.00~~ not exceed 7.00:1.00, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a junior priority basis with the Liens on the Collateral securing the Obligations, the Consolidated Senior Secured Debt to ~~1.00~~Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness, Disqualified Stock or shares of preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 7.50:1.00 and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or is secured by assets that do not become Collateral, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness, Disqualified Stock or shares of preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 7.50:1.00; provided, further, that the amount of ~~Indebtedness~~Indebtedness (other than Acquired Indebtedness existing at the time a Person is merged, consolidated, or amalgamated with or into or became a Restricted Subsidiary to the extent not in contemplation thereof), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not Guarantors shall not exceed (when taken together with the aggregate amount of Indebtedness incurred by Restricted Subsidiaries that are not Guarantors under clause (b) of this Section 11.1) (I) prior to the Conversion Date, $60,000,000, and (II) on and after the Conversion Date, the greater of (x) $~~85,000,000~~ 60,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence; provided, further, that if such Indebtedness is in the form of a floating rate term loan facility of any ~~one~~ of the Credit Parties that is pari passu in right of payment with the Obligation and secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, the terms set forth in Section 2.14(e) (including giving effect to limitations applicable thereto) shall have been complied with as if such Indebtedness was considered a New Term Loan. For purposes of this Section 11.1, (x) any New Revolving Credit Commitments shall be deemed to be fully drawn at the time ~~outstanding~~of establishing such commitment (and not thereafter tested), and (y) the cash proceeds of any Indebtedness (other than cash proceeds not applied promptly for the Specified Transaction in connection with such incurrence) shall be excluded on such incurrence date in calculating the amount of unrestricted cash and Cash Equivalents used in determining the Annual Recurring Revenue Net Leverage Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Senior Secured Debt to Consolidated EBITDA Ratio or Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented~~ incurred or assumed in a Permitted Acquisition, IP Acquisition or any other similar Investment permitted hereunder; provided that (i) if such Indebtedness is assumed, such Indebtedness shall not have been incurred in contemplation of such Permitted Acquisition, IP Acquisition or similar Investment, (ii) if such Indebtedness (other than assumed Indebtedness) is secured by the ~~Senior Notes~~ Collateral on a pari passu basis with the Obligations (A) (I) prior to the Conversion Date, the Annual Recurring Revenue Net Leverage Ratio is equal to or less than 3.60:1.00 and (II) on and after the Conversion Date, the Consolidated First Lien Debt to Consolidated EBITDA Ratio is equal to or less than 7.00:1.00 for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence or assumption and (B) if such Indebtedness is in the form of floating rate loans that is pari passu in right of payment with the Obligations and secured by the Collateral that is pari passu with the Lien securing the Obligations, the terms set forth in Section 2.14(e) (including ~~any guarantee thereof~~giving effect to limitations applicable thereto) shall have been complied with as if such Indebtedness was considered a New Term Loan, (iii) if such Indebtedness is secured by the Collateral on a junior lien basis with the Obligations, (I) prior to the Conversion Date, the Annual Recurring Revenue Net Leverage Ratio is equal to or less than 4.10:1.00 and ~~exchange notes issued in respect~~ (II) on and after the Conversion Date, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio is equal to or less than 7.50:1.00 for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence, (iv) if such ~~notes~~ Indebtedness is unsecured, (I) prior to the Conversion Date, the Annual Recurring Revenue Net Leverage Ratio is equal to or less than 4.10:1.00 and ~~any guarantee thereof in an aggregate principal amount not~~ (II) on and after the Conversion Date, the Consolidated Total Debt to ~~exceed~~ Consolidated EBITDA Ratio is equal to or less than 7.50:1.00 for the most recently ended Test Period (xcalculated on a Pro Forma Basis) ~~$375,000,000 minus (y)~~ at the time of incurrence or assumption; provided that the aggregate principal amount of ~~Senior Notes redeemed~~ Indebtedness incurred pursuant to subclauses (ii), (iii) and (iv) by Restricted Subsidiaries that are not Credit Parties (when taken together with the aggregate amount of Indebtedness incurred by Restricted Subsidiaries that are not Guarantors under the first paragraph of this Section 11.1) shall not exceed (I) prior to the Conversion Date, $60,000,000 and (II) on and after the Conversion Date, the greater of (x) $60,000,000 and (y) 30% of Consolidated EBITDA for the most recently ended Test Period (calculated on a ~~Special Mandatory Redemption~~ Pro Forma Basis) at the time of incurrence and (~~as defined in~~ v) (x) any New Revolving Credit Commitments shall be deemed to be fully drawn at the ~~Senior Notes Indenture~~time of establishing such commitment (and not thereafter tested), and (y) the cash proceeds of any Indebtedness shall be excluded on such incurrence date ; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule ~~10.1~~ 11.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule ~~10.1~~ 11.1 (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed (I) prior to the Conversion Date, $60,000,000, and (II) on and after the Conversion Date the greater of (x) $~~55,000,000~~ 60,000,000 and (y) ~~2.50~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a ~~Permitted~~ Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such ~~Permitted~~ Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such ~~Permitted~~ Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 3 contracts

Sources: Credit Agreement (SailPoint Parent, LP), Credit Agreement (SailPoint Parent, LP), Credit Agreement (SailPoint Parent, LP)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,000 and (y) ~~3.75~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $27,000,000 and (y) 50.5% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). Notwithstanding the foregoing or anything else to the contrary in this Section 10.1 (including the immediately succeeding paragraph), solely during the Limited Incurrence Period, the Borrower may only incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and the Restricted Subsidiaries may only incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred Capital Stock under the first paragraph of this Section 10.1, together with any amounts incurred (including Acquired Indebtedness) or issued under Sections 10.1(d), (l)(ii), (n) and (aa), in an aggregate principal amount at any time outstanding during such Limited Incurrence Period not to exceed $80,000,000. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by ~~a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance~~ the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings Borrower to a Restricted Subsidiary~~; provided that any such Indebtedness owing to~~ , by a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary ~~of Indebtedness of Holdings~~to another Restricted Subsidiary; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 3 contracts

Sources: Credit Agreement (Canada Goose Holdings Inc.), Credit Agreement (Canada Goose Holdings Inc.), Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) On or after the Issue Date: (i) the Company will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, ~~guarantee~~ Guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness~~Debt); (ii) ~~and Holdings~~ the Company will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any of its Restricted Subsidiaries to, issue any Disqualified Stock (including Acquired Disqualified Stock); (iii) and the Company will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares of ~~Disqualified~~ Preferred Stock or(including Acquired Preferred Stock); provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings~~ Company and the Subsidiary Guarantors may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) ~~or issue shares of Disqualified Stock,~~ and ~~any Restricted~~ the Company and the Subsidiary Guarantors may ~~incur Indebtedness (including Acquired Indebtedness),~~ issue shares of Disqualified Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ (including Acquired Disqualified Stock) if the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the Company’s most recently ended ~~Test Period (calculated~~ four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been 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 Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Letters of credit and bankers’ acceptances shall be deemed to have an aggregate principal amount of Indebtedness equal to the maximum amount available thereunder. (b) ~~at any one time outstanding.~~ The foregoing ~~limitations~~ provisions will not apply to: (ai) ~~Indebtedness arising under~~ the ~~Credit Documents; (b) Indebtedness represented~~ incurrence by the ~~Senior Notes~~ Company of Indebtedness pursuant to the Existing Credit Facility (~~including any guarantee~~ and by its Subsidiaries of Guarantees thereof) ~~and exchange notes issued in respect of such notes and any guarantee thereof~~ in an aggregate principal amount at any time outstanding not to exceed an amount equal to the greater of (xi) $~~375,000,000 minus~~ 3.6 billion and (yii) 38.0% of Consolidated Net Tangible 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; (ii) the ~~aggregate principal amount~~ incurrence by the Company and the Subsidiary Guarantors of ~~Senior~~ Indebtedness represented by the Notes ~~redeemed pursuant to a Special Mandatory Redemption~~ (~~as defined~~ other than Additional Notes) and the Subsidiary Guarantees thereof; (iii) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness (other than Indebtedness of the type described in ~~the Senior Notes Indenture~~clause (i), (ii) or (iv) through (xii) of this covenant); (civ) ~~(i) Indebtedness outstanding on~~ the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on~~ incurrence by the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings Company or any of its Restricted Subsidiaries of any Permitted Refinancing in exchange for, or ~~any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3)~~ the net proceeds of which are used to ~~the extent such net cash proceeds~~ extend, refinance, renew, replace, defease or ~~cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments~~refund, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise Indebtedness that was permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth above or clause (ii) or (iii) above or (xiii) below or this clause (iv); (v) 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 (i) if the Company or any Subsidiary Guarantor 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 Notes or the Subsidiary Guarantee, as the case may be, and (ii) (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 and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted 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; (vi) the incurrence by the Company or any Restricted Subsidiary of Hedging Obligations that are incurred for the purpose of (A) fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by the Indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates or (B) managing fluctuations in the ~~first paragraph~~ price or cost of ~~this Section 10.1~~ raw materials, manufactured products or related commodities; provided that such obligations are entered into in the ordinary course of business to hedge or mitigate risks to which the Company or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities (as determined by the Company’s or such Restricted Subsidiary’s principal financial officer in the exercise of his or her good faith business judgment); (vii) the issuance by any of the Company’s Restricted Subsidiaries of shares of Preferred Stock to the Company or a Wholly Owned Restricted Subsidiary of the Company; provided that (A) any subsequent issuance or transfer of Equity Interests that results in such Preferred Stock being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company or (2B) the transfer or other disposition by the Company or a Wholly Owned Restricted Subsidiary of the Company of any such shares to a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an issuance of such Preferred Stock by such Subsidiary on such date that is not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit and warranty and contractual service obligations of like nature, trade letters of credit or documentary letters of credit, in each case to the extent incurred in the ordinary course of business of the Company or such Restricted Subsidiary and the incurrence by the Company of Indebtedness represented by letters of credit incurred in connection with the PBGC Settlement; (ix) the incurrence by the Company or any Restricted Subsidiary of Indebtedness or the issuance by any Restricted Subsidiary of Preferred Stock in an aggregate principal amount (or accreted value or liquidation preference, as applicable) at any time outstanding and incurred or issued in reliance on this clause (ix) not to exceed the greater of (i) $200.0 million and (ii) 2.0% of Consolidated Net Tangible Assets of the Company at the date of such incurrence or issuance, as the case may be; (x) the issuance by any Finance Subsidiary of Preferred Stock with an aggregate liquidation preference not exceeding the amount of Indebtedness of the Company held by such Finance Subsidiary; provided that the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date on which such Preferred Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of ~~Holdings~~ the net proceeds therefrom) as if such Preferred Stock had been issued at the beginning of such four-quarter period; (xi) the incurrence of Indebtedness or issuance of Preferred Stock by Foreign Subsidiaries in an aggregate principal amount (or accreted value or liquidation preference, as applicable) at any time outstanding and incurred in reliance upon this clause (xi) not to exceed $200.0 million; (xii) the Guarantee by any Restricted ~~Subsidiaries~~ Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (xiii) the incurrence or issuance, as the case may be, by the Company or any Restricted Subsidiary of Acquired Debt, Acquired Preferred Stock or Acquired Disqualified Stock (including, without limitation, Indebtedness, Disqualified Stock or Preferred Stock of Equistar or Millennium or any Subsidiary thereof existing at the time such Person first becomes a Restricted Subsidiary); provided that immediately after giving effect to such incurrence, the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date of such incurrence, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) as if such Acquired Debt, Acquired Preferred Stock or Acquired Disqualified Stock had been issued at the beginning of such four-quarter period, would be (i) at least 2.0 to 1 or (ii) in the case of Equistar or Millennium or any Subsidiary thereof (or any Restricted Subsidiary into which any of such Persons is merged, consolidated or liquidated), (x) at least 2.0 to 1 or (y) equal to or greater than it would have been immediately ~~prior to~~ preceding such ~~acquisition, merger or consolidation~~incurrence; (oxiv) ~~Indebtedness arising from the honoring by a bank~~ with respect to Equistar or ~~other financial institution of a check, draft~~ Millennium or ~~similar instrument drawn against insufficient funds in the ordinary course of business;~~ any Subsidiary thereof (~~p) Indebtedness of Holdings~~ or any Restricted Subsidiary ~~supported~~ into which any of such Persons is merged, consolidated or liquidated), the incurrence by ~~a letter~~ such Person of ~~credit issued pursuant to a~~ Indebtedness under any revolving credit facility ~~otherwise permitted hereunder~~in an aggregate principal amount at any time outstanding not to exceed the aggregate principal amount of committed financing under all revolving credit facilities of such Person as in effect on the Issue Date (or, in ~~a principal~~ the case of Equistar, an amount equal to the Permitted Equistar Revolving Credit Amount as of such date); provided that the amount that may be incurred under this clause (xiv) by Equistar and Millennium or any Subsidiary thereof, in the aggregate, may be increased by an amount not ~~in excess of the stated amount of such letter of credit;~~to exceed $200.0 million; and (1xv) the incurrence by the Company or any ~~guarantee by Holdings or a~~ Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or ~~other obligations~~ 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 property, plant or equipment used in the business of the Company or any Restricted ~~Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor~~Subsidiary, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an ~~amount not~~ aggregate principal amount, including all Permitted Refinancings incurred to ~~exceed~~refinance, ~~in the aggregate at any one time outstanding~~renew, ~~the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that~~ replace, defease or refund any Indebtedness incurred pursuant to this clause (rxv), not to exceed $100.0 million at any time outstanding. (c) ~~shall cease~~ For purposes of determining compliance with this covenant, in the event that an item of Indebtedness or Preferred Stock meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xv) above or is entitled to be incurred pursuant to Section 4.06(a), the Company shall, in its sole discretion, classify such item of Indebtedness or Preferred Stock in any manner that complies with this covenant and such Indebtedness or Preferred Stock will be treated as having been incurred pursuant to the clauses or Section 4.06(a), as the case may be, designated by the Company. The amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. (d) Accrual of interest, 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 accumulation of dividends on Disqualified Stock or Preferred Stock (to the extent not paid), 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 ~~incurred~~ to be an incurrence of Indebtedness or ~~outstanding~~ an issuance of Disqualified Stock or Preferred Stock for purposes of this ~~clause~~ Section 4.06. (re) ~~but~~ 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, however, 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 ~~incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could~~ not to have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) been exceeded so long as the principal amount of such refinancing Indebtedness (including any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such Indebtedness is being refinanced and fees and other transactional expenses incurred in connection therewith) does not ~~increased above~~ exceed the principal amount ~~thereof outstanding immediately prior to~~ of such ~~refinancing~~Indebtedness being refinanced. Notwithstanding any other provision of this covenant, ~~refunding, renewal or extension (except for any original issue discount thereon and~~ the maximum amount of ~~fees, expenses and premium and accrued and unpaid interest~~ 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 ~~connection with such refinancing) and (y) such Indebtedness otherwise complies with~~ the ~~definition~~ exchange rates of ~~“Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate~~ currencies. The principal amount of ~~all such Permitted Other~~ any Indebtedness ~~issued or~~ incurred ~~pursuant~~ to ~~this clause (i)(a) shall not exceed~~ refinance other Indebtedness, if incurred in a different currency from the ~~Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof~~ Indebtedness being refinanced, shall be ~~applied no later than ten Business Days after~~ calculated based on the ~~receipt thereof~~ currency exchange rate applicable to ~~repurchase, repay, redeem or otherwise defease Senior Notes~~ the currencies in which such refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Appears in 3 contracts

Sources: Indenture (Lyondell Chemical Co), Indenture (Lyondell Chemical Co), Indenture (Lyondell Refining LP, LLC)

Limitation on Indebtedness. ~~Holdings~~ (a) On or after the Issue Date: (i) the Company will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, ~~guarantee~~ Guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness~~Debt); (ii) ~~and Holdings~~ the Company will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any of its Restricted Subsidiaries to, issue any Disqualified Stock (including Acquired Disqualified Stock); and (iii) the Company will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares of ~~Disqualified~~ Preferred Stock or(including Acquired Preferred Stock); provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings~~ Company and the Subsidiary Guarantors may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) ~~or issue shares of Disqualified Stock,~~ and ~~any Restricted~~ the Company and the Subsidiary Guarantors may ~~incur Indebtedness (including Acquired Indebtedness),~~ issue shares of Disqualified Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ (including Acquired Disqualified Stock) if the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the Company’s most recently ended ~~Test Period (calculated~~ four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been 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 Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Letters of credit and bankers’ acceptances shall be deemed to have an aggregate principal amount of Indebtedness equal to the maximum amount available thereunder. (b) ~~at any one time outstanding.~~ The foregoing ~~limitations~~ provisions will not apply to: (ai) ~~Indebtedness arising under~~ the ~~Credit Documents; (b) Indebtedness represented~~ incurrence by the ~~Senior Notes~~ Company of Indebtedness pursuant to the Existing Credit Facility (~~including any guarantee~~ and by its Subsidiaries of Guarantees thereof) ~~and exchange notes issued in respect of such notes and any guarantee thereof~~ in an aggregate principal amount at any time outstanding not to exceed an amount equal to the greater of (xi) $~~375,000,000 minus~~ 3.6 billion and (yii) 38.0% of Consolidated Net Tangible 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; (ii) the ~~aggregate principal amount~~ incurrence by the Company and the Subsidiary Guarantors of ~~Senior~~ Indebtedness represented by the Notes ~~redeemed pursuant to a Special Mandatory Redemption~~ (~~as defined~~ other than Additional Notes) and the Subsidiary Guarantees thereof; (iii) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness (other than Indebtedness of the type described in ~~the Senior Notes Indenture~~clause (i), (ii) or (iv) through (xii) of this covenant); (civ) ~~(i) Indebtedness outstanding on~~ the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on~~ incurrence by the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings Company or any of its Restricted Subsidiaries of any Permitted Refinancing in exchange for, or ~~any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3)~~ the net proceeds of which are used to ~~the extent such net cash proceeds~~ extend, refinance, renew, replace, defease or ~~cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments~~refund, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise Indebtedness that was permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth above or clause (ii) or (iii) above or (xiii) below or this clause (iv); (v) 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 (i) if (A) the Company is the obligor on such Indebtedness or (B) any Subsidiary Guarantor is the obligor on such Indebtedness and the Company or a Subsidiary Guarantor is not the obligee, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes or the Subsidiary Guarantee, as the case may be, and (ii) (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 and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted 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; (vi) the incurrence by the Company or any Restricted Subsidiary of Hedging Obligations that are incurred for the purpose of (A) fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by this Indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates or (B) managing fluctuations in the ~~first paragraph~~ price or cost of ~~this Section 10.1~~ raw materials, manufactured products or related commodities; provided that such obligations are entered into in the ordinary course of business to hedge or mitigate risks to which the Company or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities (as determined by the Company’s or such Restricted Subsidiary’s principal financial officer in the exercise of his or her good faith business judgment); (vii) the issuance by any of the Company’s Restricted Subsidiaries of shares of Preferred Stock to the Company or a Wholly Owned Restricted Subsidiary of the Company; provided that (A) any subsequent issuance or transfer of Equity Interests that results in such Preferred Stock being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company or (2B) the transfer or other disposition by the Company or a Wholly Owned Restricted Subsidiary of the Company of any such shares to a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an issuance of such Preferred Stock by such Subsidiary on such date that is not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit and warranty and contractual service obligations of like nature, trade letters of credit or documentary letters of credit, in each case to the extent incurred in the ordinary course of business of the Company or such Restricted Subsidiary and the incurrence by the Company of Indebtedness represented by letters of credit incurred in connection with the PBGC Settlement; (ix) the incurrence by the Company or any Restricted Subsidiary of Indebtedness or the issuance by any Restricted Subsidiary of Preferred Stock in an aggregate principal amount (or accreted value or liquidation preference, as applicable) at any time outstanding and incurred or issued in reliance on this clause (ix) not to exceed the greater of (i) $200.0 million and (ii) 2.0% of Consolidated Net Tangible Assets of the Company at the date of such incurrence or issuance, as the case may be; (x) the issuance by any Finance Subsidiary of Preferred Stock with an aggregate liquidation preference not exceeding the amount of Indebtedness of the Company held by such Finance Subsidiary; provided that the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date on which such Preferred Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of ~~Holdings~~ the net proceeds therefrom) as if such Preferred Stock had been issued at the beginning of such four-quarter period; (xi) the incurrence of Indebtedness or issuance of Preferred Stock by Foreign Subsidiaries in an aggregate principal amount (or accreted value or liquidation preference, as applicable) at any time outstanding and incurred in reliance upon this clause (xi) not to exceed $200.0 million; (xii) the Guarantee by any Restricted ~~Subsidiaries is~~ Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (xiii) the incurrence or issuance, as the case may be, by the Company or any Restricted Subsidiary of Acquired Debt, Acquired Preferred Stock or Acquired Disqualified Stock (including, without limitation, Indebtedness, Disqualified Stock or Preferred Stock of Equistar or Millennium or any Subsidiary thereof existing at the time such Person first becomes a Restricted Subsidiary); provided that immediately after giving effect to such incurrence, the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which earnings have been publicly disclosed immediately preceding the date of such incurrence, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) as if such Acquired Debt, Acquired Preferred Stock or Acquired Disqualified Stock had been issued at the beginning of such four-quarter period, would be (x) at least 2.0 to 1 or (y) equal to or greater than it would have been immediately ~~prior to~~ preceding such ~~acquisition, merger or consolidation~~incurrence; (oxiv) ~~Indebtedness arising from the honoring by a bank~~ with respect to Equistar or ~~other financial institution of a check, draft~~ Millennium or ~~similar instrument drawn against insufficient funds in the ordinary course of business;~~ any Subsidiary thereof (~~p) Indebtedness of Holdings~~ or any Restricted Subsidiary ~~supported~~ into which any of such Persons is merged, consolidated or liquidated), the incurrence by ~~a letter~~ such Person of ~~credit issued pursuant to a~~ Indebtedness under any revolving credit facility ~~otherwise permitted hereunder~~in an aggregate principal amount at any time outstanding not to exceed the aggregate principal amount of committed financing under all revolving credit facilities of such Person as in effect on September 20, 2006 (or, in ~~a principal~~ the case of Equistar, an amount equal to the Permitted Equistar Revolving Credit Amount as of such date); provided that the amount that may be incurred under this clause (xiv) by Equistar and Millennium or any Subsidiary thereof, in the aggregate, may be increased by an amount not ~~in excess of the stated amount of such letter of credit;~~to exceed $200.0 million; and (1xv) the incurrence by the Company or any ~~guarantee by Holdings or a~~ Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or ~~other obligations~~ 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 property, plant or equipment used in the business of the Company or any Restricted ~~Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor~~Subsidiary, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an ~~amount not~~ aggregate principal amount, including all Permitted Refinancings incurred to ~~exceed~~refinance, ~~in the aggregate at any one time outstanding~~renew, ~~the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that~~ replace, defease or refund any Indebtedness incurred pursuant to this clause (rxv), not to exceed $100.0 million at any time outstanding. (c) ~~shall cease~~ For purposes of determining compliance with this covenant, in the event that an item of Indebtedness or Preferred Stock meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xv) above or is entitled to be incurred pursuant to Section 4.06(a), the Company shall, in its sole discretion, classify such item of Indebtedness or Preferred Stock in any manner that complies with this covenant and such Indebtedness or Preferred Stock will be treated as having been incurred pursuant to the clauses or Section 4.06(a), as the case may be, designated by the Company. The amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. (d) Accrual of interest, 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 accumulation of dividends on Disqualified Stock or Preferred Stock (to the extent not paid), 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 ~~incurred~~ to be an incurrence of Indebtedness or ~~outstanding~~ an issuance of Disqualified Stock or Preferred Stock for purposes of this ~~clause~~ Section 4.06. (re) ~~but~~ 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, however, 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 ~~incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could~~ not to have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) been exceeded so long as the principal amount of such refinancing Indebtedness (including any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such Indebtedness is being refinanced and fees and other transactional expenses incurred in connection therewith) does not ~~increased above~~ exceed the principal amount ~~thereof outstanding immediately prior to~~ of such ~~refinancing~~Indebtedness being refinanced. Notwithstanding any other provision of this covenant, ~~refunding, renewal or extension (except for any original issue discount thereon and~~ the maximum amount of ~~fees, expenses and premium and accrued and unpaid interest~~ 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 ~~connection with such refinancing) and (y) such Indebtedness otherwise complies with~~ the ~~definition~~ exchange rates of ~~“Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate~~ currencies. The principal amount of ~~all such Permitted Other~~ any Indebtedness ~~issued or~~ incurred ~~pursuant~~ to ~~this clause (i)(a) shall not exceed~~ refinance other Indebtedness, if incurred in a different currency from the ~~Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof~~ Indebtedness being refinanced, shall be ~~applied no later than ten Business Days after~~ calculated based on the ~~receipt thereof~~ currency exchange rate applicable to ~~repurchase, repay, redeem or otherwise defease Senior Notes~~ the currencies in which such refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Appears in 2 contracts

Sources: Indenture (Lyondell Chemical Co), Indenture (Lyondell Houston Refinery Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to incur any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the ~~Fixed Charge Coverage~~ Total Leverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries would be ~~at least 2.00~~ no greater than 6.25 to 1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 90,000,000 and (y) ~~3.75~~60% of Consolidated ~~Total Assets for the most recently ended Test Period~~ EBITDA (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof)~~ First Lien Term Loans and ~~exchange notes issued in respect of such notes~~ First Lien Revolving Loans and any guarantee thereof (i) in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $1,045,000,000 or (xii) ~~$375,000,000 minus (y)~~ incurred pursuant to, and in compliance with, Section 2.14 of the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption~~ First Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~date hereof); (c) Indebtedness (iincluding any unused commitment) ~~Indebtedness~~ outstanding on the Closing ~~Date~~ Date; provided that any Indebtedness that is in excess of $10,000,000 individually shall only be permitted under this clause (c) to the extent such Indebtedness is listed on Schedule ~~10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party)~~10.1; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations and mortgage financings as Purchase Money Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) ), plant or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 60,000,000 and (y) ~~2.50~~36% of Consolidated ~~Total Assets for the most recently ended Test Period~~ EBITDA (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit and bank guarantees issued in the ordinary course of ~~business~~business or consistent with past practice, including letters of credit in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits (whether in respect of current or former employees) or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Second Lien Credit Agreement (Focus Financial Partners Inc.), Second Lien Credit Agreement (Focus Financial Partners Inc.)

Limitation on Indebtedness. ~~Holdings~~ CGI Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ CGI Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ CGI Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,000 and (y) ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) unlimited additional amounts if, after giving effect thereto, CGI Borrower shall on a consolidated basis have an Interest Coverage Ratio of not less than 2.00:1.00 on a Pro Forma Basis at the time of incurrence or issuance; provided, further, that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 11.1(m)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $15,000,000 and (y) 30.0% of Consolidated EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness ~~represented by the Senior Notes~~ (including any ~~guarantee thereof~~unused commitment) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule ~~10.1~~ 11.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by a ~~Credit Party~~ Borrower to a Restricted Subsidiary, by a Restricted Subsidiary to CGI Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (dc) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ CGI Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ CGI Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~c), does not exceed the greater of (x) $~~55,000,000~~ 15,000,000 and (y) ~~2.50~~30.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary pursuant to this clause (dc) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ CGI Borrower or such Restricted Subsidiary to permanently repay outstanding Permitted Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (ed) Indebtedness incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (fe) Indebtedness arising from agreements of ~~Holdings~~ CGI Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or any similar obligations, in each case, incurred or assumed in connection with ~~the disposition of~~ any ~~business, assets or a Subsidiary, other than guarantees of Indebtedness incurred~~ transaction not expressly prohibited by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this ~~clause (f))~~Agreement; (gf) Indebtedness of CGI Borrower to Holdings to or a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by CGI Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms; provided, further, 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 Indebtedness (except to ~~the~~ Holdings, CGI Borrower or ~~another~~ any Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (gf); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Credit Agreement (Canada Goose Holdings Inc.), Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) On or after the Issue Date: (i) the Company will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, ~~guarantee~~ Guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “"incur~~” and collectively, an “incurrence”~~") ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness~~Debt); (ii) ~~and Holdings~~ the Company will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any of its Restricted Subsidiaries to, issue any Disqualified Stock (including Acquired Disqualified Stock); (iii) and the Company will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to issue any shares of ~~Disqualified~~ Preferred Stock or(including Acquired Preferred Stock); provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings~~ Company and the Subsidiary Guarantors may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) ~~or issue shares of Disqualified Stock,~~ and ~~any Restricted~~ the Company and the Subsidiary Guarantors may ~~incur Indebtedness (including Acquired Indebtedness),~~ issue shares of Disqualified Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ (including Acquired Disqualified Stock) if the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the Company's most recently ended ~~Test Period (calculated~~ four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been 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 Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Letters of credit and bankers' acceptances shall be deemed to have an aggregate principal amount of Indebtedness equal to the maximum amount available thereunder. (b) ~~at any one time outstanding.~~ The foregoing ~~limitations~~ provisions will not apply to: (ai) the incurrence by the Company of Indebtedness ~~arising under~~ pursuant to the Existing Credit ~~Documents~~Facility (and by its Subsidiaries of Guarantees thereof) in an aggregate principal amount at any time outstanding not to exceed an amount equal to $3.87 billion less the aggregate amount of all mandatory repayments (other than mandatory prepayments triggered solely by the issuance of Indebtedness or Preferred Stock of a Finance Subsidiary to refinance the Existing Credit Facility) applied to (x) repay loans (other than revolving credit loans) outstanding thereunder or (y) permanently reduce the revolving credit commitments thereunder; (bii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the Senior Secured Notes and Senior Subordinated Notes issued on the Issue Date and the Subsidiary Guarantees thereof; (~~including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y~~iii) the ~~aggregate principal amount~~ incurrence by the Company and its Restricted Subsidiaries of ~~Senior Notes redeemed pursuant to a Special Mandatory Redemption~~ Existing Indebtedness (~~as defined~~ other than Indebtedness of the type described in ~~the Senior Notes Indenture~~clauses (i), (ii) or (v) through (xii) of this covenant); (civ) ~~(i) Indebtedness outstanding on~~ the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on~~ incurrence by the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings Company or any of its Restricted Subsidiaries of any Permitted Refinancing in exchange for, or ~~any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3)~~ the net proceeds of which are used to ~~the extent such net cash proceeds~~ extend, refinance, renew, replace, defease or ~~cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments~~refund, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise Indebtedness that was permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth ~~in the first paragraph of this Section 10.1~~ above or clauses (ii) or (2iii) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee above or (2xiii) ~~any guarantee by a Restricted Subsidiary of Indebtedness of Holdings;~~ or (rxiv) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to below or this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)iv); (sv) ~~Indebtedness of Holdings~~ the incurrence by the Company or any of its Restricted Subsidiaries ~~consisting~~ of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) if the ~~financing~~ Company or any Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of ~~insurance premiums~~ all Obligations with respect to the Notes or the Subsidiary Guarantee, as the case may be, and (iiii)(A) ~~take~~ any subsequent issuance or ~~pay obligations contained~~ transfer of Equity Interests that results in ~~supply arrangements~~ any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted 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; (vi) the incurrence by the Company or any Restricted Subsidiary of Hedging Obligations that are incurred for the purpose of (A) fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by the Indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates or (B) fixing or hedging risk with respect to fluctuations in the cost of raw materials; provided that such obligation is entered into for valid business purposes other than speculative purposes (as determined by the Company's or such Restricted Subsidiary's principal financial officer in the exercise of his or her good faith business judgment); (vii) the issuance by any of the Company's Restricted Subsidiaries of shares of Preferred Stock to the Company or a Wholly Owned Restricted Subsidiary; provided that (A) any subsequent issuance or transfer of Equity Interests that results in such Preferred Stock being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary or (B) the transfer or other disposition by the Company or a Wholly Owned Restricted Subsidiary of any such shares to a Person other than the Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to constitute an issuance of such Preferred Stock by such Subsidiary on such date that is not permitted by this clause (vii); (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit and warranty and contractual service obligations of like nature, trade letters of credit or documentary letters of credit, in each case to the extent incurred in the ordinary course of ~~business~~business of the Company or such Restricted Subsidiary and the incurrence by the Company of Indebtedness represented by letters of credit incurred in connection with the PBGC Settlement; (tix) the incurrence by any Restricted Subsidiary of the Company of Indebtedness or the issuance by any Restricted Subsidiary of ~~Holdings~~ Preferred Stock, the aggregate principal amount or ~~any~~ liquidation preference of ~~its~~ which, together with all other Indebtedness and Preferred Stock of the Company's Restricted Subsidiaries ~~undertaken~~ at the time outstanding and incurred or issued in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in reliance upon this clause (~~4) of Section 10.5(b~~ix); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, ~~refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is~~ does not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”exceed $50.0 million; (x) the issuance by any Finance Subsidiary of Preferred Stock with an aggregate liquidation preference not exceeding the amount of Indebtedness ~~in respect~~ of ~~(i) Permitted Other Indebtedness~~the Company held by such Finance Subsidiary; provided that ~~either~~ the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to the covenant described below under Section 4.04 immediately preceding the date on which such Preferred Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (aincluding a pro forma application of the net proceeds therefrom) as if such Preferred Stock had been issued at the beginning of such four-quarter period; (xi) the incurrence of Indebtedness by Foreign Subsidiaries in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance upon this clause (xi) not to exceed $100.0 million; (xii) the Guarantee by any Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (xiii) Acquired Debt or Acquired Disqualified Stock; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such Person becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such incurrence, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date of such incurrence would have been at least 2.0 to 1, determined on a pro forma basis; (xiv) Indebtedness or Disqualified Stock of a Specified Joint Venture or a Subsidiary thereof existing at the time such Specified Joint Venture first becomes a Restricted Subsidiary; provided that such Indebtedness or Disqualified Stock was not incurred in connection with or in contemplation of such Specified Joint Venture becoming a Restricted Subsidiary; and provided further that immediately after giving effect to such Specified Joint Venture becoming a Restricted Subsidiary, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which financial statements have been filed with the SEC pursuant to Section 4.04 immediately preceding the date on which such Specified Joint Venture became a Restricted Subsidiary would have been, determined on a pro forma basis, (x) at least 2.0 to 1 or (y) equal to or greater than it was immediately prior to such Specified Joint Venture becoming a Restricted Subsidiary; (xv) with respect to any Specified Joint Venture that becomes a Restricted Subsidiary, the incurrence by such Specified Joint Venture of Indebtedness under any revolving credit facility in an aggregate principal amount at any time outstanding not to exceed the aggregate principal amount of committed financing under all revolving credit facilities of such ~~Permitted Other~~ Specified Joint Venture as in effect on the Issue Date; and (xvi) the incurrence by the Company or any Subsidiary Guarantor of Indebtedness ~~issued~~ in an aggregate principal amount (or accreted value, as applicable) at any time outstanding and incurred in reliance on this clause (xvi) not to exceed $25.0 million. (c) For purposes of determining compliance with this covenant, in the event that an item of Indebtedness or Preferred Stock meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred pursuant to Section 4.06(a), the Company shall, in its sole discretion, classify such item of Indebtedness or Preferred Stock in any matter that complies with this ~~clause (i)(a) shall not exceed~~ covenant and such Indebtedness or Preferred Stock will be treated as having been incurred pursuant to the ~~Maximum Incremental Facilities Amount~~ clauses or ~~(b)~~ Section 4.06(a), as the ~~Net Cash Proceeds~~ case may be, designated by the Company. The amount of Indebtedness issued at a price which is less than the principal amount thereof shall be ~~applied no later than ten Business Days after~~ equal to the ~~receipt~~ amount of the liability in respect thereof ~~to repurchase, repay, redeem or otherwise defease Senior Notes~~ determined in accordance with GAAP.

Appears in 2 contracts

Sources: Indenture (Lyondell Chemical Nederland LTD), Indenture (Lyondell Chemical Nederland LTD)

Limitation on Indebtedness. ~~Holdings~~ (a) The Company will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur,” and ~~collectively, an~~ “incurrence”” shall have a correlative meaning) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt); and ~~Holdings~~ the Company will not issue any ~~shares of~~ Disqualified Stock and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings~~ Company may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) or issue ~~shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of~~ Disqualified Stock and ~~issue shares~~ any of ~~preferred stock~~the Company’s Restricted Subsidiaries may incur Acquired Debt and Non-Public Indebtedness, ~~if, after giving effect thereto,~~ if (i) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the Company’s most recently ended ~~Test Period (calculated~~ four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to l.0, 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 had been issued, as the case may be, at the beginning of such four-quarter period and (ii) ~~at any one time outstanding. The foregoing limitations~~ no Default or Event of Default will ~~not apply to: (a) Indebtedness arising under the Credit Documents;~~have occurred or be continuing or would occur as a consequence thereof. (b) Section 4.3(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness ~~represented~~ (collectively, “Permitted Debt”): (1) the incurrence by the ~~Senior Notes (including any guarantee thereof)~~ Company or a Restricted Subsidiary of Indebtedness under Credit Facilities and ~~exchange notes issued in respect~~ letters of ~~such notes and any guarantee thereof~~ credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this Section 4.3(b)(1) (with letters of credit being deemed to have a principal amount equal to the face amount) not to exceed €2.525 billion less the outstanding amount of Specified Existing Indebtedness (xto the extent and for so long as such Specified Existing Indebtedness remains outstanding) ~~$375,000,000 minus (y)~~ and less the aggregate ~~principal~~ amount of ~~Senior Notes redeemed~~ all Net Proceeds of Asset Sales that have been applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to permanently repay Indebtedness under a Credit Facility pursuant to ~~a Special Mandatory Redemption (as defined~~ Section 4.14; provided that the amount of Indebtedness permitted to be incurred pursuant to Credit Facilities in ~~the Senior Notes Indenture~~accordance with this Section 4.3(b)(1) shall be in addition to any Indebtedness permitted to be incurred pursuant to Credit Facilities, in reliance on, and in accordance with, Sections 4.3(b)(4) and 4.3(b)(18) below or Section 4.3(a); (c2) ~~(i) Indebtedness outstanding on~~ the ~~Closing Date listed on Schedule 10.1~~ incurrence by the Company and ~~(ii) intercompany Indebtedness outstanding on~~ its Restricted Subsidiaries of the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party)~~Existing Indebtedness; (d3) the incurrence by the Company of Indebtedness represented by the Notes to be issued on the date of this Indenture (but expressly excluding any Additional Notes issued from time to time under this Indenture) and the Exchange Notes to be issued pursuant to the Registration Rights Agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations), ~~Disqualified Stock and preferred stock~~ mortgage financings or purchase money obligations) incurred ~~by Holdings~~ for the purpose of financing all or any ~~Restricted Subsidiary, to finance~~ part of the ~~purchase, lease, construction, installation~~ purchase price or cost of construction or improvement of ~~property (real or personal)~~ property, plant or equipment ~~that is~~ used ~~or useful~~ in ~~a Similar Business, whether through~~ the ~~direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion~~ business of the ~~obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings~~ Company or such Restricted Subsidiary, in an aggregate principal amount (which amount may, but need not be, incurred in whole or ~~liquidation preference which~~in part under Credit Facilities), ~~when aggregated with the principal amount of~~ including all ~~other Indebtedness~~Permitted Refinancing Indebtedness incurred to refund, ~~Disqualified Stock and preferred stock then outstanding and~~ refinance, replace, amend, restate, modify or renew, in whole or in part, any Indebtedness incurred pursuant to this ~~clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~Section 4.3(b)(4), ~~does~~ not to exceed the greater of ~~(x) $55,000,000 and (y) 2.50~~3.50% of ~~Consolidated~~ Total Assets ~~for~~ as of the ~~most recently ended Test Period~~ date of incurrence and €50.0 million at any time outstanding; (~~calculated on a Pro Forma Basis~~5) at the ~~time of incurrence; provided that Capitalized Lease Obligations incurred~~ incurrence by ~~Holdings~~ the Company or any of its Restricted ~~Subsidiary pursuant to this clause (d)~~ Subsidiaries of Permitted Refinancing Indebtedness in ~~connection with a Permitted Sale Leaseback shall not be subject to~~ exchange for, or the ~~foregoing limitation so long as the~~ net proceeds of ~~such Permitted Sale Leaseback~~ which are used ~~by Holdings~~ to refund, refinance, replace, amend, restate, modify or ~~such Restricted Subsidiary~~ renew, in whole or in part, Indebtedness (other than intercompany Indebtedness) that was permitted to ~~permanently repay outstanding Term Loans~~ be incurred under Sections 4.3(a), 4.3(b)(2) (other than Specified Existing Indebtedness and the Remaining 15.5% Subordinated Notes), 4.3(b)(3) or ~~other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations~~4.3(b)(18); (e6) ~~Indebtedness incurred~~ the incurrence by ~~Holdings~~ the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and /or any of its Restricted Subsidiaries; provided, however, that each of the following 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 Section 4.3(b)(6): (i) any subsequent issuance or transfer of Equity Interests or any other event that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary ~~constituting reimbursement~~ thereof; and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof; and provided further that if the Company 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 ~~letters~~ the Notes; (7) the incurrence by the Company or any of ~~credit issued in~~ its Restricted Subsidiaries of Hedging Obligations that are incurred for the ~~ordinary course~~ purpose of ~~business, including letters of credit in respect of workers’ compensation claims, performance~~ fixing or ~~surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness~~ hedging interest rate risk with respect to ~~reimbursement type obligations regarding workers~~any floating or fixed rate Indebtedness that is permitted by the terms hereof to be outstanding and the incurrence of Indebtedness under Other Hedging Agreements providing protection against fluctuations in currency values or in the price of energy, commodities and raw materials in connection with the Company’s or any of its Restricted Subsidiaries’ ~~compensation claims~~operations so long as management of the Company or such Restricted Subsidiary, ~~performance or surety bonds~~as the case may be, ~~health, disability or other employee benefits or property, casualty or liability insurance or self-insurance~~has determined that the entering into of such Other Hedging Agreements are bona fide hedging activities; (f8) the guarantee by the Company or a Restricted Subsidiary of the Company of Indebtedness of a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.3; (9) 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 Section 4.3(b)(9); (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 will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.3; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued; (11) the incurrence of Indebtedness arising from agreements of ~~Holdings~~ the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase ~~price, earnout~~ price or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; ~~provided~~ provided, however, that (a) such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause~~ Section 4.3(b)(11)(a)) and (~~f))~~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 Company and its Restricted Subsidiaries in connection with such disposition; (g12) ~~Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not~~ the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of ~~self-insurance, performance, bid, appeal~~ performance and surety bonds and completion guarantees ~~and similar obligations~~ provided by ~~Holdings~~ the Company or any of its Restricted ~~Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case,~~ Subsidiaries in the ordinary course of business; (i13) ~~Indebtedness~~the incurrence of Indebtedness consisting of guarantees of loans or other extensions of credit made to or on behalf of officers, ~~Disqualified Stock~~ directors, employees or consultants of the Company or a Restricted Subsidiary (other than officers, directors, employees or consultants of Madison Dearborn Partners, L.L.C., and ~~preferred stock~~ its Affiliates (other than officers, directors or employees of ~~Holdings~~ the Company)) for the purpose of permitting such persons to purchase Equity Interests of Parent, in an amount not to exceed €20 million at any one time outstanding; (14) the incurrence of Indebtedness by a Receivables Subsidiary in a Qualified Receivables Transaction that is not recourse to the Company or any ~~Restricted Subsidiary in an~~ of its Subsidiaries (except for Standard Securitization Undertakings); provided that the aggregate principal amount of Indebtedness outstanding under this Section 4.3(b)(14) and Section 4.3(b)(1) does not exceed € 2.525 billion less Specified Existing Indebtedness (to the extent and for so long as such Specified Existing Indebtedness remains outstanding) and less the aggregate amount of all Net Proceeds of Asset Sales that have been applied by the Company or ~~liquidation preference~~ any of its Restricted Subsidiaries since the date hereof to permanently repay Indebtedness under a Credit Facility pursuant to Section 4.14; (15) the incurrence of Indebtedness by any one or more Restricted Subsidiaries of the Company of Other Foreign Subsidiary Indebtedness not to exceed €50.0 million in the aggregate at any one time outstanding; (16) the incurrence of Indebtedness in the ordinary course of business by any bank or financial institution permitted under the Senior Credit Agreement (each, an “Approved Bank”) to facilitate the operation of bank accounts of the Company and its Restricted Subsidiaries maintained with such Approved Bank on a net balance basis where such balances arise in connection with ordinary banking arrangements to manage cash balances of the Company and its Restricted Subsidiaries as a group and not for the purpose of obtaining net external financing; (17) Indebtedness of the Company or Non-Public Indebtedness of a Restricted Subsidiary incurred in connection with the acquisition of all of the Capital Stock or all or substantially all of the assets of a Permitted Business up to an amount equal to 100% of the net cash proceeds received by ~~Holdings since immediately after~~ the ~~Closing Date~~ Company from the ~~issue~~ issuance or sale (other than to a Subsidiary) of ~~Equity Interests of Holdings~~ its Capital Stock (other than Disqualified Stock) or ~~cash~~ otherwise contributed to the capital of ~~Holdings~~ the Company (other than Capital Stock owned by any Person (including a holding company) to the extent the purchase of such Capital Stock is financed directly or indirectly (including, in the case of a holding company, by financing the purchase price of such holding company’s Capital Stock) with the proceeds of loans or advances from the Company or a Restricted Subsidiary until such loans or advances are repaid in cash), in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) subsequent to the ~~extent~~ date hereof; provided, however, that any such net cash proceeds that are so received or ~~cash have not been applied pursuant to such clauses to make~~ contributed (i) shall be excluded for purposes of making Restricted Payments ~~or to make other Investments, payments or exchanges pursuant to~~ under Section ~~10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a~~4.4(a)(3)(ii) and ~~(b) of the definition thereof~~Section 4.4(b)(2) and (ii) ~~Indebtedness, Disqualified Stock or preferred stock of Holdings~~ shall not constitute an Excluded Contribution; and (18) the incurrence by the Company or any Restricted Subsidiary ~~not otherwise permitted hereunder~~ of additional Indebtedness in an aggregate principal amount (or ~~liquidation preference~~accreted value, as applicable) (which ~~when aggregated with the principal~~ amount ~~and liquidation preference of all other Indebtedness~~may, ~~Disqualified Stock and preferred stock then outstanding and~~ but need not be, incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock in whole or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock in part under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma BasisCredit Facilities) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, ~~the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis~~including all Permitted Refinancing Indebtedness incurred under Section 4.3(b)(5) ~~(it being understood that~~ to refund, refinance, replace, amend, restate, modify or renew, in whole or in part, any Indebtedness incurred pursuant to this ~~clause~~ Section 4.3(b)(18), not to exceed €150.0 million. (rc) ~~shall cease~~ Neither the Company nor any Restricted Subsidiary will incur any Indebtedness under Section 4.3(b) if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the Company unless such Indebtedness will be subordinated to the Notes to at least the same extent as such Subordinated Obligations. (d) For purposes of determining compliance with this Section 4.3, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in Sections 4.3(b)(1) through (18), or is entitled to be ~~deemed~~ incurred pursuant to Section 4.3(a), the Company will be permitted to classify or ~~outstanding for~~ later reclassify such item of Indebtedness in any manner that complies with this covenant; provided that Indebtedness under the Senior Credit Agreement shall be incurred only in reliance on the exception provided by Section 4.3(b)(1). 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. (e) For purposes of ~~this clause (r) but~~ determining compliance with any euro-denominated restriction on the incurrence of Indebtedness, the euro-equivalent principal amount of Indebtedness denominated in a non-euro 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 non-euro currency, and such refinancing would cause the applicable euro-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such euro-denominated restriction shall be deemed ~~incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could~~ not to have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) been exceeded so long as the principal amount of ~~any~~ such refinancing Indebtedness is does not ~~increased above~~ exceed the principal amount ~~thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount~~ of ~~fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y)~~ such Indebtedness ~~otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate~~ being refinanced. The principal amount of ~~all~~ any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Permitted ~~Other~~ Refinancing Indebtedness ~~issued or incurred pursuant to this clause (i)(a) shall not exceed~~ is denominated that is in effect on the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes date of such refinancing.

Appears in 2 contracts

Sources: Euro Indenture (JSG Acquisitions I), Dollar Indenture (JSG Acquisitions I)

Limitation on Indebtedness. Holdings and the Borrowers will not, and will not permit any ~~Restricted~~ Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any ~~Indebtedness (including Acquired~~ Indebtedness) , and ~~Holdings~~ the no Credit Party will ~~not~~ issue any shares of Disqualified Stock and will not permit any ~~Restricted~~ Subsidiary to issue any shares of Disqualified ~~Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock~~Stock.; provided that Holdings and the Borrowers may, and may permit any Subsidiary to, incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, ~~and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock,~~ if, after giving effect thereto, (x) in the ~~Fixed Charge Coverage Ratio~~ case of ~~Holdings~~ Indebtedness that is secured by the Collateral on a pari passu basis with the Liens on the Collateral securing the Obligations, if the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the ~~Restricted Subsidiaries~~ application of proceeds thereof, is equal to or less than 5.00:1.00 (or if incurred in connection with an acquisition, merger, consolidation or designation, the Consolidated First Lien Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would ~~be at least 2.00~~ not exceed the greater of (I) the Consolidated First Lien Debt to ~~1.00~~Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or designation and (II) 5.00:1.00) (the Indebtedness under this clause (x), “First Lien Ratio Debt”), (y) in the case of Indebtedness that is secured by the Collateral on a junior basis to the Obligations, if the Consolidated Secured Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the application of proceeds thereof, is equal to or less than 5.50:1.00 (or if incurred in connection with an acquisition, merger, consolidation or designation, the Consolidated Secured Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would not exceed the greater of (I) the Consolidated Secured Debt to Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or designation and (II) 5.50:1.00) (the Indebtedness under this clause (y), “Junior Secured Ratio Debt” and, together with First Lien Ratio Debt, “Secured Ratio Debt”) and (z) in the case of Indebtedness that is unsecured or not secured by a lien on the Collateral, if the Consolidated Total Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the application of proceeds thereof, is equal to or less than 5.75:1.00 (or if incurred in connection with an acquisition, merger, consolidation or designation, the Consolidated Total Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would not exceed the greater of (I) the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or designation and (II) 5.75:1.00) (Indebtedness under this clause (z), “Unsecured Ratio Debt” and, together with the Secured Ratio Debt, the “Ratio Debt”); ~~provided, further,~~ provided further that (i) the amount of Indebtedness (other than Acquired Indebtedness, ) and Disqualified Stock ~~and preferred stock~~ that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by ~~Restricted~~ Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 100,000,000 and (y) ~~3.75~~100.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis); (ii) at other than with respect to Ratio Debt in the form of Customary Bridge Loans, Ratio Debt shall not mature earlier than latest Maturity Date hereunder or have a weighted average life to maturity shorter than the Indebtedness arising under the Credit Documents; (iii) if such Ratio Debt is borrowed or issued by any ~~one time outstanding.~~ Credit Party, it shall not be guaranteed by any Person that is not a Credit Party; (iv) in the case of First Lien Ratio Debt in the form of term loans, be subject to the MFN Protection as if such Indebtedness were a New Term Loan; and (v) (x) in the case of subsequent issuances of First Lien Ratio Debt, the representative for the holders of such Permitted Other Indebtedness shall have become a party to the Intercreditor Agreement and/or a Junior Lien Intercreditor Agreement and/or other Acceptable Intercreditor Agreement in accordance with the terms thereof, and (y) in the case of Junior Secured Ratio Debt, the Collateral Agent, the Administrative Agent and the representative of the holders of such Junior Secured Ratio Debt shall have entered into a Junior Lien Intercreditor Agreement and/or other Acceptable Intercreditor Agreement; or in each case, otherwise be subject to an Acceptable Intercreditor Agreement and each of the Administrative Agent and the Collateral Agent shall be authorized to execute and deliver on behalf of the Secured Parties any intercreditor agreement contemplated by this clause; The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Senior Secured Term Loan Credit Agreement (Skillsoft Corp.), Senior Secured Second Out Term Loan Credit Agreement (Skillsoft Corp.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $450,000,000 and (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 130 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted ~~Subsidiary~~ Subsidiary, providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ the Borrower’s Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 185 million and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $150 million and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or ~~Guarantor~~a Guarantor and (4) shall have an aggregate principal amount (or liquidation preference, as applicable) that does not exceed the aggregate principal amount (or liquidation preference, as applicable) of such Indebtedness, Disqualified Stock or preferred stock being refinanced (plus an amount equal to all accrued but unpaid interest, fees, premiums and expenses incurred in connection therewith); (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150 million and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in clause (A) of the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (1) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 5.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time ~~outstanding,~~ outstanding not to exceed the greater of (x) $~~35,000,000~~ 85 million and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes inc

Appears in 2 contracts

Sources: Joinder Agreement and Amendment No. 6 (BrightSpring Health Services, Inc.), Joinder Agreement and Amendment No. 5 (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~stock that is, ifin each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, secured by a Lien on the Collateral that is junior to the Lien securing the Obligations, or that is unsecured to the extent that (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations, either (A) the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect ~~thereto~~to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.50:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (I) not exceed 4.50:1.00 or (II) not exceed the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a junior priority basis with the Liens on the Collateral securing the Obligations, either (A) either (I) the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or secured by assets that are not Collateral, either (A) either (I) the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least ~~2.00~~ 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to ~~1.00~~consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 72,000,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 63,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount ~~or liquidation preference~~ (together with any Refinancing Indebtedness in respect thereof) up to ~~100~~200% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal ~~amount or liquidation preference~~amount, which when aggregated with the principal amount ~~and liquidation preference~~ of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 90,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that ~~any~~ such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5); provided that the amount of Indebtedness, Disqualified Stock or and preferred stock that may be incurred pursuant to this clause (l)(ii) ~~shall cease to be deemed~~ by Restricted Subsidiaries that are not Guarantors together with any amounts incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 ~~without reliance~~ by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $72,000,000 and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on ~~this clause (l)(ii))~~a Pro Forma Basis) at the time of such incurrence; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i~~) and~~), this clause (m) and clause (nv) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Credit Agreement (Applovin Corp), Credit Agreement (Applovin Corp)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 180 million and (y) ~~3.75~~48.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to ~~exceed (x) $375,000,000 minus (y)~~ exceed, in the aggregate ~~principal amount of Senior Notes redeemed~~ (together with any Refinancing Indebtedness in respect thereof), without duplication, $1,987,500,000 and (ii) Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 156 million and (y) ~~2.50~~42.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations (as defined in the First Lien Credit Agreement) with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted ~~Subsidiary~~ Subsidiary, providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ the Borrower’s Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed sum of (A) the greater of (x) $~~85,000,000~~ 222 million and ~~3.75~~(y) 60% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $180 million and (y) 48.65% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, ~~respectively~~as applicable, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor, and (4) shall have an aggregate principal amount (or liquidation preference, as applicable) that does not exceed the aggregate principal amount (or liquidation preference, as applicable) of such Indebtedness, Disqualified Stock or preferred stock being refinanced (plus an amount equal to all accrued but unpaid interest, fees, premiums, and expenses incurred in connection therewith); (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 180 million and ~~3.75~~(y) 48.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in clause (A) of the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (1) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 5.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time ~~outstanding,~~ outstanding not to exceed the greater of (x) $~~35,000,000~~ 102 million and ~~1.5~~(y) 27.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b~~) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes~~

Appears in 2 contracts

Sources: Second Lien Credit Agreement (BrightSpring Health Services, Inc.), Second Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 175,000,000 and (y) ~~3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate ~~principal~~ amount not to exceed ~~(x)~~ $~~375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~575,000,000; ~~(c)~~ (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 125,000,000 and (y) ~~2.50~~25.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; ~~provided, further,~~ provided further 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 Indebtedness (except to ~~the~~ a Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if ~~the~~ a Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; ~~provided, further,~~ provided further that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 200,000,000 and ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (~~l)(i~~l)(a) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the ~~Obligations, respectively,~~ Obligations or (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively and (iii) Indebtedness subordinated to the Obligations~~respectively, ~~such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced~~ and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not ~~the~~ a Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of ~~the~~ a Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $~~85,000,000~~ 175,000,000 and ~~3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $~~35,000,000~~ 50,000,000 and ~~1.5~~10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided ~~that,~~ that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium ~~and accrued and unpaid interest~~ in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes (provided, in the case of this clause (i)(b), such Permitted Other Indebtedness is unsecured or secured by a Lien ranking junior to the Lien securing the Obligations) and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, ref

Appears in 2 contracts

Sources: Credit Agreement (Gardner Denver Holdings, Inc.), Credit Agreement (Gardner Denver Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create~~Create, incur, ~~issue, assume, guarantee~~ assume or ~~otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect~~ suffer to exist any Indebtedness (including ~~Acquired Indebtedness) and Holdings will not issue~~ any ~~shares~~ Indebtedness of ~~Disqualified Stock and will not permit~~ any ~~Restricted Subsidiary to issue any shares~~ of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtednessits Subsidiaries), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply toexcept: (a) Indebtedness ~~arising under~~ of the ~~Credit~~ Borrower or any of its Subsidiaries incurred pursuant to this Agreement and the other Loan Documents; (b) Indebtedness ~~represented~~ evidenced by the ~~Senior~~ Convertible Notes ~~(including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof~~ in an aggregate principal amount at any time outstanding not to exceed ~~(x)~~ $~~375,000,000 minus (y)~~ 9,000,000, provided that all such Indebtedness shall be repaid, redeemed, defeased, discharged or otherwise acquired or retired no later than January 15, 2010 with payment therefor to be disbursed from the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~Convertible Note Account; (c) Indebtedness of the Borrower or any of its Subsidiaries evidenced by any senior notes, other senior debt securities, or other senior indebtedness (collectively, “Senior Notes”) or subordinated notes, other subordinated debt securities or other subordinated indebtedness (“Subordinated Indebtedness”), provided that (i) ~~Indebtedness outstanding on~~ immediately after giving effect to each issuance of such Senior Notes or Subordinated Indebtedness, the ~~Closing Date listed on Schedule 10.1 and~~ Consolidated Leverage Ratio of the Borrower as at the last day of the Most Recent Four Quarter Period is less than 4.00 to 1.00, (ii) ~~intercompany~~ any such Senior Notes or Subordinated Indebtedness ~~outstanding on~~ shall have a stated maturity date after the ~~Closing~~ Termination Date ~~listed on Schedule 10.1~~ and (~~other than intercompany~~ iii) any such Senior Notes or Subordinated Indebtedness ~~owed~~ shall not be secured by ~~a Credit Party to another Credit Party)~~any assets of the Loan Parties not pledged as Collateral; (d) Indebtedness ~~(including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings~~ of the Borrower or any ~~Restricted Subsidiary~~of its Subsidiaries incurred pursuant to the ABL Facility Documents, ~~to finance the purchase~~including any extension, ~~lease~~refinancing, ~~construction~~refunding, ~~installation~~ replacement or ~~improvement of property (real or personal) or equipment that is used or useful in a Similar Business~~renewal thereof, whether ~~through the direct purchase of assets~~ in whole or ~~the Capital Stock of~~ in part; provided that at any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then time outstanding ~~and incurred~~ pursuant to this clause (d) ~~and all Refinancing Indebtedness incurred to Refinance~~ (i) the aggregate face amount of any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does~~ outstanding undrawn letters of credit that are not cash collateralized shall not exceed ~~the greater of (x)~~ $~~55,000,000~~ 25,000,000 and (yii) ~~2.50%~~ the aggregate principal amount of ~~Consolidated Total Assets for~~ such Indebtedness (including the ~~most recently ended Test Period (calculated on a Pro Forma Basis~~aggregate face amount of any outstanding undrawn letters of credit that are not cash collateralized) ~~at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback~~ shall not ~~be subject to the foregoing limitation so long~~ exceed $100,000,000 at any time outstanding (except as ~~the proceeds~~ a result of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any ~~Lien ranking junior to the Lien securing the Obligations)~~capitalization of accrued and unpaid interest thereon) and ; (e) Indebtedness ~~incurred by Holdings~~ of the Borrower or any ~~Restricted~~ Subsidiary ~~constituting reimbursement obligations with respect~~ to ~~letters of credit issued in~~ the ~~ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance~~ Borrower or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insuranceany Subsidiary; (f) Indebtedness ~~arising from agreements~~ of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or any of its Subsidiaries incurred to finance or refinance the acquisition, leasing, construction or improvement of fixed or capital assets (whether pursuant to a ~~Guarantor is subordinated in right of payment~~ loan, a Financing Lease or otherwise) otherwise permitted pursuant to ~~Holdings’ Guarantee; provided~~this Agreement, ~~further, that any subsequent issuance or transfer of any Capital Stock or~~ and any other ~~event which results in~~ Financing Leases, and any ~~such Restricted Subsidiary ceasing to be a Restricted Subsidiary~~ refinancings, replacements, refundings, renewals or ~~any other subsequent transfer of any such Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed~~extensions thereof, in ~~each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings~~ whole or ~~another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor~~in part, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not exceeding $10,000,000 at any ~~one~~ time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtednessoutstanding, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such ~~Refinancing Indebtedness (1) has a weighted average life~~ amount shall be increased by an amount equal to ~~maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity~~ $10,000,000 on each anniversary of the ~~Indebtedness~~Closing Date, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as ~~in the case~~ no Default or Event of ~~a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could~~ Default shall have ~~been incurred directly by the Restricted Subsidiary providing such guarantee or (2)~~ occurred and be continuing on any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such ~~Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r))~~amount is to be increased; (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Credit Agreement (Nci Building Systems Inc), Credit Agreement (Nci Building Systems Inc)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 125,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~Second Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, the Equity Rollover Contribution, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 40,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and ~~3.75~~(y) 30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Indebtednes

Appears in 2 contracts

Sources: First Lien Credit Agreement (National Vision Holdings, Inc.), First Lien Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $450,000,000 and (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 130 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted ~~Subsidiary~~ Subsidiary, providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ the Borrower’s Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) ~~and~~ and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 185 million and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $150 million and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or ~~Guarantor~~a Guarantor and (4) shall have an aggregate principal amount (or liquidation preference, as applicable) that does not exceed the aggregate principal amount (or liquidation preference, as applicable) of such Indebtedness, Disqualified Stock or preferred stock being refinanced (plus an amount equal to all accrued but unpaid interest, fees, premiums and expenses incurred in connection therewith); (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150 million and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in clause (A) of the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (1) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 5.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time ~~outstanding,~~ outstanding not to exceed the greater of (x) $~~35,000,000~~ 85 million and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes inc

Appears in 2 contracts

Sources: First Lien Credit Agreement (BrightSpring Health Services, Inc.), First Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~stock that is, ifin each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, secured by a Lien on the Collateral that is junior to the Lien securing the Obligations, or that is unsecured to the extent that (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations, either (A) the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect ~~thereto~~to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.50:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (I) not exceed 4.50:1.00 or (II) not exceed the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a junior priority basis with the Liens on the Collateral securing the Obligations, either (A) either (I) the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or secured by assets that are not Collateral, either (A) either (I) the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least ~~2.00~~ 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to ~~1.00~~consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 72,000,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 63,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount ~~or liquidation preference~~ (together with any Refinancing Indebtedness in respect thereof) up to ~~100~~200% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (aai) and (bciii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal ~~amount or liquidation preference~~amount, which when aggregated with the principal amount ~~and liquidation preference~~ of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 90,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that ~~any~~ such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5); provided that the amount of Indebtedness, Disqualified Stock or and preferred stock that may be incurred pursuant to this clause (l)(ii) ~~shall cease to be deemed~~ by Restricted Subsidiaries that are not Guarantors together with any amounts incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 ~~without reliance~~ by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $72,000,000 and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on ~~this clause (l)(ii))~~a Pro Forma Basis) at the time of such incurrence; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i~~) and~~), this clause (m) and clause (nv) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Stock

Appears in 2 contracts

Sources: Credit Agreement (Applovin Corp), Credit Agreement (Applovin Corp)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Borrower may, and may permit any Restricted Subsidiary to, incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, ~~and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock,~~ if, after giving effect thereto, (x) in the ~~Fixed Charge Coverage Ratio~~ case of ~~Holdings~~ Indebtedness that is secured by the Collateral on a pari passu basis with the Liens on the Collateral securing the Obligations, if the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the ~~Restricted Subsidiaries~~ application of proceeds thereof, is equal to or less than 3.00:1.00 (or if incurred in connection with an acquisition, merger, consolidation or Investment, the Consolidated First Lien Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would ~~be at least 2.00~~ not exceed the greater of (I) the Consolidated First Lien Debt to ~~1.00~~Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or Investment and (II) 3.00:1.00) (the Indebtedness under this clause (x), “First Lien Ratio Debt”), (y) in the case of Indebtedness that is secured by the Collateral on a junior basis to the Obligations, if the Consolidated Secured Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the application of proceeds thereof, is equal to or less than 3.75:1.00 (or if incurred in connection with an acquisition, merger, consolidation or Investment, the Consolidated Secured Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would not exceed the greater of (I) the Consolidated Secured Debt to Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or Investment and (II) 3.75:1.00) (the Indebtedness under this clause (y), “Junior Secured Ratio Debt” and, together with First Lien Ratio Debt, “Secured Ratio Debt”) and (z) in the case of Indebtedness that is unsecured or not secured by a lien on the Collateral, if the Consolidated Total Debt to Consolidated EBITDA Ratio, on a Pro Forma Basis immediately after giving effect to such incurrence and the application of proceeds thereof, is equal to or less than 4.50:1.00 (or if incurred in connection with an acquisition, merger, consolidation or Investment, the Consolidated Total Debt to Consolidated EBITDA Ratio on a Pro Forma Basis would not exceed the greater of (I) the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or Investment and (II) 4.50:1.00) (Indebtedness under this clause (z), “Unsecured Ratio Debt” and, together with the Secured Ratio Debt, the “Ratio Debt”); ~~provided, further,~~ provided further that (i) the amount of Indebtedness (other than Acquired Indebtedness, ) and Disqualified Stock ~~and preferred stock~~ that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by ~~Restricted~~ Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and (y) ~~3.75~~17.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis); (ii) at Ratio Debt shall not mature earlier than Latest Term Loan Maturity Date hereunder or have a weighted average life to maturity shorter than the Term Loans; (iii) if such Ratio Debt is borrowed or issued by any ~~one time outstanding~~Credit Party, it shall not be guaranteed by any Person that is not a Credit Party; (iv) (x) in the case of subsequent issuances of First Lien Ratio Debt, the representative for the holders of such Indebtedness shall have become a party to the First Lien Intercreditor Agreement and/or other Acceptable Intercreditor Agreement in accordance with the terms thereof, and (y) in the case of Junior Secured Ratio Debt, the Collateral Agent, the Administrative Agent and the representative of the holders of such Junior Secured Ratio Debt shall have entered into a Second Lien Intercreditor Agreement and/or other Acceptable Intercreditor Agreement; or in each case, otherwise be subject to an Acceptable Intercreditor Agreement and each of the Administrative Agent and the Collateral Agent shall be authorized to execute and deliver on behalf of the Secured Parties any intercreditor agreement contemplated by this clause; (v) in the case of Ratio Debt incurred by a Credit Party, other than for covenants applicable only to periods after the then Latest Term Loan Maturity Date, such Indebtedness shall have covenants that are either (w) reasonably acceptable to the Administrative Agent, (X) substantially similar to the material terms of the Initial Term Loans, (Y) on then market terms (as reasonably determined by the Borrower) or (Z) when taken as a whole, no more restrictive (as determined by the Borrower in good faith) to the Borrower and its Subsidiaries, taken as a whole, than those applicable to the Initial Term Loans; it being understood and agreed that such Indebtedness may be incurred (and shall be deemed acceptable to the Administrative Agent) if such more restrictive covenant is added (only for the period prior to the then Latest Term Loan Maturity Date) for the benefit of the Initial Term Loans; provided that the addition of such more restrictive covenant shall not require the consent of the Administrative Agent or any other Secured Party (and may be implemented with only the Borrower and the lenders providing such Indebtedness) and (vi) in the case of First Lien Ratio Debt (other than revolving Indebtedness), such Ratio Debt shall be subject to the MFN Provisions. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 2 contracts

Sources: Credit Agreement (Skillsoft Corp.), Credit Agreement (Skillsoft Corp.)

Appears in 2 contracts

Sources: Credit Agreement (Chime Financial, Inc.), Credit Agreement (Chime Financial, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 36,000,000 and (y) ~~3.75~~36.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 575,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~First Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 42,000,000 and (y) ~~2.50~~42.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings will~~ The Borrower shall not, and ~~will~~ shall not permit any ~~Restricted Subsidiary~~ of its Subsidiaries to, ~~directly~~ incur or ~~indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)~~ at any time be liable with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply toexcept: (a) Indebtedness ~~arising~~ under ~~the Credit Documents~~this Agreement and Guaranty Obligations in respect thereto; (bi) Purchase money Indebtedness ~~represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof~~ in an aggregate principal amount at any time outstanding not to exceed $25,000,000 incurred or assumed for the purpose of financing all or any part of the cost of acquiring, constructing or improving fixed assets and (xii) ~~$375,000,000 minus (y)~~ Indebtedness existing at the ~~aggregate~~ time a Person is merged or consolidated with or into the Borrower or a Subsidiary, or at the time such Person becomes a Subsidiary or at the time such asset is acquired, so long as the principal amount of ~~Senior Notes redeemed~~ Indebtedness under this clause (ii) does not exceed $25,000,000 at any time outstanding and was not incurred in contemplation of such merger, consolidation or asset acquisition, and any subsequent extensions, renewals or replacements thereof so long as the principal amount thereof is not increased above the amount outstanding immediately prior thereto (except for the amount of any premium required to be paid pursuant to ~~a Special Mandatory Redemption (as defined~~ the terms of such Indebtedness, plus expenses reasonably incurred by the issuer of such Indebtedness, in ~~the Senior Notes Indenture~~connection with such extension, renewal or replacement); (c) ~~(i)~~ Indebtedness ~~outstanding on~~ of the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany~~ Borrower owed to a Guarantor, or Indebtedness ~~outstanding on~~ of a Guarantor owed to the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to~~ Borrower or another ~~Credit Party)~~Guarantor; (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, Foreign Subsidiaries in an aggregate ~~principal~~ amount ~~or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant~~ not to ~~this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not~~ exceed ~~the greater of (x)~~ $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)25,000,000; (e) Indebtedness of the Borrower and its Subsidiaries not otherwise permitted by this Section 6.2 incurred ~~by Holdings or~~ after the Effective Date in an aggregate principal amount at any ~~Restricted Subsidiary constituting reimbursement obligations with respect~~ time outstanding not to ~~letters of credit issued in~~ exceed $10,000,000; provided, however, that the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees aggregate principal amount 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred Loan Parties pursuant to ~~in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of~~ this clause (~~f))~~e) shall not exceed $5,000,000 at any time outstanding; (i) Guaranty Obligations of the Borrower or any Guarantor of Indebtedness of the Borrower or any other Guarantor permitted by this Section 6.2 and (ii) Guaranty Obligations of any Subsidiary that is not a Guarantor of Indebtedness of the Borrower or any of its Subsidiaries permitted by this Section 6.2; (g) Indebtedness of ~~Holdings~~ a Foreign Subsidiary owed to a ~~Restricted~~ Foreign Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness (other than Indebtedness described in clauses (j) and (l) below) outstanding as of ~~a Restricted Subsidiary owing to Holdings~~ the Effective Date and listed on Schedule 6.2, plus any subsequent extensions, renewals or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may bereplacements thereof; provided, ~~further~~however, ~~that~~ that, after giving effect to any ~~subsequent transfer~~ extensions, renewals or replacements, Indebtedness permitted pursuant to this Section 6.2(h) does not exceed the respective amount listed on Schedule 6.2 as of ~~any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)~~the Effective Date; (i) ~~shares~~ Indebtedness consisting of ~~preferred stock~~ obligations in respect of ~~a Restricted Subsidiary issued~~ performance and surety bonds and completion guaranties incurred (i) in the ordinary course of business not to ~~Holdings~~ exceed $500,000 in aggregate amount at any time outstanding and (ii) in connection with the appeal of judgments or ~~another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock~~ orders rendered against the Borrower or any ~~other event which results~~ of its Subsidiaries not to exceed $7,500,000 in aggregate amount at any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i)time outstanding; (j) ~~Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)~~Indebtedness of the Borrower incurred under the Existing Senior Secured Notes and the other Existing Senior Secured Note Documents in an aggregate outstanding principal amount not to exceed $275,000,000, and Permitted Refinancings thereof; (k) ~~obligations in respect~~ Indebtedness of ~~self-insurance, performance, bid, appeal~~ the Borrower incurred under the Existing Subordinated Notes and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ~~ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary~~ other Existing Subordinated Note Documents in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to ~~exceed, in the aggregate at any one time outstanding, the greater of~~ exceed $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) 315,000,000 less the aggregate principal amount of all ~~such Permitted Other Indebtedness issued or incurred~~ Existing Subordinated Notes exchanged for Stock in the Borrower pursuant to ~~this clause~~ the Debt Swap and (~~i)(a~~ii) ~~shall~~ Qualified Subordinated Debt issued pursuant to the Debt Swap, and, in each case, Permitted Refinancings thereof; and (l) Indebtedness of the Borrower incurred under the New Senior Secured Notes and the other New Senior Secured Note Documents in an aggregate outstanding principal amount not to exceed ~~the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase~~$150,000,000, ~~repay, redeem or otherwise defease Senior Notes~~ and Permitted Refinancings thereof.

Appears in 1 contract

Sources: Credit Agreement (Tekni Plex Inc)

Limitation on Indebtedness. ~~Holdings~~ (a) The Parent Guarantor will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, ~~create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to~~ Incur any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Parent Guarantor will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock ~~or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock~~or Preferred Stock; provided that ~~Holdings~~ the Parent Guarantor may ~~incur~~ Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of ~~preferred stock~~Preferred Stock, ~~if, after giving effect thereto,~~ if either (x) the Consolidated Total Leverage Ratio of the Parent Guarantor and its Restricted Subsidiaries is no greater than 6.25 to 1.00 or (y) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Parent Guarantor and ~~the~~ its Restricted Subsidiaries ~~would be~~ on a consolidated basis is at least 2.00 to 1.00, in each case determined on a pro forma basis after giving effect thereto (including a pro forma application of the net proceeds therefrom); provided, further, that Non-Guarantors may not Incur Indebtedness if, after giving pro forma effect to such Incurrence (including a pro forma application of the ~~amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x~~net proceeds therefrom), ~~by Restricted Subsidiaries that are not Guarantors shall not exceed~~ more than an aggregate of the greater of (xa) $~~85,000,000~~ 200 million and (yb) ~~3.75~~2.5% of ~~Consolidated~~ Total Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a)~~ of Indebtedness ~~arising under the Credit Documents;~~of Non-Guarantors would be outstanding pursuant to this paragraph. (b) SECTION 3.2(a) will not prohibit the Incurrence of the following: (1) Indebtedness ~~represented by the Senior Notes~~ Incurred pursuant to any Credit Facility (including letters of credit or bankers’ acceptances issued or created under any ~~guarantee thereof)~~ Credit Facility), including the Notes issued on the Issue Date and ~~exchange notes~~ the Existing 2027 Secured Notes issued on the August 2019 Issue Date, in ~~respect of such notes and any guarantee thereof in an~~ a maximum aggregate principal amount at any time outstanding not ~~to exceed~~ exceeding (xi) the sum of (a) $~~375,000,000 minus~~ 3,950 million plus (yb) the ~~aggregate principal amount~~ greater of ~~Senior Notes redeemed pursuant to a Special Mandatory Redemption~~ $960 million and 100% of LTM EBITDA; plus (~~as defined~~ ii) any Refinancing Indebtedness in ~~the Senior Notes Indenture)~~respect thereof; (c2) ~~(i)~~ Guarantees by the Parent Guarantor or any Restricted Subsidiary of Indebtedness ~~outstanding on~~ or other obligations of the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany~~ Parent Guarantor or any Restricted Subsidiary so long as the Incurrence of such Indebtedness ~~outstanding on~~ or other obligations is not prohibited by the ~~Closing Date listed on Schedule 10.1 (other than intercompany~~ terms of this Indenture; provided that if the Indebtedness ~~owed by a Credit Party~~ being Guaranteed constitutes Pari Passu Indebtedness or Subordinated Indebtedness, the Guarantees must be pari passu with or subordinated to ~~another Credit Party)~~the same extent as the Notes or Note Guarantees; (d3) Indebtedness ~~(including Capital Lease Obligations), Disqualified Stock~~ of the Parent Guarantor owing to and ~~preferred stock incurred~~ held by ~~Holdings~~ any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Parent Guarantor or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, ~~further~~however, ~~that~~ that: (i) any subsequent issuance or transfer of ~~any~~ Capital Stock or any other event which results in any such ~~Restricted Subsidiary ceasing to be~~ Indebtedness being beneficially held by a Person other than the Parent Guarantor or a Restricted ~~Subsidiary~~ Subsidiary; and (ii) any sale or ~~any~~ other ~~subsequent~~ transfer of any such Indebtedness ~~(except~~ to a Person other than the ~~Borrower~~ Parent Guarantor or ~~another~~ a Restricted Subsidiary) ; shall be deemed, in each ~~case~~ case, to be constitute an ~~incurrence~~ Incurrence of such Indebtedness ~~not permitted~~ by ~~this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings~~ the Parent Guarantor or ~~another~~ such Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be~~; provided~~; (4) Indebtedness represented by (a) the Existing 2026 Secured Notes (other than any additional Existing 2026 Secured Notes), ~~further~~including any Guarantee thereof, ~~that~~ and the Senior Notes (other than any ~~subsequent transfer~~ additional Senior Notes), including any Guarantee thereof, (b) any Indebtedness (other than Indebtedness incurred pursuant to clauses (1), (3) or (4)(a)) outstanding on the Issue Date, and any Guarantee thereof, (c) Refinancing Indebtedness (including, with respect to the Notes and any Guarantee thereof) Incurred in respect of any ~~such~~ Indebtedness ~~(except to Holdings or another Restricted Subsidiary) shall be deemed,~~ described in ~~each case to be an incurrence of such Indebtedness not permitted by~~ this clause (h4) or clauses (2), (5), (10) or (19) of this SECTION 3.2(b) or Incurred pursuant to SECTION 3.2(a), and (d) Management Advances; (i5) ~~shares~~ Indebtedness of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (~~except to Holdings or another Restricted Subsidiary~~x) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings the Parent Guarantor or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred Incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding acquisition or (y) Persons that are acquired by ~~Holdings~~ the Parent Guarantor or any Restricted ~~Subsidiary~~ Subsidiaries or merged into or consolidated with ~~Holdings~~ the Parent Guarantor or a Restricted Subsidiary in accordance with the terms ~~hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary)~~of this Indenture; provided that on the date the acquisition, merger or consolidation, as applicable, is consummated, and after giving pro forma effect to ~~any~~ the Incurrence of such ~~acquisition or merger described in~~ Indebtedness, either (A) the total amount of Indebtedness Incurred and outstanding under this clause (n)5) is in an aggregate amount not to exceed the greater of (x) $300 million and (y) 3.5% of Total Assets, ~~either:~~ or (1B) ~~Holdings~~ any of the following are satisfied as of the date of incurrence (i) the Parent Guarantor would be permitted to ~~incur~~ Incur at least $1.00 of additional Indebtedness pursuant to SECTION 3.2(a), (ii) either (a) the ~~Fixed Charge Coverage~~ Consolidated Total Leverage Ratio ~~test set forth in~~ of the ~~first paragraph of this Section 10.1~~ Parent Guarantor and the Restricted Subsidiaries would not be higher, or (2b) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Parent Guarantor and the Restricted Subsidiaries ~~is equal~~ on a consolidated basis would not be lower, in each case than that immediately prior to such acquisition, merger or ~~greater~~ consolidation, or (iii) such Indebtedness constitutes Acquired Indebtedness (other than ~~immediately~~ Indebtedness Incurred in contemplation of the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary); provided that the only obligors with respect to such Indebtedness shall be those Persons who were obligors of such Indebtedness prior to such acquisition, merger or consolidation; (o6) Swap Obligations (excluding Swap Obligations entered into for speculative purposes (as determined in the good faith judgment of the Parent Guarantor)); (7) Indebtedness ~~arising from~~ represented by Capitalized Lease Obligations or Purchase Money Obligations in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause and then outstanding, does not exceed the greater of (a) $400 million and (b) 5.0% of Total Assets and any Refinancing Indebtedness in respect thereof; (8) Indebtedness in respect of (a) workers’ compensation claims, self-insurance obligations, performance, indemnity, surety, judgment, appeal, advance payment (including progress premiums), customs, value added or other tax or other guarantees or other similar bonds, instruments or obligations and completion guarantees and warranties provided by the Parent Guarantor or a Restricted Subsidiary or relating to liabilities, obligations or guarantees Incurred in the ordinary course of business or consistent with past practice; (b) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of ~~business~~business or consistent with past practice; provided, however, that such Indebtedness is extinguished within five (5) Business Days of Incurrence; (c) customer deposits and advance payments (including progress premiums) received in the ordinary course of business or consistent with past practice from customers for goods or services purchased in the ordinary course of business or consistent with past practice; (d) letters of credit, bankers’ acceptances, warehouse receipts, guarantees or other similar instruments or obligations issued or relating to liabilities or obligations Incurred in the ordinary course of business or consistent with past practice; and (e) Cash Management Services; (p9) Indebtedness arising from agreements providing for guarantees, indemnification, obligations in respect of ~~Holdings~~ earn-outs or other adjustments of purchase price or, in each case, similar obligations, in each case, Incurred or assumed in connection with the acquisition or disposition of any business or assets or Person or any ~~Restricted~~ Capital Stock of a Subsidiary ~~supported~~ (other than Guarantees of Indebtedness Incurred by ~~a letter~~ any Person acquiring or disposing of ~~credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess~~ such business or assets or such Subsidiary for the purpose of financing such acquisition or disposition); provided that the maximum liability of the ~~stated amount~~ Parent Guarantor and its Restricted Subsidiaries in respect of all such ~~letter~~ Indebtedness in connection with a disposition shall at no time exceed the gross proceeds, including the fair market value of ~~credit~~non-cash proceeds (measured at the time received and without giving effect to any subsequent changes in value), actually received by the Parent Guarantor and its Restricted Subsidiaries in connection with such disposition; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r10) Indebtedness ~~of Restricted Subsidiaries that are not Guarantors~~ in an aggregate outstanding principal amount ~~not to exceed~~which, in when taken together with the ~~aggregate at any one time outstanding, the greater~~ principal amount of ~~$35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any~~ all other Indebtedness ~~incurred~~ Incurred pursuant to this clause and then outstanding, will not exceed 100% of the Net Cash Proceeds received by the Parent Guarantor from the issuance or sale (rother than to a Restricted Subsidiary) of its Capital Stock (other than Disqualified Stock, Designated Preferred Stock or an Excluded Contribution) or otherwise contributed to the equity (other than through the issuance of Disqualified Stock, Designated Preferred Stock or an Excluded Contribution) of the Parent Guarantor, in each case, subsequent to the Issue Date, and any Refinancing Indebtedness in respect thereof; provided, however, that (i) any such Net Cash Proceeds that are so received or contributed shall ~~cease~~ not increase the amount available for making Restricted Payments to the extent the Parent Guarantor and its Restricted Subsidiaries Incur Indebtedness in reliance thereon and (ii) any Net Cash Proceeds that are so received or contributed shall be ~~deemed incurred or outstanding~~ excluded for purposes of Incurring Indebtedness pursuant to this clause ~~(r) but shall be deemed incurred for~~ to the ~~purposes of the first paragraph of this covenant from and after the first date on which~~ extent such Net Cash Proceeds or cash have been applied to make Restricted ~~Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r))~~Payments; (s11) Indebtedness of ~~Holdings~~ Non-Guarantors in an aggregate amount, together with any Refinancing Indebtedness in respect thereof, not to exceed the greater of (a) $200 million and (b) 2.5% of Total Assets and at any time outstanding; (12) Indebtedness consisting of promissory notes issued by the Parent Guarantor or any of its Subsidiaries to any current or former employee, director or consultant of the Parent Guarantor, any of its Subsidiaries or any Parent Entity (or permitted transferees, assigns, estates or heirs of such employee, director or consultant), to finance the purchase or redemption of Capital Stock of the Parent Guarantor or any Parent Entity that is permitted by SECTION 3.3; (13) Indebtedness of the Parent Guarantor or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) ~~take or~~ take-or-pay obligations contained in supply ~~arrangements~~ arrangements, in each ~~case, incurred~~ case Incurred in the ordinary course of ~~business~~business or consistent with past practice; (t14) Indebtedness in an aggregate outstanding principal amount which, when taken together with any Refinancing Indebtedness in respect thereof and the principal amount of all other Indebtedness Incurred pursuant to this clause and then outstanding, will not exceed the greater of (a) $350 million and (b) 4.0% of Total Assets; (15) Indebtedness in respect of any Qualified Securitization Facility or any Receivables Facility, which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause and then outstanding, will not exceed the greater of (a) $200 million and (b) 2.5% of Total Assets; (16) Indebtedness of ~~Holdings~~ the Parent Guarantor or any ~~of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect~~ Guarantor arising pursuant to any ~~Subsidiary or joint venture in the ordinary course of business~~Permitted Tax Restructuring; (u17) Indebtedness ~~consisting~~ owed to the seller of any business or assets permitted to be acquired by the Parent Guarantor or any Restricted Subsidiary under this Indenture; provided that the aggregate amount of Indebtedness Incurred pursuant to this clause and then outstanding will not exceed $80 million; (18) obligations in respect of Disqualified Stock or Preferred Stock in an aggregate amount outstanding which, when taken together with the liquidation preference of all other Disqualified Stock or Preferred Stock issued pursuant to this clause and then outstanding, will not exceed the greater of (a) $200 million and (b) 2.5% of Total Assets; (19) [Reserved]; (20) the Company’s guarantee of performance under the Transition Services Agreement and Indebtedness arising therefrom as well as Indebtedness from the Company’s indemnification obligations under the Tax Matters Agreement, and any Refinancing Indebtedness in respect thereof; and (21) Indebtedness incurred by ~~Holdings~~ the Parent Guarantor or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the ~~Net Cash Proceeds therefrom~~ net proceeds thereof are ~~applied~~ deposited with the Trustee within five (5) Business Days to satisfy or discharge the ~~prepayment~~ Notes or exercise the Company’s legal defeasance or covenant defeasance, in each case, in accordance with this Indenture. (c) For purposes of ~~Term Loans~~ determining compliance with, and the outstanding amount of any particular Indebtedness, Disqualified Stock or Preferred Stock, Incurred or issued pursuant to and in compliance with, this SECTION 3.2: (1) in the ~~manner~~ event that all or any portion of any item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in SECTIONS 3.2(a) and 3.2(b), the Parent Guarantor, in its sole discretion, will classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in SECTION 3.2(a) or one of the clauses of SECTION 3.2(b); provided that Indebtedness outstanding on the Issue Date under the Credit Agreement shall be treated as incurred under SECTION 3.2(b)(1) and may not be reclassified; (2) additionally, except as set forth in ~~Section 5.2(a)(i); and (ii~~SECTION 3.2(c)(1) above, all or any ~~refinancing, refunding, renewal or extension~~ portion of any item of Indebtedness ~~specified~~ may later be reclassified as having been Incurred pursuant to any type of Indebtedness described in ~~subclause (i~~SECTIONS 3.2(a) ~~above; provided that, (x~~and 3.2(b) ~~the principal amount of any~~ so long as such Indebtedness is ~~not increased above the principal amount thereof outstanding immediately prior~~ permitted to be Incurred pursuant to such ~~refinancing~~provision at the time of reclassification; (3) in the case of any Refinancing Indebtedness, ~~refunding, renewal or extension (except for any original issue discount thereon and~~ such Indebtedness shall not include the aggregate amount of fees, ~~expenses and premium and~~ underwriting discounts, accrued and unpaid ~~interest~~ interest, premiums (including, without limitation, tender premiums) and other costs and expenses (including, without limitation, original issue discount, upfront fees or similar fees) Incurred in connection with such refinancing~~) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”~~; (x4) ~~Indebtedness~~ Guarantees of, or obligations in respect of letters of credit, bankers’ acceptances or other similar instruments relating to, or Liens securing, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included; (i5) ~~Permitted Other~~ if obligations in respect of letters of credit, bankers’ acceptances or other similar instruments are Incurred pursuant to any Credit Facility and are being treated as Incurred pursuant to of SECTION 3.2(a) or SECTION 3.2(b) and the letters of credit, bankers’ acceptances or other similar instruments relate to other Indebtedness~~; provided that either~~ , then such other Indebtedness shall not be included; (a6) the ~~aggregate~~ amount of any Disqualified Stock of the Parent Guarantor or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary, will be equal to the liquidation preference thereof on the date of issuance; (7) Indebtedness, Disqualified Stock or Preferred Stock, permitted by this SECTION 3.2 need not be permitted solely by reference to one provision permitting such Indebtedness, Disqualified Stock or Preferred Stock, but may be permitted in part by one such provision and in part by one or more other provisions of this SECTION 3.2 permitting such Indebtedness, Disqualified Stock or Preferred Stock; and (8) the amount of Indebtedness issued at a price less than the principal amount thereof will be equal to the amount of ~~all such Permitted Other~~ the liability in respect thereof determined on the basis of GAAP. (d) Accrual of interest, accrual of dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest in the form of additional Indebtedness, the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock or the reclassification of commitments or obligations not treated as Indebtedness ~~issued~~ due to a change in GAAP, will not be deemed to be an Incurrence of Indebtedness or ~~incurred pursuant to this clause (i)(a) shall not exceed~~ the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes issuance of Disqualif

Appears in 1 contract

Sources: Indenture (iHeartMedia, Inc.)

Limitation on Indebtedness. ~~Holdings~~ CGI Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “"incur” " and collectively, an “"incurrence”") with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ CGI Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ CGI Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 105,000,000 and (y) ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) unlimited additional amounts if, after giving effect thereto, CGI Borrower shall on a consolidated basis have an Interest Coverage Ratio of not less than 2.00:1.00 on a Pro Forma Basis at the time of incurrence or issuance; provided, further, that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 11.1(m)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $80,000,000 and (y) 30.0% of Consolidated EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness (including any unused commitment) outstanding on the Seventh Closing Date listed on Schedule ~~10.1~~ 11.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Seventh Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by a ~~Credit Party~~ Borrower to a Restricted Subsidiary, by a Restricted Subsidiary to CGI Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (dc) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ CGI Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ CGI Borrower or any Restricted Subsidiary under or pursuant to any “"synthetic lease” " transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~c), does not exceed the greater of (x) $~~55,000,000~~ 80,000,000 and (y) ~~2.50~~30.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary pursuant to this clause (dc) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ CGI Borrower or such Restricted Subsidiary to permanently repay outstanding Permitted Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (ed) Indebtedness incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ ' compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ ' compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (fe) Indebtedness arising from agreements of ~~Holdings~~ CGI Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or any similar obligations, in each case, incurred or assumed in connection with ~~the disposition of~~ any ~~business, assets or a Subsidiary, other than guarantees of Indebtedness incurred~~ transaction not expressly prohibited by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this ~~clause (f))~~Agreement; (gf) Indebtedness of CGI Borrower to Holdings to or a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by CGI Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms; provided, further, 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 Indebtedness (except to ~~the~~ Holdings, CGI Borrower or ~~another~~ any Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (gf); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Parent Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Parent Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not ~~Guarantors~~Guarantors or Borrowers, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Parent Borrower and/or any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Stock or Non-Guarantor Subsidiary Preferred Stock in an aggregate amount up to the Maximum Incremental Facilities Amount (any such obligations that are secured, “Secured Ratio Debt” and any such obligations that are not Indebtedness or not secured, “Unsecured Ratio Debt”, and ~~any Restricted Subsidiary may incur~~ collectively, “Ratio Debt”); provided that (i) the amount of Indebtedness (~~including~~ other than Acquired Indebtedness~~), issue shares of~~ ) and Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Non-Guarantor Subsidiary Preferred Stock ~~and preferred stock~~ that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $~~85,000,000~~ 67,000,000 and ~~3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test ~~Period~~ Period; (~~calculated on a Pro Forma Basis~~ii) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant subject to the ~~Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings~~ Inside Maturity Exceptions and ~~the Restricted Subsidiaries is equal to or greater~~ other than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of Acquired Indebtedness, Ratio Debt shall not mature earlier than the Initial Term Loan Maturity Date or have a ~~guarantee~~ weighted average life to maturity shorter than the remaining weighted life to maturity of ~~Indebtedness~~ the Initial Term Loans or the Amendment No. 3 Term Loans (excluding the effects of ~~a Restricted Subsidiary that is not a Guarantor,~~ any amortization of such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors Ratio Debt in an amount ~~not to exceed, in the aggregate at any one time outstanding, the~~ no greater ~~of $35,000,000 and 1.5~~than 1.00% ~~of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis~~per annum) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case ~~to finance~~ as in effect at the ~~purchase~~ time of incurrence or ~~redemption~~ establishment of ~~Equity Interests of Holdings or any direct or indirect parent company of Holdings to~~ the ~~extent described in clause~~ commitment thereof) and (4iii) ~~of Section 10.5(b); (v)~~ if such Ratio Debt is Indebtedness secured by Collateral, the Intercreditor Agreement Requirement shall apply. The foregoing limitations will not apply to: Indebtedness arising under the Credit Documents; [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Mirion Technologies, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 54,000,000 and (y) ~~3.75~~36% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 845,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~First Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (A) The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness ~~(including Acquired Indebtedness)~~ and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock oror preferred stock, except: (a) Borrower and its Restricted Subsidiaries may incur Senior Indebtedness if the (x) Senior Leverage Ratio for the Borrower’s most recently ended four (4) full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Senior Indebtedness is incurred would have been less than 4.50 to 1.00 and (y) the Fixed Charge Coverage Ratio for Borrower’s most recently ended four full fiscal quarters for which internal consolidated financial statements are available immediately preceding the date on which such additional Senior Indebtedness is incurred would have been at least 2.00:1.00, in each case on a pro forma basis after giving effect to such Indebtedness and the ~~case~~ application of the proceeds thereof; (b) Borrower and its Restricted Subsidiaries ~~that are not Guarantors, preferred stock; provided that Holdings~~ may incur Permitted Subordinated Indebtedness ~~(including Acquired Indebtedness)~~ or issue ~~shares of~~ Disqualified ~~Stock,~~ Stock and any Restricted Subsidiary may ~~incur Indebtedness (including Acquired Indebtedness),~~ issue ~~shares of Disqualified Stock and issue shares of~~ preferred stock, ~~if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for Borrower’s most recently ended four full fiscal quarters for which internal consolidated financial statements are available immediately preceding the ~~Restricted Subsidiaries~~ date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would be have been at least ~~2.00~~ 2.00:1.00, determined on a pro forma basis after giving effect to ~~1.00; provided, further, that~~ such Indebtedness or the ~~amount of Indebtedness,~~ preferred stock or Disqualified Stock and ~~preferred stock~~ the application of the proceeds thereof; and (c) Holdings, Borrower and its Restricted Subsidiaries may incur Permitted Debt. For purposes of determining compliance with this Section 10.1, in the event that ~~may~~ any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt, or is entitled to be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: clause (a) ~~Indebtedness arising under the Credit Documents;~~ or (b) of this Section 10.1, Borrower will be permitted to classify such item of Indebtedness ~~represented by~~ on the date of its incurrence, and from time to time may reclassify, in any manner that complies with this Section 10.1 at such time. Indebtedness under the Senior Secured Credit Agreement and Subordinated Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date ~~listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding~~ shall be deemed to have been incurred on the Closing Date ~~listed~~ in reliance on ~~Schedule 10.1 (other than intercompany~~ the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest and dividends on any Indebtedness ~~owed by a Credit Party to another Credit Party); (d)~~ in the form of additional Indebtedness ~~(including Capital Lease Obligations)~~with the same terms, and the payment or accrual of dividends on Disqualified Stock ~~and~~ or preferred stock ~~incurred by Holdings or any Restricted Subsidiary, to finance~~ in the ~~purchase, lease, construction, installation or improvement~~ form of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion additional shares of the ~~obligations~~ same class of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock ~~and~~ or preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of ~~such~~ Indebtedness ~~not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings~~ or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this ~~clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this~~ Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii));10.1. (mB) ~~the incurrence~~ Neither Parent nor Holdings will create, incur, assume or ~~issuance by Holdings or~~ suffer to exist any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness except (1) ~~has a weighted average life~~ with respect to ~~maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness~~Parent, ~~Disqualified Stock or preferred stock being Refinanced,~~ Qualified PIK Securities and (2) to the ~~extent such Refinancing Indebtedness Refinances~~ guarantee obligations of Parent and Holdings of the Senior Unsecured Term Loans under the Senior Unsecured Term Loan Agreement and the Subordinated Notes under the Subordinated Note Indenture (provided that Holdings shall not guarantee the Subordinated Notes unless (i) ~~Indebtedness that is unsecured or secured by a Lien ranking junior~~ Holdings also has guaranteed the Obligations pursuant to the ~~Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively~~Guarantee, (ii) ~~Disqualified Stock or preferred stock,~~ such ~~Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively~~ guarantee of the Subordinated Notes is unsecured and subordinated to such guarantee of the Obligations on terms no less favorable to the Lenders than the subordination provisions of the Subordinated Notes and (iii) ~~Indebtedness subordinated to~~ such guarantee of the Subordinated Notes provides for the release and termination thereof, without action by any party, upon any release and termination of such guarantee of the Obligations). (C) Neither of Parent, ~~such Refinancing Indebtedness is subordinated to~~ Holdings nor the ~~Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness~~Borrower will, ~~Disqualified Stock or~~ nor will they permit any Subsidiary to, issue any preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other ~~financial institution of a check~~preferred equity interests, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunderother than, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of ~~a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor~~Parent, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Qualified PIK Securities.

Appears in 1 contract

Sources: Senior Unsecured Credit Agreement (Sealy Corp)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 235 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $450,000,000 and (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including, in each case, any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to ~~on-balance~~ on‑balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 205 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or ~~a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes -154-

Appears in 1 contract

Sources: First Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150235 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $450,000,000 and (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including, in each case, any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 130205 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted ~~Subsidiary~~ Subsidiary, providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ the Borrower’s Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 185290 million and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $150235 million and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or ~~Guarantor~~a Guarantor and (4) shall have an aggregate principal amount (or liquidation preference, as applicable) that does not exceed the aggregate principal amount (or liquidation preference, as applicable) of such Indebtedness, Disqualified Stock or preferred stock being refinanced (plus an amount equal to all accrued but unpaid interest, fees, premiums and expenses incurred in connection therewith); (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150235 million and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in clause (A) of the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (1) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 5.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time ~~outstanding,~~ outstanding not to exceed the greater of (x) $~~35,000,000~~ 85130 million and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Ba

Appears in 1 contract

Sources: First Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to to, any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur unsecured Indebtedness (including unsecured Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur unsecured Indebtedness (including unsecured Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving ~~effect thereto,~~ Pro Forma Effect thereto (i) the Fixed Charge Coverage Ratio ~~of Holdings and the Restricted Subsidiaries~~ would be ~~at least 2.00~~ no less than 3.00:1.00 and (ii) the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio would be no greater than the Consolidated Total Debt to Consolidated EBITDA Ratio that is 0.25:1.00 lower than the maximum Consolidated Total Debt to Consolidated EBITDA Ratio permitted under Section 10.7; provided, further, that the amount of unsecured Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ arising under the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)Existing Accounts Receivable Facility; (c) (i) Indebtedness (including any unused commitments) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitments) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to ~~on-balance~~ on‑balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 100,000,000 and (y) ~~2.50~~20.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or ~~self-insurance~~ self‑insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or ~~self-insurance~~self‑insurance; (f) Indebtedness that is not yet overdue arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) unsecured Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of the Borrower or a Restricted Subsidiary owing to Holdings or another Restricted ~~Subsidiary~~Subsidiary or the Borrower; provided that (x) if the Borrower or a another Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is unsecured and subordinated in right of payment to the Guarantee of such ~~Guarantor,~~ Guarantor or the ~~Loans~~Obligations of the Borrower, as the case may be, and (y) any Indebtedness of a Restricted Subsidiary that is not a Credit Party, owed to a Credit Party, shall be permitted as an Investment under Section 10.5; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of ~~self-insurance~~self‑insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up (together with any Refinancing Indebtedness in respect thereof) in an amount not to exceed 100% of the net cash proceeds received by Holdings since immediately after the Closing Date ~~from~~ from, without duplication, the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with ~~Sections 10.5(a)(iii)(2~~clauses (3)(B) and ~~10.5(a)(iii)(3~~(3)(C) of Section 10.5(a) to the extent such net cash proceeds ~~or cash~~ have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 250,000,000 and ~~3.75~~(y) 50.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii))incurrence; (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “Refinance”) any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i~~) and~~), this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively~~respectively (and, if secured by a Lien ranking junior to the Lien securing the Obligations, shall be subject to the Second Lien Intercreditor Agreement), (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ Refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor, (4) shall not exceed the principal amount of such Indebtedness being Refinanced plus the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses and accrued and unpaid interest incurred in connection with such Refinancing and (5) has a maturity no earlier than the maturity date of the Indebtedness, Disqualified Stock or preferred stock being Refinanced; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not ~~Guarantors~~ Guarantors, shall not ~~exceed~~ exceed, when taken together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors, the greater of $~~85,000,000~~ 150,000,000 and ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio and Consolidated Total Debt to Consolidated EBITDA Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation, and the Consolidated Total Debt to Consolidated EBITDA Ratio of Holdings and the Restricted Subsidiaries is equal to or less than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of credit, so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Restricted Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of permitted Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of permitted Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time outstanding, together with all dispositions not constituting Asset Sales pursuant to clause (e)(2) of the definition thereof and all amounts constituting Permitted Investments pursuant to clause (b) of the definition thereof, not to exceed the greater of (x) $~~35,000,000~~ 100,000,000 and ~~1.5~~(y) 20.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services and (ii) Indebtedness owed on a short term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Borrower and its Restricted Subsidiaries; (u) ~~Indebtedness consisting of~~ Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees ~~thereof,~~ thereof or their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes purchase

Appears in 1 contract

Sources: Credit Agreement (PRA Health Sciences, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Parent Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Parent Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not ~~Guarantors~~Guarantors or Borrowers, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Parent Borrower and/or any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Stock or Non-Guarantor Subsidiary Preferred Stock in an aggregate amount up to the Maximum Incremental Facilities Amount (any such obligations that are secured, “Secured Ratio Debt” and any such obligations that are not Indebtedness or not secured, “Unsecured Ratio Debt”, and ~~any Restricted Subsidiary may incur~~ collectively, “Ratio Debt”); provided that (i) the amount of Indebtedness (~~including~~ other than Acquired Indebtedness~~), issue shares of~~ ) and Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Non-Guarantor Subsidiary Preferred Stock ~~and preferred stock~~ that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of ~~(x)~~ $~~85,000,000~~ 67,000,000105,400,000 and ~~(y) 3.75~~35.050.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test ~~Period~~ Period; (ii) subject to the Inside Maturity Exceptions and other than in the case of Acquired Indebtedness, Ratio Debt shall not mature earlier than the Initial Term Loan Maturity Date or have a weighted average life to maturityWeighted Average Life to Maturity shorter than the remaining weighted life to maturity of the Initial Term Loans or theWeighted Average Life to Maturity of the then existing Amendment No. 35 Term Loans (in each case as in effect at the time of incurrence or establishment of the commitment thereof (A) excluding the effects of any amortization of such Ratio Debt in an amount no greater than 1.00% per annum) (in each case as in effect at the time of incurrence or establishment of the commitment thereofother obtaining thereof (subject to marginal increases resulting from the addition of one or more subsequent fungible tranches thereto) and (B) calculated ~~on a Pro Forma Basis~~without giving effect to prepayments of the Term Loans) ~~at any one time outstanding~~and (iii) if such Ratio Debt is Indebtedness secured by Collateral, the Intercreditor Agreement Requirement shall apply. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Mirion Technologies, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (l) (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, the Equity Rollover Contribution, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 40,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and ~~3.75~~(y) 30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided ~~that,~~ that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes fe

Appears in 1 contract

Sources: Joinder and Amendment Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock is issued would be have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been 1002368556v5 #88946885v8 incurred 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding~~. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~. (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (x) prior to the ~~Senior Notes~~ occurrence of the Trigger Date, Indebtedness (~~including~~ a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any ~~guarantee thereof~~other Credit Agreement, (c) pursuant to the New Notes, (d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), in a maximum principal amount for all such ~~notes~~ Indebtedness at any time outstanding, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed the greater of (A) $1,550.0 million and (B) the maximum aggregate principal amount (as of the date of incurrence of any ~~guarantee~~ such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 3.50 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) (y) on and after the occurrence of the Trigger Date, (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior Secured Notes, (d) constituting Rollover Indebtedness and (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), up to an aggregate principal ~~amount~~ amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (xA) $~~375,000,000 minus~~ 2,275.0 million and (yB) the maximum aggregate principal amount (as of the date of incurrence of any such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.00 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior ~~Notes redeemed pursuant to a Special Mandatory Redemption (as defined in~~ Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; 1002368556v5 #88946885v8 (ii) [Reserved]; (iii) the Existing Unsecured Notes ~~Indenture~~and other Existing Indebtedness (other than Indebtedness described in clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, assets) in an provided that the aggregate principal amount ~~or liquidation preference which~~that, when aggregated with the principal amount of all other ~~Indebtedness, Disqualified~~ of Indebtedness and/or Preferred Stock ~~and preferred stock~~ then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~iv), does to finance the acquisition of Capital Stock of any Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)Tangible Assets; (ev) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary 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~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to ~~reimbursement~~ reimbursement-type obligations regarding workers’ compensation claims~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (fvi) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnouts 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause (f)~~clause); (gvii) Indebtedness of ~~Holdings~~ the Borrower owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Borrower or any Restricted Subsidiary; ~~provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee;~~ provided, ~~further~~however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event ~~which~~ that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of any such Indebtedness (except to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an~~ constitute the incurrence of such Indebtedness ~~not permitted~~ by ~~this clause~~ the issuer thereof and (~~g); (h~~B) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower ~~or a Guarantor incurs~~ is the obligor on such Indebtedness (other than any Existing Indebtedness) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is expressly subordinated ~~in right of payment~~ to the ~~Guarantee~~ prior payment in full in cash of ~~such Guarantor, or~~ all obligations of the ~~Loans, as~~ Borrower with respect to the ~~case may be~~Notes; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h);#88946885v8 (iviii) shares of ~~preferred stock~~ Preferred Stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower or ~~another~~ a 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 ~~preferred stock~~ Preferred Stock (except to ~~Holdings~~ the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of ~~preferred stock not permitted by this clause (i)~~Preferred Stock; (jix) Hedging Obligations of the Borrower or any Restricted Subsidiary (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting (A) interest rate risk with respect to any Indebtedness that is permitted to be incurred by the terms of this Agreement, (B) exchange rate risk with respect to any currency exchange or (C) commodity price risk; (kx) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (ixi) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~in an aggregate principal amount~~ or ~~liquidation preference up to 100%~~ Preferred Stock of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation ~~preference~~preference which, ~~which~~ when aggregated with the principal amount and liquidation preference of all other ~~Indebtedness, Disqualified~~ Indebtedness and Preferred Stock ~~and preferred stock~~ then outstanding and incurred pursuant to this clause (~~l)(ii~~xi), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 250.0 million and ~~3.75~~17.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ (it being understood that any ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ incurred pursuant to this clause (~~l)(ii~~xi) shall cease to be deemed incurred or outstanding for purposes of this clause (~~l)(ii~~xi) but shall be deemed incurred for the purposes of the ~~first paragraph of this~~ Section ~~10.1~~ 8.1(a) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ under ~~the first paragraph of this~~ Section ~~10.1~~ 8.1(a) without reliance on this clause (~~l)(ii~~xi)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. ~~Holdings~~ The Borrowers will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrowers will not issue any shares of Disqualified ~~Stock~~ Equity Interests and will not permit any Restricted Subsidiary to issue any shares of Disqualified ~~Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ Equity Interests or preferred stock; provided that ~~Holdings~~ the Borrowers may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Equity Interests, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified ~~Stock~~ Equity Interests and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Lead Borrower and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified ~~Stock~~ Equity Interests and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not ~~Guarantors~~ Credit Parties shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 200,000,000 at any one time outstanding. The foregoing limitations will not apply to: (a) (x) Indebtedness ~~arising~~ incurred pursuant to the Term Facility by the Lead Borrower or any Restricted Subsidiary; provided that immediately after giving effect to any such incurrence, the then-outstanding aggregate principal amount of all Indebtedness incurred under this clause (x), plus the ~~Credit Documents~~aggregate principal amount of all Indebtedness incurred under clause (cc) below, does not exceed $2,700,000,000 plus the Maximum Incremental Facilities Amount (as defined in the Term Facility) and (y) Indebtedness incurred pursuant to this Agreement; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate ~~principal~~ amount not to exceed ~~(x)~~ $~~375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~1,300,000,000; (c~~) (i~~) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and the Existing Notes (~~ii) intercompany Indebtedness outstanding on~~ provided substantially all or all of the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed~~ Existing Notes are purchased by a Credit ~~Party to another Credit~~ Party, repurchased, redeemed or defeased within 90 days after the Closing Date); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified ~~Stock~~ Equity Interests and preferred stock incurred by ~~Holdings~~ any Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the ~~Capital~~ Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ any Borrower or any Restricted Subsidiary under or pursuant to ~~any~~ the “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 175,000,000 and (y) ~~2.50~~2.25% of Consolidated Total Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ any Borrower or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (f) Indebtedness arising from agreements of ~~Holdings~~ a Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Lead Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ a Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a ~~Guarantor~~ Credit Party is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; ~~provided, further,~~ provided further 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 Indebtedness (except to ~~the~~ a Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Del Monte Foods Co)

Limitation on Indebtedness. ~~Holdings~~ The Parent Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Parent Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not ~~Guarantors~~Guarantors or Borrowers, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Parent Borrower and/or any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Stock or Non-Guarantor Subsidiary Preferred Stock in an aggregate amount up to the Maximum Incremental Facilities Amount (any such obligations that are secured, “Secured Ratio Debt” and any such obligations that are not Indebtedness or not secured, “Unsecured Ratio Debt”, and ~~any Restricted Subsidiary may incur~~ collectively, “Ratio Debt”); provided that (i) the amount of Indebtedness (~~including~~ other than Acquired Indebtedness~~), issue shares of~~ ) and Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Non-Guarantor Subsidiary Preferred Stock ~~and preferred stock~~ that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $~~85,000,000~~ 67,000,000 and ~~3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test ~~Period~~ Period; (~~calculated on a Pro Forma Basis~~ii) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant subject to the ~~Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings~~ Inside Maturity Exceptions and ~~the Restricted Subsidiaries is equal to or greater~~ other than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of Acquired Indebtedness, Ratio Debt shall not mature earlier than the Initial Term Loan Maturity Date or have a ~~guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by~~ weighted average life to maturity shorter than the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not remaining weighted life to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes maturity of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause Initial Term Loans (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case ~~to finance~~ as in effect at the ~~purchase~~ time of incurrence or ~~redemption~~ establishment of ~~Equity Interests of Holdings or any direct or indirect parent company of Holdings to~~ the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancingcommitment thereof) and (yiii) if such Ratio Debt is Indebtedness ~~otherwise complies with~~ secured by Collateral, the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) Intercreditor Agreement Requirement shall apply. The foregoing limitations will not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes apply to:

Appears in 1 contract

Sources: Credit Agreement (Mirion Technologies, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 80,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate ~~principal~~ amount not to exceed ~~(x)~~ $~~375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~300,000,000; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 95,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (GoDaddy Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock is issued would be have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been 1002368556v5 #88946885v8 incurred 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding~~. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~. (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (x) prior to the ~~Senior Notes~~ occurrence of the Trigger Date, Indebtedness (~~including~~ a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any ~~guarantee thereof~~other Credit Agreement, (c) pursuant to the New Notes, (d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), in a maximum principal amount for all such ~~notes~~ Indebtedness at any time outstanding, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed the greater of (A) $1,550.0 million and (B) the maximum aggregate principal amount (as of the date of incurrence of any ~~guarantee~~ such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 3.50 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) (y) on and after the occurrence of the Trigger Date, (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior Secured Notes, (d) constituting Rollover Indebtedness and (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), up to an aggregate principal ~~amount~~ amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (xA) $~~375,000,000 minus~~ 2,275.0 million and (yB) the maximum aggregate principal amount (as of the date of incurrence of any such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.00 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior ~~Notes redeemed pursuant to a Special Mandatory Redemption (as defined in~~ Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; #88946885v8 (ii) [Reserved]; (iii) the Existing Unsecured Notes ~~Indenture~~and other Existing Indebtedness (other than Indebtedness described in clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such ~~assets and Indebtedness arising from~~ assets) in anprovided that the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which~~that, when aggregated with the principal amount of all ~~other Indebtedness, Disqualified~~ otherof Indebtedness and/or Preferred Stock ~~and preferred stock~~ then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~iv), ~~does~~ doesto finance the acquisition of Capital Stock of any Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)Tangible Assets; (ev) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary 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~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to ~~reimbursement~~ reimbursement-type obligations regarding workers’ compensation claims~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (fvi) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnouts 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause (f)~~clause); (gvii) Indebtedness of ~~Holdings~~ the Borrower owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Borrower or any Restricted Subsidiary; ~~provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee;~~ provided, ~~further~~however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event ~~which~~ that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of any such Indebtedness (except to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an~~ constitute the incurrence of such Indebtedness ~~not permitted~~ by ~~this clause~~ the issuer thereof and (~~g); (h~~B) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower ~~or a Guarantor incurs~~ is the obligor on such Indebtedness (other than any Existing Indebtedness) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is expressly subordinated ~~in right of payment~~ to the ~~Guarantee~~ prior payment in full in cash of ~~such Guarantor, or~~ all obligations of the ~~Loans, as~~ Borrower with respect to the ~~case may be~~Notes; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h);#88946885v8 (iviii) shares of ~~preferred stock~~ Preferred Stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower or ~~another~~ a 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 ~~preferred stock~~ Preferred Stock (except to ~~Holdings~~ the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of ~~preferred stock not permitted by this clause (i)~~Preferred Stock; (jix) Hedging Obligations of the Borrower or any Restricted Subsidiary (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting (A) interest rate risk with respect to any Indebtedness that is permitted to be incurred by the terms of this Agreement, (B) exchange rate risk with respect to any currency exchange or (C) commodity price risk; (kx) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (ixi) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~in an aggregate principal amount~~ or ~~liquidation preference up to 100%~~ Preferred Stock of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation ~~preference~~preference which, ~~which~~ when aggregated with the principal amount and liquidation preference of all other ~~Indebtedness, Disqualified~~ Indebtedness and Preferred Stock ~~and preferred stock~~ then outstanding and incurred pursuant to this clause (~~l)(ii~~xi), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 250.0 million and ~~3.75~~17.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ (it being understood that any ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ incurred pursuant to this clause (~~l)(ii~~xi) shall cease to be deemed incurred or outstanding for purposes of this clause (~~l)(ii~~xi) but shall be deemed incurred for the purposes of the ~~first paragraph of this~~ Section ~~10.1~~ 8.1(a) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ under ~~the first paragraph of this~~ Section ~~10.1~~ 8.1(a) without reliance on this clause (~~l)(ii~~xi)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 1.75:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 6.25 to 1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section~~ Sections 10.1(l)(ii) and 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 156.25 million and (y) ~~3.75~~50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facility, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $1,500,000,000, (xii) ~~$375,000,000 minus~~ Indebtedness that may be incurred pursuant to Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (yas in effect on the Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses), (iii) Indebtedness represented by the ABL Facility and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed the greater of ~~Senior Notes redeemed~~ (A) $350,000,000 and (B) the Borrowing Base as of the date of such incurrence and (iv) Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Section 2.14 of the ABL Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 137.5 million and (y) ~~2.50~~43.75% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ each Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (Bountiful Co)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,00080,000,000 and (y) ~~3.75~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (includingother than Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors, shall not exceed an aggregate principal amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $27,000,000107,000,000 and (y) 50.5% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; (c) (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ ClosingFourth Amendment Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ ClosingFourth Amendment Effective Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by ~~a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance~~ the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings Borrower to a Restricted Subsidiary~~; provided that any such Indebtedness owing to~~ , by a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary ~~of Indebtedness of Holdings~~to another Restricted Subsidiary; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings will~~ (a) The Company shall not, and ~~will~~ shall not cause or permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, ~~create~~Incur any Indebtedness, ~~incur~~including, ~~issue~~without limitation, ~~assume~~any Acquired Indebtedness; provided, ~~guarantee or otherwise become directly or indirectly liable~~however, ~~contingently or otherwise~~ that the foregoing will not prohibit (~~collectively~~i) the Company from Incurring Permitted Indebtedness and (ii) any Restricted Subsidiary from Incurring Indebtedness pursuant to clauses (vi), ~~“incur”~~ (vii), and ~~collectively~~(viii) of the definition of Permitted Indebtedness. (b) Notwithstanding the foregoing limitations, ~~an “incurrence”~~(A) ~~with respect to any~~ the Company may Incur Indebtedness (~~including~~ including, without limitation, Acquired Indebtedness) if (i) no Default or Event of Default shall have occurred and ~~Holdings will not issue any shares~~ be continuing on the date of ~~Disqualified Stock~~ the proposed Incurrence thereof or would result as a consequence of such proposed Incurrence; (ii) immediately before and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, immediately after giving effect ~~thereto~~to such proposed Incurrence, the Consolidated Fixed Charge Coverage Ratio of ~~Holdings and~~ the ~~Restricted Subsidiaries would be~~ Company is at least ~~2.00~~ equal to ~~1.00~~2.0 to 1.0. and (B) after January 1, 1999, the Company may issue additional Securities in exchange for the Class A Preferred Stock if (i) no Default or Event of Default shall have occurred and be continuing on the date of the proposed issuance thereof or would result as a consequence of such proposed issuance and (ii) immediately before and immediately after giving effect to such proposed issuance, the Consolidated Fixed Charge Coverage Ratio of the Company is at least equal to 2.25 to l.O.; provided, ~~further~~however, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (yI) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does additional Securities issued may not exceed ~~the greater of~~ $10,000,000, (~~x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis~~II) at the time of ~~incurrence; provided that Capitalized Lease Obligations incurred by Holdings or~~ issuance of any ~~Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback~~ additional Securities, the Company shall ~~not be subject~~ have delivered to the ~~foregoing limitation so long as~~ Trustee a certificate of an Independent Financial Advisor certifying the ~~proceeds~~ Consolidated Fixed Charge Coverage Ratio, (III) any such issuance of additional Securities shall be in a minimum principal amount of $1.0 million and (IV) no more than one such ~~Permitted Sale Leaseback are used~~ exchange may be effected in any fiscal quarter. (c) The Company shall not, directly or indirectly, in any event Incur any Indebtedness which by ~~Holdings~~ its terms (or by the terms of any agreement governing such ~~Restricted Subsidiary~~ Indebtedness) is subordinated to ~~permanently repay outstanding Term Loans or~~ any other Indebtedness ~~secured by a Lien on~~ of the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that Company unless such Indebtedness is ~~not reflected on~~ also by its terms (or by the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, that any subsequent issuance or transfer terms of any ~~Capital Stock or any other event which results in any~~ agreement governing such ~~Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except~~ Indebtedness) made expressly subordinate to the ~~Borrower or another Restricted Subsidiary) shall be deemed,~~ Securities to the same extent and in ~~each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if~~ the ~~Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor,~~ same manner as such Indebtedness is subordinated ~~in right of payment~~ pursuant to subordination provisions that are most favorable to the ~~Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer~~ holders of any ~~such~~ other Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Company.

Appears in 1 contract

Sources: Indenture (Toms Foods Inc)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~stock that is, ifin each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, secured by a Lien on the Collateral that is junior to the Lien securing the Obligations, or that is unsecured to the extent that (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a pari passu basis with the Liens on the Collateral securing the Obligations, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect ~~thereto~~to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 5.00:1.00, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a junior priority basis with the Liens on the Collateral securing the Obligations, the ~~Fixed Charge Coverage~~ Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would ~~be at least 2.00~~ not exceed 7.00:1.00 and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or is secured by assets that do not become Collateral, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 7.00:1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 9,900,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the Closing Date and listed on Schedule 10.1 to the Original Credit Agreement and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 ~~and (ii) intercompany Indebtedness outstanding on~~ to the ~~Closing Date listed on Schedule 10.1~~ Original Credit Agreement (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 11,550,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding ~~Term Loans or other~~ Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause; (h) Indebtedness of a Restricted Subsidiary owing to the Borrower or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount ~~or liquidation preference~~ (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary that is a Guarantor not otherwise permitted hereunder in an aggregate principal ~~amount or liquidation preference~~amount, which when aggregated with the principal amount ~~and liquidation preference~~ of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 9,900,000 and ~~3.75~~(y) 30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that ~~any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii)~~ such Indebtedness shall ~~cease to~~ be deemed ~~incurred or outstanding~~ a Restricted Payment for purposes of ~~this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this~~ compliance with Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)10.5); (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and ~~clauses (b) and~~ clause (c) ~~above, clause (l)(i) and,~~ above and this clause (m) ~~and clause (n) below~~ or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation[Reserved]; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~any direct or indirect parent thereof or the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 7,425,000 and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services and (ii) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Borrower and its Restricted Subsidiaries; (u) Indebtedness consisting of Indebtedness issued by ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of ~~Holdings~~ the Borrower or any direct or indirect parent company of ~~Holdings~~ the Borrower to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”[reserved]; (x) [reserved]; (y) [reserved]; (z) unsecured Indebtedness that represents accrued (or deferred) and unpaid management fees to the Sponsor; provided, that the payment of such management fees in respect of such Indebtedness is not otherwise prohibited under Section 10.5; (iaa) ~~Permitted Other Indebtedness; provided that either (a)~~ additional Indebtedness of the Borrower or any of its Restricted Subsidiaries in an aggregate principal amount ~~of all such Permitted Other Indebtedness issued or incurred pursuant~~ not to ~~this clause (i)(a) shall not~~ exceed the ~~Maximum Incremental Facilities~~ Available Amount ~~or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes~~ that is not o

Appears in 1 contract

Sources: Credit Agreement (OneStream, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 40,000,000 and (y) ~~3.75~~15.8% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $75,000,000 and (y) 29.7% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by ~~a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance~~ the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings Borrower to a Restricted Subsidiary~~; provided that any such Indebtedness owing to~~ , by a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary ~~of Indebtedness of Holdings~~to another Restricted Subsidiary; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Blue Coat, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Permitted Other Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Permitted Other Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect ~~thereto~~thereto on a Pro Forma Basis, the Borrower is in compliance with (a) the Maximum Incremental Ratio and (b) the Fixed Charge Coverage Ratio ~~of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00~~set forth in Section 10.7(b); provided, further, that the amount of Indebtedness (other than Assumed Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), in each case by Restricted Subsidiaries that are not ~~Guarantors~~ Guarantors, shall not exceed the greater of (x) $~~85,000,000~~ 15,000,000 and (y) ~~3.75~~35.0% of TTM Consolidated ~~Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ EBITDA at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented~~ incurred or issued by the ~~Senior Notes~~ Borrower (~~including any guarantee thereof~~such debt “Incremental Equivalent Debt”); provided that: (i) ~~and exchange notes issued in respect~~ immediately after giving effect to the incurrence of such ~~notes~~ Incremental Equivalent Debt, the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to the Maximum Incremental Ratio as of such date, (ii) such Incremental Equivalent Debt shall not be Guaranteed by any Person that is not a Guarantor and, if secured, shall not be secured by any assets other than the Collateral and shall be secured on a junior priority basis to the Lien securing the Obligations hereunder, (iii) if such Incremental Equivalent Debt is secured, then the Borrower, the Guarantors, the Administrative Agent and the representative and collateral trustee acting on behalf of the holders of such Incremental Equivalent Debt shall have executed and delivered to the Administrative Agent an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent, (iv) the final maturity date of any ~~guarantee thereof~~ Incremental Equivalent Debt shall be no earlier than the Initial Term A Loan Maturity Date and the weighted average life to maturity of any Incremental Equivalent Debt shall be no shorter than the remaining weighted average life to maturity of the Initial Term A Loans, (v) the terms of such Incremental Equivalent Debt shall not be more restrictive, taken as a whole, to the Credit Parties (as determined in ~~an aggregate principal amount not~~ good faith by the Borrower) than the terms applicable to ~~exceed~~ any facility under this Agreement at the time of incurrence of such Incremental Equivalent Debt unless (x) ~~$375,000,000 minus~~ this Agreement is amended so that such more restrictive terms are also applicable for the benefit of the Lenders under the then-existing facilities under this Agreement or (y) any such terms apply after the ~~aggregate principal amount~~ Latest Maturity Date at the time of ~~Senior Notes redeemed pursuant~~ incurrence of such Incremental Equivalent Debt, and (vi) no Event of Default shall exist before or after giving effect to ~~a Special Mandatory Redemption (as defined in~~ the ~~Senior Notes Indenture)~~incurrence of such Incremental Equivalent Debt; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 11,000,000 and (y) ~~2.50~~25.0% of TTM Consolidated ~~Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ EBITDA at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of the Borrower to Holdings or to a any Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to ~~the Borrower or~~ another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (European Wax Center, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 235,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~Second Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 50,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 60,000,000 and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and ~~3.75~~(y) 30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: First Lien Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 80,000,000 and (y) ~~3.75~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors, shall not exceed an aggregate principal amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $107,000,000 and (y) 50.5% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Fourth Amendment Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Fourth Amendment Effective Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by the Borrower to a ~~Credit Party~~ Restricted Subsidiary, by a Restricted Subsidiary to the Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred ~~pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred~~ or issued pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 80,000,000 and (y) ~~2.50~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the disposition constituting any part 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f))Permitted Reorganization; (g) Indebtedness of the Borrower owing, or Disqualified Stock of the Borrower issued, to Holdings to or a Restricted Subsidiary; provided that any ~~such~~ Indebtedness under this clause (g) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a ~~Guarantor is~~ Credit Party must be subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by the Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms prior to the Closing Distribution; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any ~~such~~ applicable Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to Holdings, the Borrower or another Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such ~~Indebtedness~~ Indebtedness, or issuance of such Disqualified Stock, as applicable, not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary ~~owing~~ owing, or Disqualified Stock or preferred Capital Stock of a Restricted Subsidiary issued, to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor~~, or the Loans, as the case may be~~; provided, further, that any subsequent transfer of any such ~~Indebtedness~~ Indebtedness, Disqualified Stock or preferred Capital Stock (except to ~~Holdings~~ Holdings, the Borrower or another Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such ~~Indebtedness~~ Indebtedness, or issuance of Disqualified Stock or preferred Capital Stock, as applicable, not permitted by this clause (h); (i) ~~shares~~ to the extent constituting Indebtedness, customer deposits and advance payments (including progress payments) received in the ordinary course of ~~preferred stock~~ business from customers for goods and services purchased in the ordinary course of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i)business; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)) and obligations in respect of Bank Products, in each case, both as defined under this Agreement and as defined under the ABL Credit Agreement; (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bankers’ acceptances, warehouse receipts, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to ~~100~~100.0% of the net cash proceeds received by ~~Holdings~~ the Borrower since ~~immediately after~~ the ~~Closing~~ Fourth Amendment Effective Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions or~~ Contributions, proceeds of Disqualified Stock or proceeds of sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 100,000,000 and ~~3.75~~(y) 46.75% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence or issuance (it being understood that any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued pursuant to this clause (l)(ii) shall cease to be deemed ~~incurred~~ incurred, issued or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred or issued for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred or issued such Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued as permitted under (i) the first paragraph of this Section ~~10.1 and clauses~~ 10.1, (bii) Sections 10.1(c), (d), (l)(i), (n), (w), (x), (y) and (~~c) above, clause (l)(i) and, this clause (m~~dd) and ~~clause~~ this Section 10.1(m) or (niii) ~~below or~~ any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock (the “Refinancing Indebtedness”) on or prior to its respective maturity, so long as the aggregate principal amount, accreted value or liquidation preference, as applicable, of such Refinancing Indebtedness shall equal no more than the aggregate outstanding principal amount, accreted value or liquidation preference of the refinanced Indebtedness, Disqualified Stock or preferred Capital Stock (plus the amount of any unused commitments thereunder), plus accrued interest, fees, defeasance costs and premium (including call and tender premiums), if any, under the refinanced Indebtedness, Disqualified Stock or preferred Capital Stock, plus underwriting discounts, fees, commissions and expenses (including original issue discount, upfront fees and similar items) in connection with the refinancing of such Indebtedness, Disqualified Stock or preferred Capital Stock and the incurrence or issuance of such Refinancing Indebtedness; provided that such Refinancing Indebtedness (other than such Refinancing Indebtedness incurred or issued in respect of Indebtedness under Section 10.1(d) or Section 10.1(dd)) (1) has a ~~weighted average life~~ Weighted Average Life to ~~maturity~~ Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining ~~weighted average life~~ Weighted Average Life to ~~maturity~~ Maturity of the Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (iI) Indebtedness that is ~~unsecured or~~ secured by a Lien ranking junior to the Liens securing ~~the~~ any First Lien Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing ~~the Obligations, respectively,~~ any First Lien Obligations or (iiII) Disqualified Stock or preferred ~~stock~~Capital Stock, such Refinancing Indebtedness must be consist of Disqualified Stock or preferred ~~stock~~Capital Stock, ~~respectively and (iii) Indebtedness subordinated to the Obligations~~respectively, ~~such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced~~ and (3) shall not include Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of the Borrower or a Guarantor; provided, further, that in the case of a refinancing of Permitted Other Indebtedness incurred pursuant to Section 10.1(x)(b) with other Refinancing Indebtedness (“Refinancing Permitted Other Indebtedness”), such Refinancing Permitted Other Indebtedness, if secured, may only be secured by a Lien ranking junior to the Lien securing the First Lien Obligations outstanding under this Agreement and in the case of Refinancing Indebtedness with respect to clauses (d), (n) (but only to the extent such Refinancing Indebtedness is incurred by non-Credit Parties) and (dd) of this Section 10.1, the incurrence of such Refinancing Indebtedness shall be without duplication of any amounts outstanding under any such clauses; (n) Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary ~~incurred~~ incurred, assumed or issued to finance an acquisition, merger, amalgamation or consolidation; provided that the outstanding principal amount of Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock that may be incurred or issued pursuant to the foregoing, together with any outstanding principal amounts incurred or issued under the first paragraph of this Section 10.1 (other than Acquired Indebtedness), in each case, by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (A) $~~85,000,000~~ 107,000,000 and ~~3.75~~(B) 50.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~ of incurrence or issuance, and (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or amalgamated or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided ~~that~~ that, after giving effect to any such ~~acquisition~~ acquisition, merger, amalgamation, consolidation or ~~merger~~ designation described in this clause (n), on a Pro Forma Basis, either: : (1A) ~~Holdings would be permitted to incur~~ the Interest Coverage Ratio as of the most recently ended Test Period is at least $2.00 to 1.00 ~~of additional Indebtedness pursuant to~~ or is not less than the ~~Fixed Charge~~ Interest Coverage Ratio ~~test set forth in the first paragraph~~ as of ~~this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than~~ immediately prior to such acquisition, ~~merger~~ merger, amalgamation, consolidation or ~~consolidation~~designation or (B) the Total Net Leverage Ratio as of the most recently ended Test Period is not greater than 5.50 to 1.00 or is not higher than the Total Net Leverage Ratio as of immediately prior to such acquisition, merger, amalgamation, consolidation or designation; provided that any cash proceeds of any new Indebtedness, Disqualified Stock or preferred Capital Stock then being incurred shall not be netted from the numerator in the Total Net Leverage Ratio, as applicable for purposes of calculating the Total Net Leverage Ratio, as applicable, under this clause (n) for purposes of determining whether such Indebtedness, Disqualified Stock or preferred Capital Stock can be incurred; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary~~ credit so long as ~~in the case~~ such letter of ~~a guarantee of Indebtedness of a Restricted Subsidiary that~~ credit is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not otherwise permitted to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness be incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums Section 10.1 or (ii) ~~take or pay~~ obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of ~~(i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment~~ letters of ~~Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing~~support, ~~refunding~~guarantees or similar obligations issued, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued made or incurred ~~pursuant to this clause (i)(a) shall not exceed~~ for the ~~Maximum Incremental Facilities Amount~~ benefit of the Borrower or ~~(b)~~ any Subsidiary of the ~~Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes~~ Borrower

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided ~~that~~ that, following the Additional Restrictions Period, Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted ~~Subsidiary~~ Subsidiarythe Borrower or any Guarantor may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 35,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding.Consolidated Total Debt to Consolidated EBITDA Ratio is equal to or less than 3.75:1.00. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the ~~Closing~~ Restatement Effective Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 45,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (~~l)(ii))~~l)(ii));Permitted Other Indebtedness and/or Permitted Convertible Indebtedness in an aggregate principal amount not to exceed $750,000,000; (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) following the Additional Restrictions Period, Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ Holdings, the Borrower or a Restricted ~~Subsidiary~~ SubsidiaryGuarantor incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and ~~3.75~~(y) 30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designationthe Consolidated Total Debt to Consolidated EBITDA Ratio is equal to or less than 3.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (~~r))~~r));[reserved]; (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of “Cash Management Services”; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes therefrom

Appears in 1 contract

Sources: Amendment No. 1 (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to incur any Indebtedness (including Acquired Indebtedness~~) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to~~ ), issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, issue any preferred stock; provided that ~~Holdings~~ the Borrower and its Restricted Subsidiaries may incur any of the following: (i) Indebtedness that is secured by Liens on the Collateral that rank pari passu with the Liens on the Collateral securing the First Lien Obligations, so long as after giving effect to the incurrence of such amount the Borrower would be in compliance on a Pro Forma Basis with respect to the last day of the most recently ended Test Period with a First Lien Leverage Ratio (~~including Acquired Indebtedness~~as defined in the First Lien Credit Agreement as in effect on the date hereof) of no greater than the greater of (x) 4.75 to 1.00 and (y) if such Indebtedness is incurred to finance a Permitted Acquisition or ~~issue shares~~ other permitted Investment (other than Specified Investments), the First Lien Leverage Ratio (as defined in the First Lien Credit Agreement as in effect on the date hereof) immediately prior such Permitted Acquisition or other permitted Investment (other than Specified Investments), as applicable, (ii) Indebtedness that is secured by Liens on the Collateral that rank junior to the Liens on the Collateral securing the First Lien Obligations, so long as after giving effect to the incurrence of such amount the Borrower would be in compliance on a Pro Forma Basis with respect to the last day of the most recently ended Test Period with a Total Secured Leverage Ratio of no greater than the greater of (x) 6.00 to 1.00 and (y) if such Indebtedness is incurred to finance a Permitted Acquisition or other permitted Investment (other than Specified Investments), the Total Secured Leverage Ratio immediately prior to such Permitted Acquisition or other permitted Investment (other than Specified Investments), as applicable, or (iii) any Indebtedness secured by assets that do not constitute Collateral, any unsecured Indebtedness or Disqualified ~~Stock~~Stock incurred or issued by the Borrower or any Restricted Subsidiary, and any preferred stock issued by any Restricted Subsidiary ~~may incur Indebtedness~~ that is not a Credit Party, as applicable, so long as after giving effect to the incurrence of such amount the Borrower would be in compliance on a Pro Forma Basis with respect to the last day of the most recently ended Test Period with either (~~including Acquired~~ A) a Total Leverage Ratio of no greater than the greater of (x) 6.00 to 1.00 and (y) if such Indebtedness), ~~issue shares of~~ Disqualified Stock ~~and issue shares of~~ or preferred stock, ifas applicable, ~~after giving effect thereto~~is incurred to finance a Permitted Acquisition or other permitted Investment (other than Specified Investments), the ~~Fixed Charge~~ Total Leverage Ratio immediately prior to such Permitted Acquisition or other permitted Investment (other than Specified Investments), as applicable, or (B) an Interest Coverage Ratio of ~~Holdings and~~ no less than the ~~Restricted Subsidiaries would be at least~~ lesser of (x) 2.00 to ~~1.00~~1.00 and (y) if such Indebtedness, Disqualified Stock or preferred stock, as applicable, is incurred to finance a Permitted Acquisition or other permitted Investment (other than Specified Investments), the Interest Coverage Ratio immediately prior to such Permitted Acquisition or other permitted Investment (other than Specified Investments), as applicable; provided, further, that (I) the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 105,000,000 and (y) ~~3.75~~60% of Consolidated ~~Total Assets for the most recently ended Test Period~~ EBITDA (calculated on a Pro Forma Basis) at any one time ~~outstanding~~outstanding and (II) to the extent applicable, any such Indebtedness incurred pursuant to the foregoing shall comply with the Additional Debt Requirements. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit ~~Documents~~Documents (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (b) Indebtedness ~~represented by~~ incurred under the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Credit Agreement and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed (xi) $~~375,000,000 minus~~ 935,000,000 plus (yii) amounts incurred pursuant to, and in compliance with, Section 2.14 of the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption~~ First Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~date hereof); (c) Indebtedness (iincluding any unused commitment) ~~Indebtedness~~ outstanding on the Closing ~~Date~~ Date; provided that any Indebtedness that is in excess of $12,000,000 individually shall only be permitted under this clause (c) to the extent such Indebtedness is listed on Schedule ~~10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party)~~10.1; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations and mortgage financings as Purchase Money Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) ), plant or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 63,000,000 and (y) ~~2.50~~36% of Consolidated ~~Total Assets for the most recently ended Test Period~~ EBITDA (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit and bank guarantees issued in the ordinary course of ~~business~~business or consistent with past practice, including letters of credit in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits (whether in respect of current or former employees) or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (HireRight GIS Group Holdings, LLC)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to to, any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur unsecured Indebtedness (including unsecured Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur unsecured Indebtedness (including unsecured Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving ~~effect thereto,~~ Pro Forma Effect thereto (i) the Fixed Charge Coverage Ratio ~~of Holdings and the Restricted Subsidiaries~~ would be ~~at least 2.00~~ no less than 3.00:1.00 and (ii) the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio would be no greater than the Consolidated Total Debt to Consolidated EBITDA Ratio that is 0.25:1.00 lower than the maximum Consolidated Total Debt to Consolidated EBITDA Ratio permitted under Section 10.7; provided, further, that the amount of unsecured Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ arising under the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)Notes; (c) (i) Indebtedness (including any unused commitments) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitments) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) ~~2.50~~20% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness that is not yet overdue arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) unsecured Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of the Borrower or a Restricted Subsidiary owing to Holdings or another Restricted ~~Subsidiary~~Subsidiary or the Borrower; provided that (x) if the Borrower or a another Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is unsecured and subordinated in right of payment to the Guarantee of such ~~Guarantor,~~ Guarantor or the ~~Loans~~Obligations of the Borrower, as the case may be, and (y) any Indebtedness of a Restricted Subsidiary that is not a Credit Party, owed to a Credit Party, shall be permitted as an Investment under Section 10.5; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up (together with any Refinancing Indebtedness in respect thereof) in an amount not to exceed 100% of the net cash proceeds received by Holdings since immediately after the Closing Date ~~from~~ from, without duplication, the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a3)(B) and (b3)(C) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes of

Appears in 1 contract

Sources: Credit Agreement (PRA Health Sciences, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Joinder Agreement and Amendment No. 6 (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ providedfurther that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 36,000,000 and (y) ~~3.75~~36.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 575,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~First Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 42,000,000 and (y) ~~2.50~~42.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, the Equity Rollover Contribution, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 48,000,000 and ~~3.75~~(y) 48.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, ~~respectively~~as applicable, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 36,000,000 and ~~3.75~~(y) 36.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~stock that is, ifin each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, secured by a Lien on the Collateral that is junior to the Lien securing the Obligations, or that is unsecured to the extent that (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations, either (A) the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect ~~thereto~~to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.50:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (I) not exceed 4.50:1.00 or (II) not exceed the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on a junior priority basis with the Liens on the Collateral securing the Obligations, either (A) either (I) the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or secured by assets that are not Collateral, either (A) either (I) the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis would not exceed 6.25:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 6.25:1.00 or (y) not exceed the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis, would be at least ~~2.00~~ 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to ~~1.00~~consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) ~~$85,000,000~~ $ 72,000,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 63,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount ~~or liquidation preference~~ (together with any Refinancing Indebtedness in respect thereof) up to ~~100~~200% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal ~~amount or liquidation preference~~amount, which when aggregated with the principal amount ~~and liquidation preference~~ of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 90,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that ~~any~~ such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5); provided that the amount of Indebtedness, Disqualified Stock or and preferred stock that may be incurred pursuant to this clause (l)(ii) ~~shall cease to be deemed~~ by Restricted Subsidiaries that are not Guarantors together with any amounts incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 ~~without reliance~~ by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $72,000,000 and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on ~~this clause (l)(ii))~~a Pro Forma Basis) at the time of such incurrence; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i~~) and~~), this clause (m) and clause (nv) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Applovin Corp)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided ~~that~~ that, Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the ~~Fixed Charge Coverage~~ Consolidated Total Debt to Consolidated EBITDA Ratio ~~of Holdings and~~ is equal to or less than 0.25:1.00 inside the ~~Restricted Subsidiaries would be at least 2.00 to 1.00~~then applicable financial covenant level set forth in Section 10.7(i); ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 35,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Second Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Second Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (l) (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted ~~Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof)~~ Convertible Indebtedness and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 45,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided ~~that~~ that, the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and ~~3.75~~(y) 30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either:in (1) ~~Holdings would be permitted~~ the Consolidated Total Debt to ~~incur at least $1.00 of additional Indebtedness pursuant~~ Consolidated EBITDA Ratio is equal to or less than 0.25:1.00 inside the ~~Fixed Charge Coverage Ratio test~~ then applicable financial covenant level set forth in ~~the first paragraph of this~~ Section ~~10.1~~ 10.7(i) or (2) the ~~Fixed Charge Coverage~~ Consolidated Total Debt to Consolidated EBITDA Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of “Cash Management Services”; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided ~~that~~that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses, and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; and (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i), when aggregated with the amount of Incremental Term Loans and New Revolving Commitments established shall not exceed the Maximum Incremental Facilities Amount and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes In

Appears in 1 contract

Sources: Second Joinder and Restatement Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 (~~as defined~~ together with any Refinancing Indebtedness in ~~the Senior Notes Indenture~~respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ providedfurther that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 36,000,000 and (y) ~~3.75~~36.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 575,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~First Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 42,000,000 and (y) ~~2.50~~42.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, the Equity Rollover Contribution, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 48,000,000 and ~~3.75~~(y) 48.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, ~~respectively~~as applicable, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 36,000,000 and ~~3.75~~(y) 36.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 18,000,000 and ~~1.5~~(y) 12.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes re

Appears in 1 contract

Sources: Second Lien Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such #895889271003585382v58 Preferred Stock is issued would be have been at least 2.00 to 1.00, 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 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding~~. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~. (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior ~~Notes~~ Secured Notes, (~~including any guarantee thereof~~d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of ~~such notes~~ Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any ~~guarantee thereof in~~ additional proceeds), up to an aggregate principal ~~amount~~ amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (xA) $~~375,000,000 minus~~ 2,275.0 million and (yB) the maximum aggregate principal amount (as of the date of incurrence of any such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.004.50 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior ~~Notes redeemed pursuant to a Special Mandatory Redemption (as defined in~~ Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; (ii) [Reserved]; (iii) the Existing Unsecured Notes ~~Indenture~~and other Existing Indebtedness (other than Indebtedness described in clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such ~~assets and Indebtedness arising from~~ assets) provided that the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount~~ of ~~all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ Indebtedness incurred pursuant to this clause ~~(d) and all Refinancing Indebtedness incurred~~ to ~~Refinance~~ finance the acquisition of Capital Stock of any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does~~ Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated ~~Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~Tangible Assets; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes #895889271003585382v58

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Issuer will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings~~ the Issuer will not issue any ~~shares of~~ Disqualified Stock and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ preferred stock; ~~provided~~ provided, however, that ~~Holdings~~ the Issuer may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) or issue ~~shares of~~ Disqualified ~~Stock,~~ Stock and ~~any~~ its wholly owned Restricted ~~Subsidiary~~ Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) or issue ~~shares of Disqualified Stock and issue shares of~~ preferred stock, ~~if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Issuer’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 or such Disqualified Stock or such preferred stock is issued, as the case may be, would be have been at least ~~2.00~~ 2.0 to ~~1.00~~1.0, 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, further, that the maximum aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred ~~pursuant to the foregoing, together with~~ by any ~~amounts incurred under Section 10.1(n)(x), by~~ Non- Guarantor Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this ~~clause (d)~~ paragraph and ~~all~~ any Permitted Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors thereof shall not exceed the greater of $~~85,000,000~~ 15.0 million and ~~3.75~~25% of Consolidated ~~Total Assets~~ EBITDA of the Issuer and its Restricted Subsidiaries for the most recently ended ~~Test Period~~ four fiscal quarters for which internal financial statements are available (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to ~~this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for~~ the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent provisions described in ~~clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness~~ this paragraph being herein referred to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of as “~~Permitted Other~~ Ratio Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes ).

Appears in 1 contract

Sources: Indenture (CPI Card Group Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 180 million and (y) ~~3.75~~48.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to ~~exceed (x) $375,000,000 minus (y)~~ exceed, in the aggregate ~~principal amount of Senior Notes redeemed~~ (together with any Refinancing Indebtedness in respect thereof), without duplication, $1,987,500,000 and (ii) Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 156 million and (y) ~~2.50~~42.00% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or ~~a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)5.2(a); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Second Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 235,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~Second Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 50,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: First Lien Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to incur any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the ~~Fixed Charge Coverage~~ Total Leverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries would be ~~at least 2.00~~ no greater than 6.25 to 1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 75,000,000 and (y) ~~3.75~~50% of Consolidated ~~Total Assets for the most recently ended Test Period~~ EBITDA (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (wc) Indebtedness (including any unused commitment) outstanding on the Closing Date; provided that any Indebtedness that is in ~~respect~~ excess of $10,000,000 individually shall only be permitted under this clause (ic) ~~Permitted Other Indebtedness~~ to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”listed on Schedule 10.1; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: First Lien Credit Agreement (Focus Financial Partners Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 (~~as defined~~ together with any Refinancing Indebtedness in ~~the Senior Notes Indenture~~respect thereof and all accrued interest, fees and expenses); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 54,000,000 and (y) ~~3.75~~36% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ First Lien Facilities, Permitted First Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 845,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the First Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~First Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 60,000,000 and (y) ~~2.50~~42% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (l) (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 72,000,000 and ~~3.75~~(y) 48% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking pari passu or junior to the Liens securing the Obligations, ~~respectively~~as applicable, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either:of (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 18,000,000 and ~~1.5~~(y) 12% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [~~reserved~~Reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided ~~that,~~ that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, ~~expenses~~ expenses, and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes otherw

Appears in 1 contract

Sources: Second Lien Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,000 and (y) ~~3.75~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $27,000,000 and (y) 50.5% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). Notwithstanding the foregoing or anything else to the contrary in this Section 10.1 (including the immediately succeeding paragraph), solely during the Limited Incurrence Period, the Borrower may only incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and the Restricted Subsidiaries may only incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred Capital Stock under the first paragraph of this Section 10.1, together with any amounts incurred (including Acquired Indebtedness) or issued under Sections 10.1(d), (l)(ii), (n) and (aa), in an aggregate principal amount at any time outstanding during such Limited Incurrence Period not to exceed $80,000,000. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by the Borrower to a ~~Credit Party~~ Restricted Subsidiary, by a Restricted Subsidiary to the Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred ~~pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred~~ or issued pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 20,000,000 and (y) ~~2.50~~37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the disposition constituting any part 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f))Permitted Reorganization; (g) Indebtedness of the Borrower owing, or Disqualified Stock of the Borrower issued, to Holdings to or a Restricted Subsidiary; provided that any ~~such~~ Indebtedness under this clause (g) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a ~~Guarantor is~~ Credit Party must be subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by the Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms prior to the Closing Distribution; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any ~~such~~ applicable Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to Holdings, the Borrower or another Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such ~~Indebtedness~~ Indebtedness, or issuance of such Disqualified Stock, as applicable, not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary ~~owing~~ owing, or Disqualified Stock or preferred Capital Stock of a Restricted Subsidiary issued, to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor~~, or the Loans, as the case may be~~; provided, further, that any subsequent transfer of any such ~~Indebtedness~~ Indebtedness, Disqualified Stock or preferred Capital Stock (except to ~~Holdings~~ Holdings, the Borrower or another Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such ~~Indebtedness~~ Indebtedness, or issuance of Disqualified Stock or preferred Capital Stock, as applicable, not permitted by this clause (h); (i) ~~shares~~ to the extent constituting Indebtedness, customer deposits and advance payments (including progress payments) received in the ordinary course of ~~preferred stock~~ business from customers for goods and services purchased in the ordinary course of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i)business; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)) and obligations in respect of Bank Products, in each case, both as defined under this Agreement and as defined under the ABL Credit Agreement; (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bankers’ acceptances, warehouse receipts, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions or~~ Contributions, proceeds of Disqualified Stock or proceeds of sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of ~~Holdings~~ Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 33,500,000 and ~~3.75~~(y) 62.75% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence or issuance (it being understood that any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued pursuant to this clause (l)(ii) shall cease to be deemed ~~incurred~~ incurred, issued or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred or issued for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred or issued such Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued as permitted under (i) the first paragraph of this Section ~~10.1 and clauses~~ 10.1, (bii) Sections 10.1(c), (d), (l)(i), (n), (w), (x), (y) and (~~c) above, clause (l)(i) and, this clause (m~~dd) and ~~clause~~ this Section 10.1(m) or (niii) ~~below or~~ any Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock incurred or issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock (the “Refinancing Indebtedness”) on or prior to its respective maturity, so long as the aggregate principal amount, accreted value or liquidation preference, as applicable, of such Refinancing Indebtedness shall equal no more than the aggregate outstanding principal amount, accreted value or liquidation preference of the refinanced Indebtedness, Disqualified Stock or preferred Capital Stock (plus the amount of any unused commitments thereunder), plus accrued interest, fees, defeasance costs and premium (including call and tender premiums), if any, under the refinanced Indebtedness, Disqualified Stock or preferred Capital Stock, plus underwriting discounts, fees, commissions and expenses (including original issue discount, upfront fees and similar items) in connection with the refinancing of such Indebtedness, Disqualified Stock or preferred Capital Stock and the incurrence or issuance of such Refinancing Indebtedness; provided that such Refinancing Indebtedness (other than such Refinancing Indebtedness incurred or issued in respect of Indebtedness under Section 10.1(d) or Section 10.1(dd)) (1) has a ~~weighted average life~~ Weighted Average Life to ~~maturity~~ Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining ~~weighted average life~~ Weighted Average Life to ~~maturity~~ Maturity of the Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (iI) Indebtedness that is ~~unsecured or~~ secured by a Lien ranking junior to the Liens securing ~~the~~ any First Lien Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing ~~the Obligations, respectively,~~ any First Lien Obligations or (iiII) Disqualified Stock or preferred ~~stock~~Capital Stock, such Refinancing Indebtedness must be consist of Disqualified Stock or preferred ~~stock~~Capital Stock, ~~respectively and (iii) Indebtedness subordinated to the Obligations~~respectively, ~~such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced~~ and (3) shall not include Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of the Borrower or a Guarantor; provided, further, that in the case of a refinancing of Permitted Other Indebtedness incurred pursuant to Section 10.1(x)(b) with other Refinancing Indebtedness (“Refinancing Permitted Other Indebtedness”), such Refinancing Permitted Other Indebtedness, if secured, may only be secured by a Lien ranking junior to the Lien securing the First Lien Obligations outstanding under this Agreement and in the case of Refinancing Indebtedness with respect to clauses (d), (n) (but only to the extent such Refinancing Indebtedness is incurred by non-Credit Parties) and (dd) of this Section 10.1, the incurrence of such Refinancing Indebtedness shall be without duplication of any amounts outstanding under any such clauses; (n) Indebtedness, Disqualified Stock or preferred ~~stock~~ Capital Stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary ~~incurred~~ incurred, assumed or issued to finance an acquisition, merger, amalgamation or consolidation; provided that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred ~~stock~~ Capital Stock that may be incurred or issued pursuant to the foregoing, together with any amounts incurred or issued under the first paragraph of this Section ~~10.1~~ 10.1, in each case, by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (A) $~~85,000,000~~ 20,000,000 and ~~3.75~~(B) 37.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding or~~ outstanding, and (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or amalgamated or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided ~~that~~ that, after giving effect to any such ~~acquisition~~ acquisition, merger, amalgamation, consolidation or ~~merger~~ designation described in this clause (n), on a Pro Forma Basis, either: : (1A) ~~Holdings would be permitted to incur~~ the Interest Coverage Ratio as of the most recently ended Test Period is at least $2.00 to 1.00 ~~of additional Indebtedness pursuant to~~ or is not less than the ~~Fixed Charge~~ Interest Coverage Ratio ~~test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than~~ for such Test Period immediately prior to such acquisition, ~~merger~~ merger, amalgamation, consolidation or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee designation or (2B) ~~any guarantee by a Restricted Subsidiary~~ the Total Net Leverage Ratio as of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not ~~increased above~~ greater than 5.50 to 1.00 or is not higher than the ~~principal amount thereof outstanding~~ Total Net Leverage Ratio for such Test Period immediately prior to such ~~refinancing~~acquisition, ~~refunding~~merger, ~~renewal~~ amalgamation, consolidation or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtednessdesignation; provided that ~~either (a)~~ any cash proceeds of any new Indebtedness, Disqualified Stock or preferred Capital Stock then being incurred shall not be netted from the ~~aggregate principal amount~~ numerator in the Total Net Leverage Ratio, as applicable for purposes of ~~all such Permitted Other Indebtedness issued or incurred pursuant to~~ calculating the Total Net Leverage Ratio, as applicable, under this clause (~~i)(a~~n) ~~shall not exceed the Maximum Incremental Facilities Amount~~ for purposes of determining whether such Indebtedness, Disqualified Stock or ~~(b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes~~ preferred

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Issuer will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries (other than the Existing Digital Assets Subsidiaries) to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings~~ the Issuer will not issue any ~~shares of~~ Disqualified Stock and will not permit any of its Restricted Subsidiaries (other than an Existing Digital Assets Subsidiary that is not the Existing Digital Assets Subsidiary Holdco) to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings~~ Issuer may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) or issue ~~shares of~~ Disqualified ~~Stock,~~ Stock and ~~any~~ its Restricted ~~Subsidiary~~ Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness)~~Debt) or issue Preferred Stock, ~~issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Issuer’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 or such Disqualified Stock or such Preferred Stock is issued, as the case may be, would be have been at least ~~2.00~~ 2.0 to ~~1.00~~1.0 (or solely with respect to Indebtedness that is convertible into, or exchangeable for, Capital Stock, at least 1.0 to 1.0), determined on a pro forma basis (including a pro forma application of the net proceeds thereof), 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,~~ provided further that (i) the maximum aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred by any Non-Guarantor Restricted Subsidiaries (other than any Existing Digital Assets Subsidiary) pursuant to ~~the foregoing, together with~~ this paragraph and any ~~amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors~~ Permitted Refinancing Indebtedness in respect thereof shall not exceed the greater of (x) $~~85,000,000~~ 25.0 million and (y) ~~3.75~~20% of Trailing Consolidated ~~Total Assets for~~ EBITDA and (ii) any Indebtedness that is convertible into, or exchangeable for, Capital Stock (“FCCR Convertible Indebtedness”) shall either (A) have a final maturity date later than the ~~most recently ended Test Period~~ final maturity date of the Notes or (~~calculated~~ B) to the extent such Indebtedness has a final maturity date earlier than the final maturity date of the Notes, the Notes will mature on ~~a Pro Forma Basis~~such date that is 91 days prior to such earlier maturity date unless on such date (i) at the Issuer has Liquidity in excess of 130% of the amount required to pay in full in cash the then outstanding aggregate principal amount of and accrued interest on such Indebtedness or (ii) less than $100,000,000 of the aggregate principal amount of such Indebtedness remain outstanding 91 days prior to the final maturity date of such Indebtedness (any ~~one time outstanding. The foregoing limitations will not apply to: (a)~~ Indebtedness ~~arising under~~ incurred pursuant to the ~~Credit Documents;~~provisions described in this paragraph being herein referred to as “Ratio Indebtedness”). (b) Section 3.2(a) will not prohibit the incurrence of any of the following items of Indebtedness ~~represented~~ (collectively, “Permitted Debt”): (1) the incurrence by the ~~Senior Notes~~ Issuer or any of its Restricted Subsidiaries of Indebtedness (including any ~~guarantee thereof~~ABL Indebtedness) ~~and exchange notes issued in respect~~ or letters of ~~such notes and any guarantee thereof~~ 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 potential liability of the Issuer or any of its Restricted Subsidiaries thereunder) not to exceed the greater of (x) $~~375,000,000 minus~~ 50.0 million and (y) ~~the aggregate principal amount~~ 40% of ~~Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ Trailing Consolidated EBITDA provided, however, that any such Indebtedness or letters of credit under Credit Facilities will be used in the ~~Senior Notes Indenture)~~ordinary course of business of the Existing Software & Services Business and will not be used to acquire Digital Assets; (c2) ~~(i) Indebtedness outstanding on~~ the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on~~ incurrence by the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party)~~Issuer or any of its Restricted Subsidiaries of the Existing Indebtedness; (d3) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness ~~(including~~ represented by Capital Lease Obligations), ~~Disqualified Stock~~ mortgage financings, industrial revenue bonds, economic development loans and ~~preferred stock~~ purchase money obligations, in each case, incurred ~~by Holdings~~ for the purpose of financing (whether prior to or within 270 days after) all or any ~~Restricted Subsidiary~~part of the purchase price or cost of design, ~~to finance the purchase, lease~~development, construction, installation or improvement of ~~property (real or personal)~~ property, plant or equipment ~~that is~~ or other assets used or useful in ~~a Similar Business,~~ the business of the Issuer or any of its Restricted Subsidiaries (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and whether such Indebtedness ~~arising from~~ is owed to the ~~conversion of the obligations of Holdings~~ seller or ~~any Restricted Subsidiary under~~ Person carrying out such construction or ~~pursuant~~ improvement or to any ~~“synthetic lease” transactions to on-balance sheet Indebtedness of Holdings~~ third party) (including any reasonably related fees or expenses incurred in connection with such ~~Restricted Subsidiary~~purchase, ~~in an~~ design, construction, installation or improvement); provided that the aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or ~~liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ discharge any Indebtedness incurred pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~3), ~~does~~ shall not exceed the greater of (x) $~~55,000,000~~ 20.0 million and (y) ~~2.50~~15% of Trailing Consolidated ~~Total Assets for~~ EBITDA; (4) the ~~most recently ended Test Period (calculated on a Pro Forma Basis) at~~ incurrence by the ~~time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings~~ Issuer or any of its Restricted ~~Subsidiary pursuant to this clause (d)~~ Subsidiaries of Permitted Refinancing Indebtedness in ~~connection with a Permitted Sale Leaseback shall not be subject to~~ exchange for, or the ~~foregoing limitation so long as the~~ net proceeds of ~~such Permitted Sale Leaseback~~ which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by ~~Holdings~~ this Indenture to be incurred under Section 3.2(a) or ~~such Restricted Subsidiary to permanently repay outstanding Term Loans~~ clauses (2), (4), (5), (12), (14), (15), (17) or ~~other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback~~ (~~excluding any Lien ranking junior to the Lien securing the Obligations~~34) of this Section 3.2(b); (e5) the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries; provided, however, that: (a) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such Indebtedness must be subordinated (to the extent permitted by law) to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Issuer, or the Guarantee, in the case of a Subsidiary Guarantor (for the avoidance of doubt, any such Indebtedness shall be deemed to be expressly subordinated in right of payment to the Obligations unless the terms of such Indebtedness expressly provide otherwise); (b) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuer or any of its Restricted Subsidiaries; and (c) any sale or other transfer of any such Indebtedness to a Person that is not the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); (6) the issuance by any of the Issuer’s Restricted Subsidiaries to the Issuer 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 Issuer or a Restricted Subsidiary of the Issuer; and (b) any sale or other transfer of any such Preferred Stock to a Person that is not the Issuer or a Restricted Subsidiary of the Issuer, 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 (6); (7) the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by the Issuer; (8) the guarantee (a) by the Issuer or any of the Guarantors of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer that was permitted to be incurred by another provision of this Section 3.2; 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 (b) by any Non-Guarantor Restricted Subsidiary of Indebtedness of another Non-Guarantor Restricted Subsidiary (other than any Existing Digital Assets Subsidiary) that is permitted to be incurred by another provision of this Section 3.2; (9) Indebtedness incurred by ~~Holdings~~ the Issuer or any of its Restricted ~~Subsidiary~~ 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, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance~~ claims or self-~~insurance~~ insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance; (10) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims~~, performance or surety bonds~~, health, disability or and other types of employee ~~benefits or~~ benefits, social security benefits, unemployment and other self-insurance obligations, vehicle, property, casualty or liability insurance or ~~self-insurance~~other similar bonds, the financing of insurance premiums in the ordinary course of business, bankers’ acceptances, performance, surety, judgment, appeal, bid and performance bonds, trade contracts and leases, cash management obligations and netting, overdraft protection and other similar facilities or arrangements and completion guarantees in the ordinary course of business; (f11) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds, so long as such Indebtedness is covered within 10 Business Days of notification to the Issuer or any of its Restricted Subsidiaries of its incurrence and (b) Cash Management Obligations; (12) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness arising from agreements of ~~Holdings~~ the Issuer or a any of its Restricted ~~Subsidiary~~ Subsidiaries providing for indemnification, adjustment of purchase price, ~~earnout~~ working capital adjustments, holdback, earn-outs or similar ~~obligations~~obligations of the Issuer or any of its Restricted Subsidiaries pursuant to such agreements, in each case, incurred ~~or assumed~~ in connection with the acquisition or disposition of any Restricted Subsidiary, business, ~~assets~~ property or asset; (13) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness to the extent the net proceeds thereof are promptly deposited in trust to defease the Notes (either the legal defeasance option or covenant defeasance option) or to satisfy and discharge this Indenture, in each case in accordance with the terms of this Indenture; (14) Indebtedness that constitutes Acquired Debt (other than Indebtedness incurred in contemplation of the transaction or series of related transactions pursuant to which the relevant Person became a Restricted Subsidiary or was otherwise acquired by 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g15) Indebtedness of ~~Holdings~~ the Issuer or any Guarantor incurred to finance an acquisition, merger, consolidation or amalgamation (including designating an Unrestricted Subsidiary as a Restricted Subsidiary~~; provided that~~ ), including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any ~~such~~ Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary15); provided that on the date of such acquisition, merger, consolidation or amalgamation after giving pro forma effect ~~to any such acquisition or merger described in this clause~~ thereto as if the same had occurred at the beginning of the applicable four-quarter period, the Issuer would either (~~n), either: (1~~A) ~~Holdings would~~ be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in ~~the first paragraph of this~~ Section ~~10.1~~ 3.2(a) or (2B) have a Fixed Charge Coverage Ratio of not less than the Fixed Charge Coverage Ratio of ~~Holdings and~~ the ~~Restricted Subsidiaries is equal to or greater than~~ Issuer immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~amalgamation; (o16) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness ~~arising from the honoring by~~ owed on a ~~bank or~~ short-term basis of not longer than 30 days to banks and other financial ~~institution of a check, draft or similar instrument drawn against insufficient funds~~ institutions incurred in the ordinary course of ~~business~~business with such banks or financial institutions in connection with ordinary banking arrangements to manage cash balances of the Issuer or any of its Restricted Subsidiaries; (p17) the incurrence by the Issuer and the Guarantors of Indebtedness ~~of Holdings or~~ represented by the Notes (not including any ~~Restricted Subsidiary supported by a letter of credit~~ Additional Notes) issued ~~pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess~~ on the Issue Date and the related Guarantees of the ~~stated amount of such letter of credit~~Notes; (118) ~~any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in~~ the ~~case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly~~ incurrence by the ~~Restricted Subsidiary providing such guarantee~~ Issuer or ~~(2)~~ any ~~guarantee by a Restricted Subsidiary~~ of ~~Indebtedness of Holdings; (r) Indebtedness of~~ its Restricted Subsidiaries ~~that are not Guarantors~~ of additional Indebtedness, Disqualified Stock or Preferred Stock in an aggregate principal amount ~~not to exceed~~(or accreted value, ~~in the aggregate~~ as applicable) at any ~~one~~ time outstanding, ~~the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that~~ including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (r18), not to exceed the greater of (x) ~~shall cease~~ $30.0 million and (y) 25.0% of Trailing Consolidated EBITDA; (19) [Reserved]; (20) Indebtedness consisting of obligations to ~~be deemed incurred~~ make payments to current or ~~outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes~~ former officers, directors, managers, consultants and employees of the ~~first paragraph~~ Issuer or any of ~~this covenant from and after~~ its Subsidiaries, their respective estates, spouses or former spouses with respect to the ~~first date on which~~ cancellation, purchase or redemption of Equity Interests of the Issuer or any of its Subsidiaries to the extent such ~~Restricted Subsidiary could have incurred such Indebtedness~~ cancellation, purchase or redemption is permitted under ~~the first paragraph of this covenant without reliance on this clause (r)~~Section 3.3(b)(5); (s21) Indebtedness of ~~Holdings~~ the Issuer or any of its Restricted Subsidiaries consisting of (ia) the financing of insurance premiums with the providers of such insurance or their affiliates, (iib) ~~take or~~ take-or-pay obligations contained in supply ~~arrangements~~ agreements, in each case, ~~incurred~~ in the ordinary course of ~~business;~~ business or consistent with past practice, (tc) ~~Indebtedness of Holdings~~ deferred compensation or ~~any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect~~ equity-based compensation to ~~any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future~~ current or former officers, directors, ~~managers and~~ consultants, advisors or employees thereof~~, their respective estates, spouses or former spouses~~, in each case ~~to finance~~ in the ~~purchase~~ ordinary course of business, (d) customer deposits and advance payments received in the ordinary course of business or ~~redemption~~ consistent with past practice from customers for goods or services purchased in the ordinary course of ~~Equity Interests of Holdings~~ business or ~~any direct~~ consistent with past practice and (e) taxes, assessments or ~~indirect parent company of Holdings~~ governmental charges to the extent ~~described~~ such taxes are being contested in ~~clause (4) of Section 10.5(b)~~good faith by appropriate proceedings and for which adequate reserves have been set aside in accordance with GAAP; (v22) ~~[reserved]~~Indebtedness in the form of (a) guarantees of loans and advances to officers, directors, consultants, managers and employees, in an aggregate amount not to exceed $7.0 million at any one time outstanding and (b) reimbursements owed to officers, directors, managers, consultants and employees of the Issuer or any of its Restricted Subsidiaries for business expenses in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries; (w23) the incurrence by the Issuer or any of its Wholly Owned Restricted Subsidiaries of Indebtedness equal to 100.0% of the net cash proceeds received by the Issuer since the Issue Date from the issuance or sale of Capital Stock of the Issuer or cash contributed to the capital of the Issuer (in each case, other than proceeds of Disqualified Stock or sales of Capital Stock to the Issuer or any of its Subsidiaries); provided, however, that (x) any such net cash proceeds that are so received or contributed shall not increase the amount available for making Restricted Payments to the extent the Issuer and its Restricted Subsidiaries incur Indebtedness in reliance thereon and (y) any net cash proceeds that are so received or contributed shall be excluded for purposes of incurring Indebtedness pursuant to this clause to the extent such net cash proceeds or cash have been applied to make Restricted Payments; (24) obligations in respect of (i) ~~Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment~~ statutory obligations, bids, leases, governmental contracts, trade contracts, performance, surety, stay, customs, appeal, performance and/or return of ~~Term Loans in the manner set forth in Section 5.2(a)(i);~~ money bonds, completion guarantees and ~~(ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is~~ similar obligations not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with ~~such refinancing)~~ money borrowed, in each case, provided in the ordinary course of business or consistent with past practice, including those incurred to secure health, safety and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes environmental obligation

Appears in 1 contract

Sources: Indenture (MICROSTRATEGY Inc)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any other Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any other Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ each of the Borrower and the Restricted Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified ~~Stock~~Stock or, ~~and any~~ in the case of Restricted ~~Subsidiary~~ Subsidiaries, may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred stock, that is, in each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the First Lien Obligations (and junior to the Liens on the ABL Priority Collateral securing the Obligations), secured by a Lien on the Collateral that is junior to the Lien securing the First Lien Obligations (and junior to the Liens on the ABL Priority Collateral securing the Obligations), or unsecured or secured by a Lien on assets that do not become Collateral, if, after giving effect thereto, (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a pari passu basis with the Liens on the Collateral securing the First Lien Obligations (and junior to the Liens on the ABL Priority Collateral securing the Obligations), either (A) the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the First Lien Obligations (and junior to the Liens on ABL Priority Collateral security the Obligations)), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 3.50:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the First Lien Obligations (and junior to the Liens on ABL Priority Collateral security the Obligations)), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (I) not exceed 3.50:1.00 or (II) not exceed the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a junior priority basis with the Liens on the Collateral securing the First Lien Obligations (and junior to the Liens on the ABL Priority Collateral securing the Obligations), either (A) the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.25:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 4.25:1.00 or (y) not exceed the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or is secured by assets that do not become Collateral, either (A) either (I) the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured or is secured by assets that do not become Collateral), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.75:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 4.75:1.00 or (y) not exceed the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured or is secured by assets that do not become Collateral), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis, would be at least ~~2.00~~ 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to ~~1.00~~consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries, after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall be (x) greater than or equal to 2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not ~~Guarantors~~ Credit Parties shall not exceed the greater of (x) $~~85,000,000~~ 91,250,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness ~~represented by~~ under the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Term Loan Credit Agreement and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 502,436,230.19 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Section 2.14 of the Term Loan Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party or Restricted Subsidiary to another Credit ~~Party~~Party or Restricted Subsidiary); provided that any such Indebtedness owing to a Subsidiary that is not a Credit Party shall be subordinated in right of payment to the Obligations; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 80,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause~~ clause; (h)) Indebtedness of a Restricted Subsidiary owing to the Borrower or another Restricted Subsidiary; provided that if a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor, such Indebtedness is subordinated in right of payment to the guarantee of such Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings, the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount ~~or liquidation preference~~ (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) ~~and~~ and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal ~~amount or liquidation preference~~amount, which when aggregated with the principal amount ~~and liquidation preference~~ of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 114,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisitionincurrence; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to ~~the foregoing,~~ this clause (l)(ii) by Restricted Subsidiaries that are not Guarantors together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 91,250,000 and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~ of such incurrence; (m) the incurrence or ~~(y) Persons that are acquired~~ issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on preferred stock which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes ser

Appears in 1 contract

Sources: Abl Credit Agreement (Claire's Holdings LLC)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 (~~as defined~~ together with any Refinancing Indebtedness in ~~the Senior Notes Indenture~~respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 105,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)5.2(a); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Issuer will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings~~ the Issuer will not issue any ~~shares of~~ Disqualified Stock and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ preferred stock; ~~provided~~ provided, however, that ~~Holdings~~ the Issuer may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) or issue ~~shares of~~ Disqualified ~~Stock,~~ Stock and ~~any~~ its Restricted ~~Subsidiary~~ Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) or issue ~~shares of Disqualified Stock and issue shares of~~ preferred stock, ~~if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Issuer’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 or such Disqualified Stock or such preferred stock is issued, as the case may be, would be have been at least ~~2.00~~ 2.0 to ~~1.00~~1.0, 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, further, that the maximum aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred by any Non- Guarantor Restricted Subsidiaries pursuant to ~~the foregoing, together with~~ this paragraph and any ~~amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors~~ Permitted Refinancing Indebtedness in respect thereof shall not ~~exceed~~ exceed, at the time of incurrence, the greater of ~~(x)~~ $~~85,000,000~~ 50.0 million and ~~(y) 3.75~~20% of Consolidated ~~Total Assets~~ EBITDA of the Issuer and its Restricted Subsidiaries for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets four fiscal quarters for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to which internal financial statements ~~and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause~~ are available (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to ~~this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for~~ the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent provisions described in ~~clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness~~ this paragraph being herein referred to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of as “~~Permitted Other~~ Ratio Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes ).

Appears in 1 contract

Sources: Indenture (Moneygram International Inc)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 35,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the ~~Closing~~ Restatement Effective Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 45,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and ~~3.75~~(y) 30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 15,000,000 and ~~1.5~~(y) 10.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (t) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of “Cash Management Services”; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]~~to the extent constituting Indebtedness, obligations pursuant to the Wal-Mart Agreements; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided ~~that,~~ that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes o

Appears in 1 contract

Sources: Joinder and Amendment and Restatement Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ Holdings, the Borrower and their Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio is equal to or less than 6.50:1.00 or the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 160,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (i) Indebtedness represented by the Senior ~~Notes~~ Secured Credit Agreement (including any guarantee thereof) and ~~exchange notes issued in respect of such notes and~~ any guarantee thereof in an aggregate ~~principal~~ amount not to exceed $2,697,500,000, (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption~~ any Incremental Loans (as defined in the Senior ~~Notes Indenture~~Secured Credit Agreement) or commitments (including any guarantee thereof) with respect thereto permitted under the Senior Secured Credit Agreement as of the date hereof and (iii) any refinancing of the Indebtedness referenced in the foregoing clauses (i) and (ii); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 185,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 215,000,000 and ~~3.75~~(y) 40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced,~~ refinanced; (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is ~~unsecured or secured by a Lien ranking junior to the Liens securing the Obligations~~unsecured, such Refinancing Indebtedness is ~~unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively~~unsecured, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (i) $~~85,000,000~~ 185,000,000 and ~~3.75~~(ii) 35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: : (1i)(A) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2B) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) either the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (A) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such acquisition, merger, consolidation or designation or (B) less than or equal to 6.50:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 120,000,000 and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of “Cash Management Services” and (ii) Indebtedness owed on a short term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Company and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Company and its Restricted Subsidiaries; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes t

Appears in 1 contract

Sources: Bridge Credit Agreement (GoDaddy Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, suffer to exist, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “~~incur~~Incur” and collectively, an “~~incurrence~~Incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock~~; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock~~, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply toother than: (a) Indebtedness arising under the Credit Documents; (b) ~~Indebtedness represented by~~ the 2022 Convertible Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)Notes; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock ~~incurred~~ Incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, ~~whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion~~ Incurred within 270 days of the ~~obligations~~ purchase, lease, construction, installation, maintenance, replacement or improvement of ~~Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or~~ such ~~Restricted Subsidiary~~property, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and ~~incurred~~ Incurred pursuant to this clause (d) and all Refinancing Indebtedness ~~incurred~~ Incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock ~~incurred~~ Incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 25,000,000 and (y) ~~2.50~~2.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~Incurrence; provided that Capitalized Lease Obligations ~~incurred~~ Incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness ~~incurred~~ Incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness that is not yet overdue arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnout, deferred compensation or similar obligations, in each case, ~~incurred~~ Incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, other than guarantees of Indebtedness ~~incurred~~ 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Unsecured Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations and to each Guarantee in a manner reasonably satisfactory to the Administrative Agent; provided, further, 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 Indebtedness (except to ~~the Borrower or~~ another Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to be an ~~incurrence~~ Incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Unsecured Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that (x) if the Borrower or a Guarantor ~~incurs~~ Incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such Guarantor, ~~or the Loans,~~ as the case may bebe and (y) any Indebtedness of a Restricted Subsidiary that is not a Credit Party owed to a Credit Party is permitted as an Investment pursuant to Section 10.5; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted ~~Subsidiary~~Subsidiary (it being understood that any transfer of any such Indebtedness from a Guarantor to a Restricted Subsidiary shall be subject to compliance with the foregoing clause (y))) shall be deemed, in each ~~case~~ case, to be an ~~incurrence~~ Incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock (other than Disqualified Stock) of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock ~~(except to Holdings or another Restricted Subsidiary)~~ shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations Incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, ~~bid~~bid appeal, ~~appeal~~ and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice in an aggregate amount not to exceed $25,000,000; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up (together with any Refinancing Indebtedness in respect thereof) in an amount not to exceed 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the ~~issue~~ issuance or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section ~~10.5(b)~~ 10.5 or to make Permitted Investments (other than Permitted Investments specified in ~~clauses~~ clause (~~a) and (b~~i) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and ~~incurred~~ Incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 50,000,000 and ~~3.75~~(y) 4.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~ Incurrence (provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be Incurred pursuant to this clause (l)(ii), together with any amounts Incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed in the aggregate the greater of (x) $50,000,000 and (y) 4.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding) (it being understood that any Indebtedness, Disqualified Stock or preferred stock ~~incurred~~ Incurred pursuant to this clause (l)(ii) shall cease to be deemed ~~incurred~~ Incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed ~~incurred~~ Incurred for the purposes of ~~the first paragraph of this~~ Section ~~10.1~~ 10.1(n)(x) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have ~~incurred~~ Incurred such Indebtedness, Disqualified Stock or preferred stock under ~~the first paragraph of this~~ Section ~~10.1~~ 10.1(n)(x) without reliance on this clause (l)(ii)); (m) the ~~incurrence~~ Incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock ~~incurred~~ Incurred as permitted under ~~the first paragraph of this Section 10.1 and~~ clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is ~~incurred~~ Incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is ~~unsecured or~~ unsecured, such Refinancing Indebtedness is unsecured, (ii) Indebtedness that is secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is either unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (iiiii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (~~iii~~iv) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations ~~at least~~ on terms in all material respects no more restrictive to the ~~same extent~~ Administrative Agent and the Lenders as those contained in the documentation governing the Indebtedness being ~~Refinanced and~~ Refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (4) the principal amount (or accreted value, if applicable) of such Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced except by an amount equal to accrued and unpaid interest and premiums required to be paid thereon, plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such Refinancing and by an amount equal to any existing commitments unutilized thereunder to the extent that the portion of such existing and unutilized commitment being refinanced was permitted to be drawn under Section 10.1 and Section 10.2 immediately prior to such refinancing (other than by reference to Refinancing Indebtedness); (5) the terms and conditions (including, if applicable, as to collateral but excluding as to interest rate, redemption premiums and other components of yield) of any such Refinancing Indebtedness are either (x) terms that would be commonly available in the comparable market for similar Indebtedness as determined in good faith by the Borrower or (y) no more restrictive to the Credit Parties and their Restricted Subsidiaries, taken as a whole, than the terms and conditions of the Indebtedness being Refinanced); (6) such Indebtedness is not secured by a Lien on any assets other than the collateral securing, and with no higher priority than, the Indebtedness being Refinanced (and, if secured by a Lien on any or all of the Collateral, is subject to a customary intercreditor agreement reasonably satisfactory to the Administrative Agent); and (7) the obligors and guarantors of such Indebtedness are the same as the obligors and guarantors of the Indebtedness being Refinanced, or there are no additional obligors or guarantors in respect of such Refinancing Indebtedness; (n) Indebtedness, Disqualified Stock or and preferred stock of (x) ~~Holdings~~ of the Borrower or a any Restricted Subsidiary ~~incurred~~ that is unsecured and/or subordinated in right of payment to the Credit Facilities pursuant to a customary subordination agreement that is reasonably satisfactory to the Administrative Agent, if, after giving effect thereto, the Total Leverage Test (calculated on a Pro Forma Basis) is satisfied or ~~issued~~ (y) of the Credit Parties that is secured on a junior basis to ~~finance an acquisition~~the Credit Facilities if, after giving effect thereto, the Secured Leverage Test (calculated on a Pro Forma Basis) is satisfied (Indebtedness Incurred pursuant to (y), “Junior Secured Ratio Debt”); provided that, in each of the foregoing clauses (x) and (y), (A) except with respect to up to the Maturity Carveout Amount, (i) the applicable maturity date with respect to such Indebtedness shall be no earlier than the Latest Term Loan Maturity Date in effect as of the date such Indebtedness is Incurred and (ii) the weighted average life to maturity for such Indebtedness shall be no shorter than the weighted average to maturity of the then existing Initial Term Loans, (B) such Indebtedness (i) shall not be subject to mandatory repayment or redemption terms that are more favorable to the holders thereof than the mandatory repayment and redemption terms applicable to the Term Loans outstanding as of the date such Indebtedness is Incurred and (ii) shall not be prepaid or redeemed other than with amounts not required to be applied to the prepayment of the Term Loans outstanding as of the date such Indebtedness is Incurred and (C) no Event of Default shall have occurred and be continuing or would result from the Incurrence of such Indebtedness; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be ~~incurred~~ Incurred pursuant to the ~~foregoing~~foregoing clause (x), together with any amounts ~~incurred~~ Incurred under ~~the first paragraph of this~~ Section ~~10.1~~ 10.1(l)(ii), by Restricted Subsidiaries that are not Guarantors shall not exceed in the aggregate the greater of (x) $~~85,000,000~~ 50,000,000 and ~~3.75~~(y) 4.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidationoutstanding; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit;~~ credit so long as such letter of credit is otherwise permitted to be Incurred pursuant to Section 10.1(k)(ii) or (1ii) ~~any guarantee by Holdings~~ obligations in respect of letters of support, guarantees or ~~a Restricted Subsidiary of Indebtedness~~ similar obligations issued, made or ~~other obligations~~ Incurred for the benefit of any Restricted Subsidiary ~~so long as~~ of the Borrower to the extent required by law or in connection with any statutory filing or the ~~case~~ delivery of ~~a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by~~ audit opinions performed in jurisdictions other than within the ~~Restricted Subsidiary providing such guarantee or~~ United States; (2q) ~~any guarantee by a Restricted Subsidiary of Indebtedness of Holdings~~[reserved]; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors or joint ventures in an aggregate amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 50,000,000 and ~~1.5~~(y) 4.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Carbonite Inc)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided ~~that~~ that, following the Additional Restrictions Period, Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and the Borrower or any ~~Restricted~~ GuarantorRestricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the ~~Fixed Charge Coverage~~ Consolidated Total Debt to Consolidated EBITDA Ratio ~~of Holdings and~~ is equal to or less than 3.70.25:1.00. inside the ~~Restricted Subsidiaries would be at least 2.00 to 1.00~~then applicable financial covenant level set forth in Section 10.7(a); ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 35,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[Reserved]; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (il) ~~Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary~~ Permitted Other Indebtedness and/or Permitted Convertible Indebtedness in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to ~~exceed, in the aggregate at any one time outstanding, the greater of~~ exceed $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r))750,000,000; (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Amendment to Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock is issued would be have been at least 2.00 to 1.00, 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 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding~~. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~. (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior ~~Notes~~ Secured Notes, (~~including any guarantee thereof~~d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of ~~such notes~~ Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any ~~guarantee thereof in~~ additional proceeds), up to an aggregate principal ~~amount~~ amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (xA) $~~375,000,000 minus~~ 2,275.0 million and (yB) the maximum aggregate principal amount (as of the date of incurrence of any such Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.00 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior ~~Notes redeemed pursuant to a Special Mandatory Redemption (as defined in~~ Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; (ii) [Reserved]; (iii) the Existing Unsecured Notes ~~Indenture~~and other Existing Indebtedness (other than Indebtedness described in clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such ~~assets and Indebtedness arising from~~ assets) provided that the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount~~ of ~~all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ Indebtedness incurred pursuant to this clause ~~(d) and all Refinancing Indebtedness incurred~~ to ~~Refinance~~ finance the acquisition of Capital Stock of any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does~~ Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)Tangible Assets; (ev) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary 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~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to ~~reimbursement~~ reimbursement-type obligations regarding workers’ compensation claims~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (fvi) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnouts 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause (f)~~clause); (gvii) Indebtedness of ~~Holdings~~ the Borrower owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Borrower or any Restricted Subsidiary; ~~provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee;~~ provided, ~~further~~however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event ~~which~~ that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of any such Indebtedness (except to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an~~ constitute the incurrence of such Indebtedness ~~not permitted~~ by ~~this clause~~ the issuer thereof and (~~g); (h~~B) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower ~~or a Guarantor incurs~~ is the obligor on such Indebtedness (other than any Existing Indebtedness) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is expressly subordinated ~~in right of payment~~ to the ~~Guarantee~~ prior payment in full in cash of ~~such Guarantor, or~~ all obligations of the ~~Loans, as~~ Borrower with respect to the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)Notes; (iviii) shares of ~~preferred stock~~ Preferred Stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower or ~~another~~ a 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 ~~preferred stock~~ Preferred Stock (except to ~~Holdings~~ the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of ~~preferred stock not permitted by this clause (i)~~Preferred Stock; (jix) Hedging Obligations of the Borrower or any Restricted Subsidiary (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting (A) interest rate risk with respect to any Indebtedness that is permitted to be incurred by the terms of this Agreement, (B) exchange rate risk with respect to any currency exchange or (C) commodity price risk; (kx) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (ixi) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~in an aggregate principal amount~~ or ~~liquidation preference up to 100%~~ Preferred Stock of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation ~~preference~~preference which, ~~which~~ when aggregated with the principal amount and liquidation preference of all other ~~Indebtedness, Disqualified~~ Indebtedness and Preferred Stock ~~and preferred stock~~ then outstanding and incurred pursuant to this clause (~~l)(ii~~xi), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 250.0 million and ~~3.75~~17.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ (it being understood that any ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ incurred pursuant to this clause (~~l)(ii~~xi) shall cease to be deemed incurred or outstanding for purposes of this clause (~~l)(ii~~xi) but shall be deemed incurred for the purposes of the ~~first paragraph of this~~ Section ~~10.1~~ 8.1(a) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ under ~~the first paragraph of this~~ Section ~~10.1~~ 8.1(a) without reliance on this clause (~~l)(ii~~xi)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will ~~not issue any shares of Disqualified Stock~~ not, and will not permit any Restricted Subsidiary to to, issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding principal amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 80,000,000 and (y) ~~3.75~~37.538.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) additional amounts if, after giving effect thereto, for the most recently ended Test Period (on a Pro Forma Basis) at the time of incurrence or issuance, the Interest Coverage Ratio is not less than 2.00 to 1.00; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors, shall not exceed an aggregate principal amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $107,000,000208,300,000 and (y) 50.5100% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness ~~represented by~~ representing deferred compensation to, or similar arrangements with, employees and independent contractors of the ~~Senior Notes (including~~ Borrower or any ~~guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not~~ Restricted Subsidiary to ~~exceed (x) $375,000,000 minus (y)~~ the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ extent incurred in the ~~Senior Notes Indenture)~~ordinary course of business; (c) (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ FourthSeventh Amendment Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ FourthSeventh Amendment Effective Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by ~~a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance~~ the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings Borrower to a Restricted Subsidiary~~; provided that any such Indebtedness owing to~~ , by a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary ~~of Indebtedness of Holdings~~to another Restricted Subsidiary; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 6.00 to 1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section~~ Sections 10.1(l)(ii) and 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 125 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $400,000,000, (xii) ~~$375,000,000 minus~~ Indebtedness that may be incurred pursuant to Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (yas in effect on the Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses), (iii) Indebtedness represented by the ABL Facility and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed the greater of ~~Senior Notes redeemed~~ (A) $350,000,000 and (B) the Borrowing Base as of the date of such incurrence and (iv) Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Section 2.14 of the ABL Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 110 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ each Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: First Lien Credit Agreement (Bountiful Co)

Limitation on Indebtedness. ~~Holdings~~ The Borrowers will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrowers will not issue any shares of Disqualified ~~Stock~~ Equity Interests and will not permit any Restricted Subsidiary to issue any shares of Disqualified ~~Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ Equity Interests or preferred stock; provided that ~~Holdings~~ the Borrowers may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Equity Interests, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified ~~Stock~~ Equity Interests and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Lead Borrower and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified ~~Stock~~ Equity Interests and preferred stock that may be incurred by Restricted Subsidiaries that are not Credit Parties pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not ~~Guarantors~~ Credit Parties, shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 200,000,000 at any one time outstanding. The foregoing limitations will not apply to: (a) (x) Indebtedness ~~arising~~ incurred pursuant to the Term Facility by the Lead Borrower or any Restricted Subsidiary; provided that immediately after giving effect to any such incurrence, the then-outstanding aggregate principal amount of all Indebtedness incurred under this clause (x), plus the ~~Credit Documents~~aggregate principal amount of all Indebtedness incurred under clause (cc) below, does not exceed $1,726,428,375 plus the Maximum Incremental Facilities Amount (as defined in the Term Facility) and (y) Indebtedness incurred pursuant to this Agreement; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate ~~principal~~ amount not to exceed ~~(x)~~ $~~375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~1,300,000,000; (c~~) (i~~) Indebtedness outstanding on the Closing Date listed on Schedule ~~10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party)~~10.1; (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified ~~Stock~~ Equity Interests and preferred stock incurred by ~~Holdings~~ any Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the ~~Capital~~ Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ any Borrower or any Restricted Subsidiary under or pursuant to ~~any~~ the “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 175,000,000 and (y) ~~2.50~~2.25% of Consolidated Total Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ any Borrower or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (f) Indebtedness arising from agreements of ~~Holdings~~ a Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Lead Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Big Heart Pet Brands)

Limitation on Indebtedness. ~~Holdings will~~ (a) Iridium shall not, and ~~will~~ shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to Incur any Indebtedness (including any Acquired Indebtedness) unless (i) immediately after giving effect to the Incurrence of such Indebtedness and ~~Holdings will not issue any shares~~ the receipt and application of ~~Disqualified Stock~~ the proceeds thereof, the Debt to Cash Flow Ratio would be less than 4.0 to 1.0 and ~~will not permit any~~ (ii) if such Indebtedness is Incurred by a Restricted Subsidiary, such Restricted Subsidiary is a Guarantor Subsidiary. Notwithstanding the foregoing, prior to ~~issue~~ June 30, 2000, Iridium, Capital and any ~~shares~~ other Restricted Subsidiary that is a Guarantor Subsidiary may Incur Indebtedness if immediately after giving effect to the Incurrence of ~~Disqualified Stock or~~such Indebtedness and the receipt and application of the proceeds thereof, the Debt to Capital Ratio would be less than 65%. (b) Notwithstanding the foregoing paragraph (a), Iridium, Capital and any other Restricted Subsidiary that is a Guarantor Subsidiary may Incur the following Indebtedness: (i) Indebtedness Incurred under any one or more Bank Credit Agreements, Vendor Financing Facilities or other agreements or arrangements to finance the Build-out of the IRIDIUM System; provided, however, that Indebtedness Incurred pursuant to this clause (i), other than Indebtedness Incurred pursuant to a Bank Credit Agreement or Vendor Financing Facility, shall not have a Stated Maturity earlier than the Stated Maturity of the Notes, and shall not be mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or be redeemable at the option of the holder thereof, in whole or in part, prior to the ~~case~~ Stated Maturity of ~~Restricted Subsidiaries that~~ the Notes (other than pursuant to provisions which are ~~not Guarantors, preferred stock; provided that Holdings may incur~~ substantially similar to those contained in Section 4.08 which permit the holders of such Indebtedness to require the issuer thereof to repurchase or repay such Indebtedness upon a Change of Control (~~including Acquired Indebtedness~~or an event substantially similar thereto) or ~~issue shares~~ to make an offer to purchase as a result of ~~Disqualified Stock~~the occurrence of an Asset Disposition (or an event substantially similar thereto) or receipt of insurance proceeds); (ii) After Commercial Activation, Indebtedness under any one or more Bank Credit Agreements or other agreements or arrangements to finance working capital requirements of Iridium and any ~~Restricted Subsidiary may incur~~ Refinancing Indebtedness ~~(including Acquired~~ in respect of such Indebtedness); provided, ~~issue shares~~ however, at the time of ~~Disqualified Stock~~ the Incurrence of such Indebtedness and ~~issue shares of preferred stock, if,~~ after giving effect thereto, the ~~Fixed Charge Coverage Ratio~~ aggregate principal amount of ~~Holdings~~ all Indebtedness Incurred pursuant to this clause (ii) and then outstanding does not exceed $950,000,000; 48 41 (iii) Indebtedness Incurred under any one or more Bank Credit Agreements, Vendor Financing Facilities or other agreements or arrangements that is guaranteed pursuant to the ~~Restricted Subsidiaries would be at least 2.00 to 1.00~~Motorola Additional Guarantee; provided, ~~further~~however, ~~that~~ at the ~~amount~~ time of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect Incurrence of such ~~notes~~ Indebtedness and ~~any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y)~~ after giving effect thereto, the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (riii) ~~shall cease to be deemed incurred or~~ and then outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r))does not exceed $350,000,000; (siv) Indebtedness ~~of Holdings~~ owed by Iridium to Capital or any ~~of its~~ Wholly-Owned Restricted ~~Subsidiaries consisting of~~ Subsidiary that is a Guarantor Subsidiary or Indebtedness owed by Capital or any Wholly-Owned Restricted Subsidiary that is a Guarantor Subsidiary to Iridium or to Capital or another Wholly-Owned Restricted Subsidiary that is a Guarantor Subsidiary; provided, however, that upon either (ix) the ~~financing~~ transfer or other disposition by Capital, such Wholly-Owned Restricted Subsidiary or Iridium of ~~insurance premiums~~ any Indebtedness so permitted to a Person other than Iridium, Capital or another Wholly-Owned Restricted Subsidiary that is a Guarantor Subsidiary or (iiy) ~~take~~ the issuance, sale, lease, transfer or ~~pay obligations contained in supply arrangements in each case~~other disposition of shares of Capital Stock (including by consolidation or merger, ~~incurred in the ordinary course of business; (t) Indebtedness of Holdings~~ but not including directors' qualifying shares or ~~any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect~~ interests required to ~~any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued~~ be held by ~~Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses~~foreign nationals, in each case to ~~finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to~~ the extent ~~described in clause (4~~mandated by applicable law) of ~~Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect~~ such Wholly-Owned Restricted Subsidiary or Capital to a Person other than Iridium, Capital or another such Wholly-Owned Restricted Subsidiary, the provisions of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (~~i)(a~~iv) shall ~~not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof~~ no longer be applicable to such Indebtedness and such Indebtedness shall be ~~applied no later than ten Business Days after~~ deemed to have been Incurred by the ~~receipt~~ issuer thereof ~~to repurchase~~at the time of such issuance, ~~repay~~sale, ~~redeem~~ lease, transfer or ~~otherwise defease Senior Notes~~ other disposition;

Appears in 1 contract

Sources: Series C Note Indenture (Iridium Capital Corp)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, (A) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00 to 1.00; provided, further, that~~ 2.00:1.00 or (B) the ~~amount of~~ Borrower and its Restricted Subsidiaries may Incur Indebtedness (including Acquired Indebtedness~~, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x~~), ~~by Restricted Subsidiaries that are not Guarantors shall not exceed~~ if, after giving effect thereto, the ~~greater of (x) $85,000,000 and (y) 3.75% of~~ Consolidated Total ~~Assets for the most recently ended Test Period~~ Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) ~~at any one time outstanding~~shall be less than or equal to 2.25:1.00 (Indebtedness Incurred pursuant to this paragraph, “Ratio Debt”). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ ABL Facility and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed the greater of (xA) $~~375,000,000 minus~~ 1,000,000,000 and (yB) the ~~aggregate principal amount~~ Borrowing Base Basket as of the date of such incurrence and (ii) Indebtedness represented by the New Senior Notes ~~redeemed pursuant to a Special Mandatory Redemption (as defined in the~~ and any guarantee thereof; provided that such New Senior Notes ~~Indenture)~~have been defeased; ~~(c)~~ (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 168,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Subsidiary Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings or~~ another Restricted ~~Subsidiary~~Subsidiary or the Borrower; provided that if ~~the Borrower or~~ a Subsidiary Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Subsidiary Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Subsidiary Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another ~~Restricted Subsidiary~~Subsidiary Guarantor) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the ~~Closing~~ Restatement Effective Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings or~~ any of ~~its Subsidiaries or any Cure Amounts~~the Borrower’s Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 240,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) additional Indebtedness of the Borrower or any of its Restricted Subsidiaries in an aggregate principal amount not to exceed the Available Amount that is not otherwise applied pursuant to Section 10.5(a)(iii) as in effect immediately prior to the Incurrence of such Indebtedness (and after giving Pro Forma Effect thereto) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) or clause (r) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of ~~the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances~~ the (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Subsidiary Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Subsidiary Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition~~; provided that the amount of Indebtedness~~, ~~Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing~~merger, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or consolidation or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) either (1) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (A) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 2.25:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 190,000,00 and ~~1.5~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services and (ii) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Borrower and its Restricted Subsidiaries; (u) Indebtedness consisting of Indebtedness issued by ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of ~~Holdings~~ the Borrower or any direct or indirect parent company of ~~Holdings~~ the Borrower to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Academy Sports & Outdoors, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any other Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any other Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ each of the Borrower and the Restricted Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with, or in contemplation of, a Permitted Acquisition) or issue shares of Disqualified ~~Stock~~Stock or, ~~and any~~ in the case of Restricted ~~Subsidiary~~ Subsidiaries, may incur Indebtedness (including Acquired ~~Indebtedness~~Indebtedness incurred in connection with or in contemplation of, a Permitted Acquisition), issue shares of Disqualified Stock and issue shares of preferred stock, ifthat is, in each case, secured by a Lien on the Collateral that is pari passu with the Lien securing the Obligations, secured by a Lien on the Collateral that is junior to the Lien securing the Obligations, or unsecured or secured by a Lien on assets that do not become Collateral to the extent that (1) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a pari passu basis with the Liens on the Collateral securing the Obligations, either (A) the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect ~~thereto~~to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 3.50:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a pari passu basis with the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (I) not exceed 3.50:1.00 or (II) not exceed the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment, (2) if such Indebtedness, Disqualified Stock or shares of preferred stock is secured by a Lien on the Collateral on a junior priority basis with the Liens on the Collateral securing the Obligations, either (A) the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.25:1.00 or (B) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is secured by a Lien on a junior basis to the Liens on the Collateral securing the Obligations), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 4.25:1.00 or (y) not exceed the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment and (3) if such Indebtedness, Disqualified Stock or shares of preferred stock is unsecured or is secured by assets that do not become Collateral, either (A) either (I) the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured or is secured by assets that do not become Collateral), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis would not exceed 4.75:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Consolidated Total Debt to Consolidated EBITDA Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall (x) not exceed 4.75:1.00 or (y) not exceed the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to such Permitted Acquisition or other Investment or (B) either (I) the Fixed Charge Coverage Ratio of the Borrower and the Restricted Subsidiaries (including for the purposes of such calculation any Disqualified Stock or shares of preferred stock that is unsecured or is secured by assets that do not become Collateral), after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis, would be at least 2.00:1.00 or (II) if such Indebtedness, Disqualified Stock or shares of preferred stock is incurred to consummate a Permitted Acquisition or other Investment not prohibited hereunder, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted ~~Subsidiaries would~~ Subsidiaries, after giving effect to the incurrence of such Indebtedness or the issuance of such Disqualified Stock or preferred stock and the use of proceeds thereof, on a Pro Forma Basis shall be ~~at least 2.00~~ (x) greater than or equal to ~~1.00~~2.00:1.00 or (y) greater than or equal to the Fixed Charge Coverage Ratio immediately prior to such Permitted Acquisition or other Investment; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing proviso by Restricted Subsidiaries that are not ~~Guarantors~~ Credit Parties shall not exceed the greater of (x) $~~85,000,000~~ 91,250,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at ~~any one~~ the time ~~outstanding~~of such incurrence. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Term Loan Credit Agreement (Claire's Holdings LLC)

Limitation on Indebtedness. ~~Holdings will~~ (a) ESH REIT shall not, and ~~will~~ shall not permit any of the Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to Incur any Indebtedness (including Acquired Indebtedness) unless, immediately after giving effect to the Incurrence of such additional Indebtedness and ~~Holdings will not issue any shares~~ the receipt and application of ~~Disqualified Stock~~ the proceeds therefrom, the Loan-to-Value Ratio as of the last day of the most recently ended Calculation Period on or prior to the date of determination is equal to or less than 65.0%. (b) ESH REIT shall not, and ~~will~~ shall not permit any ~~Restricted Subsidiary to issue any shares~~ of ~~Disqualified Stock or, in~~ the ~~case of~~ Restricted Subsidiaries ~~that are not Guarantors~~to, ~~preferred stock; provided that Holdings may incur~~ Incur any Secured Indebtedness (including Acquired Indebtedness) unless, immediately after giving effect to the Incurrence of such additional Secured Indebtedness and the receipt and application of the proceeds therefrom, the Senior Loan-to-Value Ratio as of the last day of the most recently ended Calculation Period on or ~~issue shares~~ prior to the date of ~~Disqualified Stock~~determination is equal to or less than 45.0%. (c) ESH REIT shall not, and shall not permit any of the Restricted ~~Subsidiary may incur~~ Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness~~), issue shares of Disqualified Stock and issue shares of preferred stock,~~ ) if, after giving effect ~~thereto~~to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the ~~Fixed Charge~~ Interest Coverage Ratio of ~~Holdings~~ ESH REIT and the Restricted Subsidiaries on a consolidated basis would be ~~at least 2.00~~ less than 2.0 to ~~1.00~~1.0; ~~provided, further,~~ provided that the amount of Indebtedness (including Acquired Indebtedness~~, Disqualified Stock and preferred stock~~ ) that may be ~~incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ Incurred by Restricted Subsidiaries that are not Subsidiary Guarantors shall not exceed in the aggregate an Incremental Loan-to-Value Ratio of the Restricted Subsidiaries of 2.0%. (d) Notwithstanding paragraph (a), (b) or (c) above, ESH REIT or any of the Restricted Subsidiaries (except as specified below) may Incur each and all of the following: (1) Indebtedness of ESH REIT or any of the Restricted Subsidiaries outstanding under any Credit Facility at any time in an aggregate principal amount not to exceed the greater of (x) $~~85,000,000~~ 2.7 billion and (y) ~~3.75%~~ an amount of ~~Consolidated Total Assets for~~ Indebtedness that would result in an Incremental Loan-to-Value Ratio of ESH REIT and the ~~most recently ended Test Period~~ Restricted Subsidiaries of 45.0%; (~~calculated on a Pro Forma Basis~~2) at Indebtedness of ESH REIT or any ~~one time outstanding. The foregoing limitations will not apply~~ of the Restricted Subsidiaries owed to: (ai) ESH REIT evidenced by an unsubordinated promissory note, or (ii) ESH REIT or any Restricted Subsidiary; provided, however, that any event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary of ESH REIT or any subsequent transfer of such Indebtedness ~~arising under the Credit Documents~~(other than to ESH REIT or any other Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness not permitted by this clause (2); (b3) Indebtedness of ESH REIT or any of the Restricted Subsidiaries under Currency Agreements or Interest Rate Agreements; provided that such agreements (x) are designed primarily to protect ESH REIT or any of the Restricted Subsidiaries against fluctuations in interest rates (whether fluctuations of fixed to floating rate interest or floating to fixed rate interest) and (y) do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (4) Indebtedness of ESH REIT or any of the Restricted Subsidiaries, to the extent the net proceeds thereof are promptly: (i) used to purchase Notes tendered in a Change of Control Offer made as a result of a Change of Control, (ii) used to redeem all of the Notes pursuant to Section 5 of the Notes, (iii) deposited to defease the Notes as described in Sections 8.02 and 8.03, or (iv) deposited to discharge the obligations under the Notes and this Indenture as described in Section 8.01; (5) (i) Guarantees by ESH REIT of Indebtedness of any of the Restricted Subsidiaries; (ii) Guarantees of Indebtedness of ESH REIT by any of the Restricted Subsidiaries; provided the guarantee of such Indebtedness is permitted by and made in accordance with Section 4.14, and (iii) Guarantees by Restricted Subsidiaries of any Indebtedness of any other Restricted Subsidiary; provided, that any such Indebtedness owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is subordinated in right of payment to the obligations of ESH REIT and the Guarantors under the Notes; (6) Indebtedness outstanding on the Issue Date (other than pursuant to clause (1)); (7) Indebtedness represented by the ~~Senior~~ Notes and the Guaranties issued on the Issue Date; (~~including~~ 8) Indebtedness (i) consisting of obligations to pay insurance premiums or take-or-pay obligations contained in supply agreements, in each case incurred in the ordinary course of business and (ii) owed to any ~~guarantee thereof~~person providing insurance to ESH REIT or any Restricted Subsidiary so long as such Indebtedness shall not be in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance; (9) ~~and exchange notes issued~~ Indebtedness in respect of ~~such notes~~ any bankers’ acceptance, bank guarantees, letter of credit, warehouse receipt or similar facilities, and reinvestment obligations related thereto, entered into in the ordinary course of business; (10) Indebtedness in respect of workers’ compensation claims, unemployment or other insurance or self-insurance obligations, indemnities, bankers’ acceptances, performance, bid, completion, return-of-money, appeal, and surety bonds or guarantees and similar types of obligations in the ordinary course of business; (11) Indebtedness represented by cash management obligations and other obligations in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements in each case in connection with deposit accounts; (12) Indebtedness supported by a letter of credit procured by ESH REIT or any ~~guarantee thereof~~ of the Restricted Subsidiaries in ~~an aggregate~~ a principal amount not ~~to exceed (x) $375,000,000 minus (y)~~ in excess of the ~~aggregate principal~~ stated amount of ~~Senior Notes redeemed pursuant~~ such letter of credit and where the underlying Indebtedness would otherwise be permitted; (13) Permitted Refinancing Indebtedness Incurred in exchange for, or the net proceeds of which are used to ~~a Special Mandatory Redemption~~ refund, refinance or replace, Indebtedness (~~as defined in~~ other than intercompany Indebtedness) that was permitted by this Indenture to be Incurred under the ~~Senior Notes Indenture~~provisions of Sections 4.08(a), (b) and (c) or clauses (4), (6), (7), (13), (14), (16), (17), (18), (19), (20) or (22) of this Section 4.08(d); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d14) Indebtedness (including ~~Capital~~ Attributable Debt and Capitalized Lease Obligations~~), Disqualified Stock and preferred stock incurred~~ ) Incurred by ~~Holdings~~ ESH REIT or any Restricted ~~Subsidiary~~Subsidiary within 365 days of the related purchase, lease or improvement, to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment ~~that is~~ used in the business of ESH REIT or ~~useful in a Similar Business~~any Restricted Subsidiary, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then~~ at any time outstanding ~~and incurred pursuant~~ not to ~~this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not~~ exceed the greater of (x) $~~55,000,000~~ 125,000,000 and (y) ~~2.50%~~ an amount of ~~Consolidated Total Assets for~~ Indebtedness that would result in an Incremental Loan-to-Value Ratio of ESH REIT and the ~~most recently ended Test Period (calculated on a Pro Forma Basis) at the time~~ Restricted Subsidiaries of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)2.0%; (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f15) Indebtedness arising from agreements ~~of Holdings or a Restricted Subsidiary~~ providing for indemnification, adjustment of purchase ~~price, earnout~~ price or similar ~~obligations, in each case, incurred or assumed~~ obligations Incurred in connection with the disposition of any business, assets or a Restricted Subsidiary, other than ~~guarantees~~ Guarantees of Indebtedness ~~incurred~~ Incurred by any other Person for the purpose of acquiring ~~all~~ or financing the acquisition of any ~~portion of~~ such business, assets or ~~a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any~~ Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f))Subsidiary; (g16) ~~Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated~~ contingent liabilities in ~~right of payment to Holdings’ Guarantee; provided, further, that any subsequent issuance or transfer~~ respect of any ~~Capital Stock or any other event which results~~ indemnification, adjustment of purchase price, non-compete, consulting, deferred taxes and similar obligations of ESH REIT and the Restricted Subsidiaries incurred in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g)connection with acquisitions; (h17) the Incurrence of Acquired Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings ESH REIT or any Restricted Subsidiary in ~~an aggregate principal amount or liquidation preference up to 100%~~ connection with the acquisition of ~~the net cash proceeds received~~ any Person (whether by ~~Holdings since immediately after the Closing Date from the issue or sale~~ merger, consolidation, acquisition of ~~Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified~~ Capital Stock or ~~sales of Equity Interests to Holdings~~ otherwise), Asset Acquisition or other asset acquisition by ESH REIT or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturitySubsidiaries; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness any Person that is ~~unsecured~~ so acquired (including pursuant to an Asset Acquisition) is primarily engaged in a Permitted Business and becomes, upon such acquisition, a Restricted Subsidiary or ~~secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness~~ is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings merged into ESH REIT or a Restricted Subsidiary ~~incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock~~ and ~~preferred stock that may be incurred~~ any assets so acquired (including pursuant to ~~the foregoing~~an Asset Acquisition) are used or useful in a Permitted Business; and provided, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that further, that, immediately after giving effect to ~~any~~ such acquisition and the Incurrence of such Acquired Indebtedness, no Event of Default shall have occurred and be continuing (or ~~merger described in this clause (n), either:~~ would result therefrom) and either (1) ~~Holdings~~ the Interest Coverage Ratio would be greater than immediately prior to such transactions, or (2) ESH REIT would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the ~~Fixed Charge~~ Interest Coverage Ratio test set forth in Section 4.08(c) without giving effect to the ~~first paragraph~~ proviso in such Section 4.08(c); (18) Indebtedness of ~~this Section 10.1 or (2) the Fixed Charge Coverage~~ Foreign Subsidiaries in an aggregate principal amount at any one time outstanding not to exceed an amount of Indebtedness that would result in an Incremental Loan-to-Value Ratio of ~~Holdings~~ ESH REIT and the Restricted Subsidiaries is equal to ~~or greater than immediately prior to such acquisition, merger or consolidation~~1.0% as of any date of Incurrence; (o19) Indebtedness ~~arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds~~ in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting respect of (i) ~~the financing of insurance premiums~~ taxes, assessments, governmental charges or levies and (ii) ~~take or pay obligations contained in supply arrangements in each case,~~ deferred compensation to employees incurred in the ordinary course of business; (t20) Indebtedness owed by ESH REIT to the Corporation the aggregate principal amount of ~~Holdings or~~ which at any time outstanding may not exceed the greater of ~~its~~ (x) $300,000,000 and (y) an amount of Indebtedness that would result in an Incremental Loan-to-Value Ratio of ESH REIT and the Restricted Subsidiaries ~~undertaken~~ of 5.0%; (21) Indebtedness arising from or in connection with ~~cash management and related activities with respect to any Subsidiary~~ accounts payable for deferred purchase price of property or ~~joint venture~~ services in the ordinary course of ~~business;~~business greater than 90 days past the invoice billing date which are being contested in good faith by appropriate proceedings and for which adequate reserves shall be have been established in conformity with GAAP; and (u22) additional Indebtedness ~~consisting~~ of ESH REIT and the Restricted Subsidiaries in aggregate principal amount at any time outstanding not to exceed the greater of (x) $250,000,000 and (y) an amount of Indebtedness ~~issued by Holdings~~ that would result in an Incremental Loan-to-Value Ratio of ESH REIT and the Restricted Subsidiaries of 4.0%; provided, however, that any Permitted Refinancing Indebtedness Incurred under clause (13) above in respect of such Indebtedness shall be deemed to have been Incurred under this clause (22) for purposes of determining the amount of Indebtedness that may at any time be Incurred under this clause (22). (e) Notwithstanding any other provision of this Section 4.08, the maximum amount of Indebtedness that ESH REIT or any of ~~its~~ the Restricted Subsidiaries may Incur pursuant to ~~future current or former officers~~this Section 4.08 shall not be deemed to be exceeded, ~~directors~~with respect to any outstanding Indebtedness, ~~managers and employees thereof, their respective estates, spouses or former spouses~~due solely to the result of fluctuations in the exchange rates of currencies. For purposes of determining compliance with this Section 4.08, in ~~each case~~ the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (1) through (22) of paragraph (d) above or is entitled to ~~finance~~ be Incurred pursuant to paragraphs (a), (b) and (c) above, ESH REIT shall, in its sole discretion, be entitled to classify all or a portion of such item of Indebtedness on the ~~purchase~~ date of its Incurrence and determine the order of such Incurrence (and may later reclassify such item of Indebtedness) and may divide and classify such Indebtedness in more than one of the types of Indebtedness described. At any time that ESH REIT or ~~redemption~~ the Restricted Subsidiaries would be entitled to have Incurred any then outstanding Indebtedness under paragraphs (a), (b) and (c) of ~~Equity Interests of Holdings~~ this Section 4.08, such Indebtedness shall be automatically reclassified into Indebtedness Incurred pursuant to those paragraphs. Notwithstanding the foregoing, any Indebtedness Incurred on or ~~any direct or indirect parent company of Holdings~~ prior to the ~~extent described in~~ Issue Date and outstanding under the ESH REIT Credit Facilities on the Issue Date shall be deemed to have been Incurred under clause (41) of paragraph (d) above and may not be reclassified. For the avoidance of doubt, 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 included. For purposes of determining compliance with this Section ~~10.5(b);~~ 4.08, in the event that ESH REIT or a Restricted Subsidiary enters into or increases commitments under a revolving credit facility or enters into any commitment to incur or issue Indebtedness, the incurrence or issuance thereof for all purposes under this Indenture, including without limitation for purposes of calculating any ratio or usage of the clauses in paragraph (vd) ~~[reserved];~~ above (wif any) ~~Indebtedness~~ for borrowings and reborrowings thereunder (and including issuance and creation of letters of credit and bankers’ acceptances thereunder) will, at ESH REIT’s option, either (a) be determined on the date of such revolving credit facility or such entry into or increase in ~~respect of~~ commitments (~~i) Permitted Other Indebtedness to the extent~~ assuming that the ~~Net Cash Proceeds therefrom are applied~~ full amount thereof has been borrowed as of such date) or other Indebtedness and, if ratio, test or other provision of this Indenture is satisfied with respect thereto at such time, any borrowing or reborrowing thereunder (and the issuance and creation of letters of credit and bankers’ acceptances thereunder) will be permitted under this Section 4.08 irrespective of the ratio or other provision of this Indenture at the time of any borrowing or reborrowing (or issuance or creation of letters of credit or bankers’ acceptances thereunder) or (b) be determined on the date such amount is borrowed pursuant to any such facility or increased commitment, and in each case, ESH REIT may revoke such determination at any time and from time to time. For purposes of determining compliance with any U.S. dollar-denominated restriction on the ~~prepayment~~ Incurrence of ~~Term Loans~~ 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 ~~manner set forth~~ case of term debt, or first committed, in ~~Section 5.2(a)(i)~~the case of revolving credit debt; provided, however, that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and ~~(ii) any~~ 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, ~~refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x)~~ 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, plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses Incurred in connection with the issuance of such new Indebtedness; provided further, however, that if any such Indebtedness denominated in a different currency is ~~not increased above the principal amount thereof outstanding immediately prior~~ subject to a Currency Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such ~~refinancing~~Indebtedness, ~~refunding, renewal or extension (except for any original issue discount thereon and~~ the amount of ~~fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y)~~ such Indebtedness ~~otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness~~ expressed in ~~respect of (i) Permitted Other Indebtedness;~~ U.S. dollars will be as provided ~~that either (a) the aggregate~~ in such Currency Agreement. The principal amount of ~~all such Permitted Other~~ any Indebtedness ~~issued or~~ incurred ~~pursuant~~ to ~~this clause (i)(a) shall not exceed~~ refinance other Indebtedness, if Incurred in a different currency from the ~~Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof~~ Indebtedness being refinanced, shall be ~~applied no later than ten Business Days after~~ calculated based on the ~~receipt thereof~~ currency exchange rate applicable to ~~repurchase, repay, redeem or otherwise defease Senior Notes~~ the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

Appears in 1 contract

Sources: Indenture (ESH Hospitality, Inc.)

Limitation on Indebtedness. ~~Holdings will~~ (a) The Borrower shall not, and ~~will~~ shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, ~~create~~any Indebtedness, ~~incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur”~~ and ~~collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock oror Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur~~ Borrower shall be entitled to Incur Indebtedness ~~(including Acquired Indebtedness) or~~ and issue shares of Disqualified Stock, and any ~~Restricted Subsidiary~~ Guarantor may incur ~~Indebtedness (including Acquired~~ Indebtedness), issue shares of Disqualified Stock and issue shares of ~~preferred stock, if, after giving effect thereto,~~ Preferred Stock to the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred extent permitted pursuant to ~~the foregoing, together with any amounts incurred under~~ Section ~~10.1(n)(x~~6.01(b), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;. (b) Section 6.01(a) will not prohibit the Incurrence of any of the following items of Indebtedness ~~represented~~ (collectively, “Permitted Indebtedness”): (1) the Incurrence of Indebtedness pursuant to any Credit Facilities by the ~~Senior Notes~~ Borrower or any Guarantor and Priority Lien Debt consisting of Refinancing Indebtedness Incurred to refinance, refund or replace any such Indebtedness, in each case, to the extent subject to and not prohibited by the Intercreditor Agreement; provided that immediately after giving effect to such Incurrence (~~including any guarantee thereof)~~ and ~~exchange notes issued in respect~~ the application of ~~such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y~~proceeds therefrom) the aggregate principal amount of ~~Senior Notes redeemed pursuant~~ all such Indebtedness Incurred under this clause (1) and then outstanding (with outstanding letters of credit being deemed to have a ~~Special Mandatory Redemption~~ principal amount equal to the stated amount thereof) does not exceed the greatest of (a) the sum of (i) $375,000,000 plus (ii) an amount equal to six and two-thirds percent of the aggregate principal amount of outstanding Indebtedness (including the aggregate stated amount of any outstanding letters of credit) under any borrowing base asset based revolving credit facility constituting Priority Lien Obligations (provided that such amount under this clause (ii) shall only be permitted to be incurred under this clause (b)(1) to the extent it is utilized exclusively to incur Indebtedness comprised of protective advances (i.e., loans made under any such borrowing base asset based revolving Priority Lien Credit Facility which (A) is made to maintain, protect or preserve the Collateral and/or the Priority Lien Secured Parties’(as defined in the Intercreditor Agreement) rights under the Priority Lien Documents or which is otherwise for the benefit of the Priority Lien Secured Parties, (B) is made to enhance the likelihood of, or to maximize the amount of, repayment of any Priority Lien Obligation and/or (C) is made to pay any other amount chargeable to, or required to be paid by, any Credit Party under the Intercreditor Agreement or any other Priority Lien Document)), (b) the Borrowing Base (as defined in the ~~Senior~~ First Lien Credit Agreement) in effect at the time of such Incurrence and (c) 30% of Modified ACNTA determined at the time of such Incurrence; (2) the Incurrence by the Borrower and the Guarantors of (x) the Loans and other Obligations and (y) other Parity Lien Debt (to the extent subject to the Intercreditor Agreement); provided that immediately after giving effect to such Incurrence (and the application of proceeds therefrom) the aggregate principal amount of all such Parity Lien Debt under the forgoing clauses (x) and (y) then outstanding does not exceed $700,000,000; (3) the Incurrence by the Borrower or any Guarantor of Junior Lien Debt to the extent subject to the Intercreditor Agreement and to the extent permitted by the indentures or similar agreements governing the Existing Unsecured Notes ~~Indenture~~(if outstanding); (c4) Indebtedness of the Borrower owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Borrower or any other Restricted Subsidiary; provided, that (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, that any subsequent issuance or transfer of any ~~Capital Stock or any other event~~ Equity Interests which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of ~~any~~ such Indebtedness (~~except~~ other than to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an incurrence~~ constitute the Incurrence of such Indebtedness by the obligor thereon not permitted by this clause (g4); , (hii) if a non-Credit Party is the obligor with respect to such Indebtedness and a Credit Party is the obligee, such Indebtedness shall be subject to the limitation set forth in clause (a)(iv) of ~~a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ the definition of “Permitted Investment” and (iii) if the Borrower or a Guarantor ~~incurs~~ is the obligor on such Indebtedness, such Indebtedness ~~owing~~ shall be expressly subordinated to the prior payment in full in cash of all Obligations of such obligor pursuant to a ~~Restricted~~ subordinated intercompany note in form and substance reasonably satisfactory to the Administrative Agent; (5) Indebtedness outstanding on the Effective Date and set forth in Schedule 6.01; (6) Permitted Acquisition Indebtedness; (7) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to clauses (3) (to the extent subject to the Intercreditor Agreement and to the extent permitted by the indentures or similar agreements governing the Existing Unsecured Notes (if outstanding)), (5), (6) or (12) of this Section 6.01(b) or this clause (7); provided, that to the extent such Refinancing Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary ~~that is not~~ Incurred pursuant to clause (6), such Refinancing Indebtedness shall be Incurred only by such Subsidiary; (8) Hedging Obligations of the Borrower or ~~a Guarantor, such Indebtedness is subordinated~~ any Restricted Subsidiary pursuant to contracts entered into in ~~right~~ the ordinary course of ~~payment to~~ business for the ~~Guarantee~~ purpose of ~~such Guarantor, or~~ limiting risks that arise in the ~~Loans, as~~ ordinary course of business of the ~~case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another~~ Borrower and its Restricted ~~Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)~~Subsidiaries; (i9) ~~shares of preferred stock of a Restricted Subsidiary issued to Holdings or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock~~ the Incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims, payment obligations in connection with health or other ~~event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary~~ types of social security benefits, unemployment or ~~any~~ other ~~subsequent transfer of any such shares of preferred stock (except to Holdings~~ insurance or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) self-insurance obligations, reclamation, statutory obligations, banks’ acceptances and obligations in respect of ~~self-insurance,~~ performance, ~~bid, appeal~~ bid and surety bonds and completion guarantees ~~and similar obligations~~ provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case,~~ in the ordinary course of business; (i10) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 business and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) ~~take or pay obligations contained in supply arrangements in each case, incurred~~ pursuant to Cash Management Obligations Incurred in the ordinary course of business; (t11) Non-Recourse Purchase Money Indebtedness; (12) any Guarantee by the Borrower or a Credit Party of Indebtedness or other obligations of any Credit Party so long as the Incurrence of such Indebtedness incurred by such Credit Party is permitted to be incurred under this covenant, or any Guarantee by a Credit Party of Indebtedness of the Borrower so long as the Incurrence of such Indebtedness by the Borrower is permitted under this covenant; (13) in-kind obligations relating to net oil or natural gas balancing positions arising in the ordinary course of business (14) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary represented by Capital Lease Obligations, mortgage financings or purchase money obligations Incurred to finance all or any part of the design, development, installation, construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment used in the business of the Borrower or any of its Restricted Subsidiaries ~~undertaken in connection with cash management and related activities with respect to any Subsidiary~~ not more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or ~~joint venture in the ordinary course~~ commencement of ~~business; (u) Indebtedness consisting~~ full operation of ~~Indebtedness issued by Holdings~~ such property, plant or ~~any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses~~equipment, in ~~each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described~~ an aggregate principal amount which, in ~~clause (4) of Section 10.5(b); (v) [reserved]; (w)~~ an aggregate principal amount outstanding, taken together with all Refinancing Indebtedness in respect thereof, not to exceed at any time outstanding the greater of ~~(i) Permitted Other Indebtedness to~~ $20,000,000 and 2.0% of Modified ACNTA determined as of the ~~extent that the Net Cash Proceeds therefrom are applied to the prepayment~~ date of ~~Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension~~ Incurrence of ~~any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any~~ such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Term Loan Credit Agreement (Exco Resources Inc)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 30,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) (x) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (plus all accrued interest, fees and expenses) not to exceed ~~(x)~~ $~~375,000,000 minus~~ 125,000,000 and (y) ~~the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the Closing Date), in each case, pursuant to the definition of Maximum Incremental Facilities Amount in the ~~Senior Notes Indenture~~Second Lien Credit Agreement (as in effect on the Closing Date); (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 35,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: First Lien Credit Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least ~~2.00~~ 1.75 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~30% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 (~~as defined~~ together with any Refinancing Indebtedness in ~~the Senior Notes Indenture~~respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 105,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to ~~the~~ another Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 150,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $120 million and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced~~ refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (i) $~~85,000,000~~ 120,000,000 and ~~3.75~~(ii) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 60,000,000 and ~~1.5~~(y) 20% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of Holdings or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect to financial accommodations of the type described in the definition of Cash Management Services and (ii) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Borrower and its Restricted Subsidiaries; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of ~~its~~ the Restricted Subsidiaries to ~~future~~ future, current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) ~~[reserved]; (w)~~ Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes resp

Appears in 1 contract

Sources: Credit Agreement (BrightView Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Parent Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Parent Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not ~~Guarantors~~Guarantors or Borrowers, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Parent Borrower and/or any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Stock or Non-Guarantor Subsidiary Preferred Stock in an aggregate amount up to the Maximum Incremental Facilities Amount (any such obligations that are secured, “Secured Ratio Debt” and any such obligations that are not Indebtedness or not secured, “Unsecured Ratio Debt”, and ~~any Restricted Subsidiary may incur~~ collectively, “Ratio Debt”); provided that (i) the amount of Indebtedness (~~including~~ other than Acquired Indebtedness~~), issue shares of~~ ) and Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Non-Guarantor Subsidiary Preferred Stock ~~and preferred stock~~ that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of ~~(x)~~ $~~85,000,000~~ 67,000,000 and ~~(y) 3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test ~~Period~~ Period; (~~calculated on~~ ii) subject to the Inside Maturity Exceptions and other than in the case of Acquired Indebtedness, Ratio Debt shall not mature earlier than the Initial Term Loan Maturity Date or have a ~~Pro Forma Basis~~weighted average life to maturity shorter than the remaining weighted life to maturity of the Initial Term Loans (in each case as in effect at the time of incurrence or establishment of the commitment thereof) ~~at any one time outstanding~~and (iii) if such Ratio Debt is Indebtedness secured by Collateral, the Intercreditor Agreement Requirement shall apply. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Mirion Technologies, Inc.)

Limitation on Indebtedness. ~~Holdings~~ CGI Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ CGI Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ CGI Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,000 and (y) ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) unlimited additional amounts if, after giving effect thereto, CGI Borrower shall on a consolidated basis have an Interest Coverage Ratio of not less than 2.00:1.00 on a Pro Forma Basis at the time of incurrence or issuance; provided, further, that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 11.1(m)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $15,000,000 and (y) 30.0% of Consolidated EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness ~~represented by the Senior Notes~~ (including any ~~guarantee thereof~~unused commitment) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Fourth Closing Date listed on Schedule ~~10.1~~ 11.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Fourth Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by a ~~Credit Party~~ Borrower to a Restricted Subsidiary, by a Restricted Subsidiary to CGI Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (dc) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ CGI Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ CGI Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~c), does not exceed the greater of (x) $~~55,000,000~~ 15,000,000 and (y) ~~2.50~~30.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary pursuant to this clause (dc) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ CGI Borrower or such Restricted Subsidiary to permanently repay outstanding Permitted Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (ed) Indebtedness incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (fe) Indebtedness arising from agreements of ~~Holdings~~ CGI Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or any similar obligations, in each case, incurred or assumed in connection with ~~the disposition of~~ any ~~business, assets or a Subsidiary, other than guarantees of Indebtedness incurred~~ transaction not expressly prohibited by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this ~~clause (f))~~Agreement; (gf) Indebtedness of CGI Borrower to Holdings to or a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by CGI Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms; provided, further, 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 Indebtedness (except to ~~the~~ Holdings, CGI Borrower or ~~another~~ any Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (gf); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 35,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [~~reserved~~Reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Joinder and Amendment and Restatement Agreement (National Vision Holdings, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Company will not, and will not cause or permit any of its Restricted ~~Subsidiary~~ Subsidiaries to~~, directly or indirectly~~, create, issue, incur~~, issue~~, assume, guarantee or otherwise in any manner become directly or indirectly ~~liable~~liable for, contingently or otherwise (collectively, “"incur~~” and collectively~~"), ~~an “incurrence”) with respect to~~ any Indebtedness (including ~~Acquired Indebtedness) and Holdings will not issue~~ any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), ~~issue shares~~ unless such Indebtedness is incurred by the Company or any Guarantor or constitutes Acquired Indebtedness of ~~Disqualified Stock and issue shares of preferred stock~~the Company or a Restricted Subsidiary and, ~~if, after giving effect thereto~~in each case, the Company's Consolidated Fixed Charge Coverage Ratio for the most recent four full fiscal quarters for which consolidated financial statements are available immediately preceding the incurrence of ~~Holdings and~~ such Indebtedness taken as one period is at least equal to or greater than 2.25:1. (b) Notwithstanding the foregoing, the Company and, to the extent specifically set forth below, the Restricted Subsidiaries ~~would be~~ may incur the following (collectively, the "Permitted Indebtedness"): (i) Indebtedness of the Company (and guarantees by Restricted Subsidiaries of such Indebtedness) under a Credit Facility in an aggregate principal amount at ~~least 2.00~~ any one time outstanding not to ~~1.00~~exceed the greater of: (A) $275 million, less, without duplication, any permanent repayment thereof or permanent reduction in commitments thereunder from the proceeds of one or more Asset Sales which are used to repay a Credit Facility pursuant to clause (b)(i) of Section 1012; or (B) (1) 85% of accounts receivable of the Company and its Restricted Subsidiaries (excluding any Receivables and Related Assets sold, conveyed or otherwise transferred to a Securitization Entity in connection with a Qualified Securitization Transaction) as of the end of the most recently ended fiscal quarter for which consolidated financial statements are available, plus (2) 60% of inventory of the Company and its Restricted Subsidiaries as of the end of the most recently ended fiscal quarter for which consolidated financial statements are available; (ii) Indebtedness pursuant to (A) the Securities (excluding any Additional Securities) and any Guarantee of the Securities, and (B) any Securities issued in exchange for the Securities pursuant to the Registration Rights Agreement and any Guarantee thereof; (iii) Indebtedness under any of the Acquisition Agreements and Indebtedness of Viewpoint and its Subsidiaries existing on the date of the Acquisition after giving effect to the Acquisition (including any Indebtedness assumed by the Company or any of its Restricted Subsidiaries pursuant to the Acquisition Agreements); (iv) Indebtedness of the Company or any Restricted Subsidiary outstanding on the date of this Indenture other than Indebtedness referred to in clause (i) or (ii) of this definition of "Permitted Indebtedness;" (v) Indebtedness of the Company owing to a Restricted Subsidiary; provided that any Indebtedness of the Company owing to a Restricted Subsidiary that is not a Guarantor incurred after the Issue Date is unsecured and is subordinated in right of payment to the Securities; provided, further, that ~~the amount~~ any disposition or transfer of ~~Indebtedness, Disqualified Stock and preferred stock that may~~ any such Indebtedness to a Person (other than to a Restricted Subsidiary) shall be ~~incurred pursuant~~ deemed to ~~the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater~~ be an incurrence of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) such Indebtedness ~~arising under the Credit Documents; (b) Indebtedness represented~~ by the ~~Senior Notes~~ Company or other obligor not permitted by this clause (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenturev); (~~c) (i~~vi) Indebtedness ~~outstanding on~~ of a Restricted Subsidiary owing to the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany~~ Company or another Restricted Subsidiary; provided, that any disposition or transfer of any such Indebtedness ~~outstanding on the Closing Date listed on Schedule 10.1~~ to a Person (other than ~~intercompany~~ a disposition or transfer to the Company or a Restricted Subsidiary or a Person that becomes a Restricted Subsidiary) shall be deemed to be an incurrence of such Indebtedness ~~owed~~ by ~~a Credit Party to another Credit Party~~the obligor not permitted by this clause (vi); (dvii) guarantees of any Restricted Subsidiary of Indebtedness of the Company or any of its Restricted Subsidiaries which are permitted to be incurred under this Indenture; provided that such guarantees are made in accordance with the provisions of Section 1013; (viii) Indebtedness ~~(including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings~~ of the Company or any Restricted ~~Subsidiary~~Subsidiary pursuant to any: (A) Interest Rate Agreements, (B) Currency Hedging Agreements, ~~to finance~~ and (C) Commodity Price Protection Agreements; (ix) Indebtedness of the ~~purchase~~Company or any Restricted Subsidiary represented by Capital Lease Obligations or Purchase Money Obligations or other Indebtedness in connection with the acquisition or development of real or personal, ~~lease~~movable or immovable, ~~construction~~property, ~~installation~~ in each case incurred or assumed for the purpose of financing or refinancing all or any part of the purchase price or cost of construction or improvement of property ~~(real or personal) or equipment that is~~ used ~~or useful~~ in ~~a Similar Business, whether through~~ the ~~direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion~~ business of the ~~obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings~~ Company or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then~~ not to exceed $10 million outstanding ~~and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance~~ at any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of~~ one time; (x) ~~$55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations~~ Indebtedness incurred by ~~Holdings or any Restricted Subsidiary pursuant to this clause (d)~~ a Securitization Entity in connection with a ~~Permitted Sale Leaseback shall not be subject~~ Qualified Securitization Transaction that is Non-recourse Indebtedness with respect to the ~~foregoing limitation so long~~ Company and its Restricted Subsidiaries; provided, however, that in the event such Securitization Entity ceases to qualify as ~~the proceeds of such Permitted Sale Leaseback are used by Holdings~~ a Securitization Entity or such ~~Restricted Subsidiary~~ Indebtedness ceases to ~~permanently repay outstanding Term Loans or other~~ constitute such Non-recourse Indebtedness, such Indebtedness ~~secured by a Lien on the assets subject~~ will be deemed, in each case, to be incurred at such ~~Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~time; (exi) Indebtedness ~~incurred by Holdings~~ of the Company or any of its Restricted ~~Subsidiary constituting reimbursement obligations~~ Subsidiaries in connection with ~~respect to letters of credit issued~~ surety, performance, appeal or similar bonds, completion guarantees or similar instruments entered into in the ordinary course of ~~business, including~~ business or from letters of credit ~~in respect of workers’ compensation claims, performance or surety bonds, health, disability~~ or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-~~insurance~~insurance and workers' compensation obligations or similar arrangements; provided that, ~~performance~~in each case contemplated by this clause (xi), ~~bid~~upon the drawing of such instrument, ~~appeal~~ such obligations are reimbursed within 30 days following such drawing; (xii) Indebtedness of Foreign Subsidiaries in the aggregate principal amount of $10 million outstanding at any one time; (xiii) Indebtedness arising under the Earn-Out Agreement and ~~surety bonds and completion guarantees and similar obligations provided by Holdings~~ Indebtedness incurred to finance payments due or ~~any Restricted Subsidiary or obligations~~ becoming due thereunder in an amount not to exceed (a) up to $6.25 million per year in respect of ~~letters of credit~~each Earn-Out Year and (b) the Cumulative Additional Earn-Out Payment, ~~bank guarantees or similar instruments related thereto~~less, in each case, the amount of cash paid in respect of each Earn-Out Year (excluding cash received upon the ~~ordinary course~~ incurrence of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred Indebtedness pursuant to this clause (~~l)(ii), does not at any one time outstanding exceed the greater~~ xiii) in respect of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such ~~Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)~~year); (mxiv) Indebtedness of the ~~incurrence or issuance by Holdings~~ Company or any ~~Restricted Subsidiary~~ of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) 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 such amount need not be inadvertent) drawn against insufficient funds in the ordinary course of business~~; (p)~~ ; provided however, that such Indebtedness is extinguished within three business days of ~~Holdings~~ receipt by the Company or any Restricted Subsidiary ~~supported by a letter~~ of ~~credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount~~ notice of such ~~letter of credit~~insufficient funds; (1xv) Indebtedness of the Company or any ~~guarantee by Holdings~~ Restricted Subsidiary to the extent the net proceeds thereof are promptly deposited to defease the Securities as described under Article Four; (xvi) Indebtedness of the Company or any Restricted Subsidiary arising from agreements for indemnification or purchase price adjustment obligations or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligation of the Company or a Restricted Subsidiary ~~of Indebtedness~~ pursuant to such an agreement, in each case, incurred or ~~other obligations~~ assumed in connection with the acquisition or disposition of any ~~Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor~~business, ~~such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee~~ assets or ~~(2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings~~properties; (rxvii) ~~Indebtedness~~ any renewals, extensions, substitutions, refundings, refinancings or replacements (collectively, a "refinancing") of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to ~~this clause~~ paragraph (ra) ~~shall cease to be deemed incurred or outstanding for purposes~~ of this ~~clause~~ Section 1008 and clauses (rii), (iii), (iv) ~~but shall be deemed incurred for the purposes~~ and (xiii) of this paragraph (b), including any successive refinancings so long as Indebtedness of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Company or a Guarantor may only be refinanced with Indebtedness of ~~Holdings~~ the Company or ~~any of its Restricted Subsidiaries consisting of (i)~~ a Guarantor and the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the aggregate principal amount of ~~any such~~ Indebtedness refinanced is not increased ~~above~~ by such refinancing except by an amount equal to the ~~principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension~~ lesser of (~~except for any original issue discount thereon and~~ A) the stated amount of ~~fees, expenses and~~ any premium ~~and accrued and unpaid interest~~ or other payment contractually required to be paid in connection with such ~~refinancing~~a refinancing pursuant to the terms of the Indebtedness being refinanced or (B) the amount of premium or other payment actually paid at such time to refinance the Indebtedness, plus, in either case, the amount of expenses of the Company incurred in connection with such refinancing and (y1) in the case of any refinancing of Indebtedness that is Subordinated Indebtedness, such new Indebtedness ~~otherwise complies with~~ is made subordinated to the ~~definition~~ Securities at least to the same extent as the Indebtedness being refinanced and (2) in the case of ~~“Permitted Other~~ Pari Passu Indebtedness or Subordinated Indebtedness”;, as the case may be, such refinancing does not reduce the Average Life to Stated Maturity or the Stated Maturity of such Indebtedness; and (xxviii) Indebtedness of the Company or any Restricted Subsidiary in ~~respect of~~ addition to that described in clauses (i) ~~Permitted Other~~ through (xvii) above, and any refinancings of such Indebtedness~~; provided that either (a)~~ , so long as the aggregate principal amount of all such ~~Permitted Other~~ Indebtedness ~~issued or incurred pursuant to this clause (i)(a)~~ shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes $10 million outstanding at any one time.

Appears in 1 contract

Sources: Indenture (Oxford Industries Inc)

Limitation on Indebtedness. ~~Holdings~~ The Parent Borrower will not, and will not permit any Restricted Subsidiary to~~, directly or indirectly~~, create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) ), with respect to any Indebtedness (including Acquired Indebtedness) ), and ~~Holdings~~ the Parent Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not ~~Guarantors~~Guarantors or Borrowers, preferred ~~stock~~stock that are not otherwise pledged as Collateral (the “Non-Guarantor Subsidiary Preferred Stock”); provided that ~~Holdings~~ the Parent Borrower and/or any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Stock or Non-Guarantor Subsidiary Preferred Stock in an aggregate amount up to the Maximum Incremental Facilities Amount (any such obligations that are secured, “Secured Ratio Debt” and any such obligations that are not Indebtedness or not secured, “Unsecured Ratio Debt”, and ~~any Restricted Subsidiary may incur~~ collectively, “Ratio Debt”); provided that (i) the amount of Indebtedness (~~including~~ other than Acquired Indebtedness~~), issue shares of~~ ) and Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Non-Guarantor Subsidiary Preferred Stock ~~and preferred stock~~ that may be incurred pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of ~~(x)~~ $~~85,000,000~~ 67,000,000 and ~~(y) 3.75~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test ~~Period~~ Period; (~~calculated on~~ ii) subject to the Inside Maturity Exceptions and other than in the case of Acquired Indebtedness, Ratio Debt shall not mature earlier than the Initial Term Loan Maturity Date or have a ~~Pro Forma Basis~~weighted average life to maturity shorter than the remaining weighted life to maturity of the Initial Term Loans or the Amendment No. 3 Term Loans (excluding the effects of any amortization of such Ratio Debt in an amount no greater than 1.00% per annum) (in each case as in effect at ~~any one~~ the time ~~outstanding~~of incurrence or establishment of the commitment thereof) and (iii) if such Ratio Debt is Indebtedness secured by Collateral, the Intercreditor Agreement Requirement shall apply. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Mirion Technologies, Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ (A) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries ~~would be~~ is at least ~~2.00~~ 2.00:1.00 or (B) the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if, after giving effect thereto, the Consolidated Total Debt to ~~1.00~~Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.75:1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under ~~Section 10.1(n)(x),~~ Sections 10.1(l)(ii) and (n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150235 million and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ Second Lien Facility, Permitted Second Lien Exchange Notes, and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed $450,000,000 and (xii) ~~$375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed~~ Indebtedness that may be incurred pursuant to ~~a Special Mandatory Redemption~~ Sections 2.14 and 10.1(x)(i) of the Second Lien Credit Agreement (as ~~defined~~ in effect on the ~~Senior Notes Indenture~~Closing Date) (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses); (~~c) (~~i) ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including, in each case, any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany ~~Indebtedness~~ Indebtedness, Disqualified Stock and preferred stock (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to ~~on-balance~~ on‑balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 130205 million and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligationsin accordance with Section 5.2(a); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting ~~reimbursement obligations~~ Reimbursement Obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or ~~self-insurance~~ self‑insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or ~~self-insurance~~self‑insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted ~~Subsidiary~~ Subsidiary, providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’~~ the Borrower’s Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such ~~Guarantor, or the Loans,~~ Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of ~~self-insurance~~self‑insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded ~~Contributions~~ Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (ai) and (biii) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the sum of (A) the greater of (x) $~~85,000,000~~ 185290 million and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence and (B) an additional amount of Indebtedness in lieu of Restricted Payments permitted under Section 10.5 (it being understood that such Indebtedness shall be deemed a Restricted Payment for purposes of compliance with Section 10.5) (it being further understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(n)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $150235 million and (y) 40% of Consolidated EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding; (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m) ~~and~~ or clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated in right of payment to the Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Obligations at least to the same extent as the Indebtedness being ~~Refinanced and~~ refinanced, (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or ~~Guarantor~~a Guarantor and (4) shall have an aggregate principal amount (or liquidation preference, as applicable) that does not exceed the aggregate principal amount (or liquidation preference, as applicable) of such Indebtedness, Disqualified Stock or preferred stock being refinanced (plus an amount equal to all accrued but unpaid interest, fees, premiums and expenses incurred in connection therewith); (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 and Section 10.1(l)(ii) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 150235 million and ~~3.75~~(y) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in clause (A) of the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (1) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 5.75:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in ~~an amount not to exceed, in~~ the aggregate at any one time ~~outstanding,~~ outstanding not to exceed the greater of (x) $~~35,000,000~~ 85130 million and ~~1.5~~(y) 22.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes Ba

Appears in 1 contract

Sources: First Lien Credit Agreement (BrightSpring Health Services, Inc.)

Limitation on Indebtedness. ~~Holdings~~ CGI Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ CGI Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred ~~stock~~Capital Stock; provided that ~~Holdings~~ CGI Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred ~~stock~~Capital Stock, ~~if, after giving effect thereto,~~ in an aggregate outstanding amount at the ~~Fixed Charge Coverage Ratio~~ time of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are incurrence or issuance not ~~Guarantors shall not exceed~~ greater than (1) the greater of (x) $~~85,000,000~~ 20,000,000 and (y) ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of such incurrence or issuance, in each case plus (2) unlimited additional amounts if, after giving effect thereto, CGI Borrower shall on a consolidated basis have an Interest Coverage Ratio of not less than 2.00:1.00 on a Pro Forma Basis at the time of incurrence or issuance; provided, further, that the amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and preferred Capital Stock that may be incurred and issued pursuant to the foregoing together with any amounts incurred under Section 11.1(m)(x) by Restricted Subsidiaries that are not Guarantors shall not exceed an aggregate amount equal to at any one time ~~outstanding~~outstanding the greater of (x) $15,000,000 and (y) 30.0% of Consolidated EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis). The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness ~~represented by the Senior Notes~~ (including any ~~guarantee thereof~~unused commitment) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Sixth Closing Date listed on Schedule ~~10.1~~ 11.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Sixth Closing Date ~~listed on Schedule 10.1 (other than intercompany Indebtedness~~ owed by a ~~Credit Party~~ Borrower to a Restricted Subsidiary, by a Restricted Subsidiary to CGI Borrower or by a Restricted Subsidiary to another ~~Credit Party)~~Restricted Subsidiary; (dc) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred ~~stock~~ Capital Stock incurred or issued by ~~Holdings~~ CGI Borrower or any Restricted ~~Subsidiary,~~ Subsidiary to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ CGI Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ such Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred ~~stock~~ Capital Stock then outstanding and incurred or issued pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~c), does not exceed the greater of (x) $~~55,000,000~~ 15,000,000 and (y) ~~2.50~~30.0% of Consolidated ~~Total Assets~~ EBITDA of CGI Borrower for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of ~~incurrence~~incurrence or issuance; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary pursuant to this clause (dc) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the ~~proceeds~~ Net Cash Proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ CGI Borrower or such Restricted Subsidiary to permanently repay outstanding Permitted Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale ~~Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)~~Leaseback; (ed) Indebtedness incurred by ~~Holdings~~ CGI Borrower or any Restricted Subsidiary (including letter of credit obligations constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, bid, appeal, performance or surety bonds, performance or completion guarantees, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (fe) Indebtedness arising from agreements of ~~Holdings~~ CGI Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or any similar obligations, in each case, incurred or assumed in connection with ~~the disposition of~~ any ~~business, assets or a Subsidiary, other than guarantees of Indebtedness incurred~~ transaction not expressly prohibited by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this ~~clause (f))~~Agreement; (gf) Indebtedness of CGI Borrower to Holdings to or a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the~~ a Borrower or a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations pursuant to an Intercompany Note or otherwise and any such Indebtedness owing by CGI Borrower to Holdings shall be subject to the Holdings Subordination Agreement for so long as the Holdings Subordination Agreement is in effect in accordance with its terms; provided, further, 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 Indebtedness (except to ~~the~~ Holdings, CGI Borrower or ~~another~~ any Restricted ~~Subsidiary~~Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (gf); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Canada Goose Holdings Inc.)

Limitation on Indebtedness. (a) Holdings will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, with respect to (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and Holdings will not issue any ~~shares of~~ Disqualified Stock and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ preferred stock; ~~provided~~ provided, however, that Holdings may incur Indebtedness (including Acquired ~~Indebtedness~~Debt) or issue ~~shares of~~ Disqualified ~~Stock,~~ Stock and ~~any~~ its Wholly Owned Restricted ~~Subsidiary~~ Subsidiaries may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) or issue ~~shares of Disqualified Stock and issue shares of~~ preferred stock, ~~if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for Holdings’ most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the ~~Restricted Subsidiaries~~ date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would be have been at least ~~2.00~~ 2.0 to ~~1.00~~1.0, 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, further,~~ provided further that the maximum aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred by any Non-Guarantor Restricted Subsidiaries pursuant to ~~the foregoing, together with~~ this paragraph and any ~~amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors~~ Permitted Refinancing Indebtedness in respect thereof shall not exceed the greater of (x) $~~85,000,000~~ 22.0 million and (y) ~~3.75~~25.0% of Consolidated ~~Total Assets~~ EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended ~~Test Period~~ four fiscal quarters for which internal financial statements are available (~~calculated on a Pro Forma Basis) at~~ any ~~one time outstanding~~Indebtedness incurred pursuant to the provisions described in this paragraph being herein referred to as “Ratio Indebtedness”). ~~The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~ (b) Section 3.2(a) will not prohibit the incurrence of the following Indebtedness ~~represented~~ (collectively, “Permitted Debt”): (1) the incurrence by ~~the Senior Notes (including~~ Holdings or any ~~guarantee thereof) and exchange notes issued in respect~~ of ~~such notes and any guarantee thereof~~ its Restricted Subsidiaries of Indebtedness or 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 potential liability of Holdings or any of its Restricted Subsidiaries thereunder) not to exceed the greater of (x) $~~375,000,000 minus~~ 75.0 million and (y) the ~~aggregate principal amount~~ Borrowing Base as of ~~Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in~~ the ~~Senior Notes Indenture)~~date of such incurrence; (c2) ~~(i) Indebtedness outstanding on~~ the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred incurrence by Holdings or any of its Restricted ~~Subsidiary~~Subsidiaries of the Existing Indebtedness; (3) the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings, industrial revenue bonds, economic development loans and purchase money obligations, in each case, incurred for the purpose of financing (whether prior to ~~finance~~ or within 270 days after) all or any part of the ~~purchase~~purchase price or cost of design, ~~lease~~development, construction, installation or improvement of ~~property (real or personal)~~ property, plant or equipment ~~that is~~ or other assets used or useful in ~~a Similar Business,~~ the business of Holdings or any of its Restricted Subsidiaries (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and whether such Indebtedness ~~arising from~~ is owed to the ~~conversion of the obligations of Holdings~~ seller or ~~any Restricted Subsidiary under~~ Person carrying out such construction or ~~pursuant~~ improvement or to any ~~“synthetic lease” transactions to on-balance sheet Indebtedness of Holdings~~ third party) (including any reasonably related fees or expenses incurred in connection with such ~~Restricted Subsidiary~~purchase, ~~in an~~ design, construction, installation or improvement); provided that the aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or ~~liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ discharge any Indebtedness incurred pursuant to this clause (~~d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d~~3), ~~does~~ shall not exceed the greater of (x) $~~55,000,000~~ 35.0 million and (y) ~~2.50~~40.0% of Consolidated ~~Total Assets~~ EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended ~~Test Period~~ four fiscal quarters for which internal financial statements are available; (~~calculated on a Pro Forma Basis~~4) at the ~~time of incurrence; provided that Capitalized Lease Obligations incurred~~ incurrence by Holdings 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 3.2(a) or clauses (2), (4), (5), (12) or (16) of this Section 3.2(b); (5) the incurrence by Holdings or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Holdings and any of its Restricted Subsidiaries; provided, however, that: (i) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the 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 Issuer, or the Note Guarantee, in the case of a Guarantor; and (ii) (A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Holdings or any of its Restricted Subsidiaries and (B) any sale or other transfer of any such Indebtedness to a Person that is not Holdings or a Restricted Subsidiary ~~pursuant~~ of Holdings will be deemed, in each case, to ~~this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds~~ constitute an incurrence of such ~~Permitted Sale Leaseback are used~~ Indebtedness by Holdings or such Restricted ~~Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured~~ Subsidiary, as the case may be, that was not permitted by ~~a Lien on the assets subject to such Permitted Sale Leaseback~~ this clause (~~excluding any Lien ranking junior to the Lien securing the Obligations~~5); (e6) the issuance by any of Holdings’ Restricted Subsidiaries to Holdings or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that: (i) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than Holdings or a Restricted Subsidiary of Holdings; and (ii) any sale or other transfer of any such preferred stock to a Person that is not Holdings or a Restricted Subsidiary of Holdings 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 (6); (7) the incurrence by Holdings or any of its Restricted Subsidiaries of Hedging Obligations entered into for bona fide hedging purposes (and not for speculative purposes) as determined in good faith by Holdings; (8) the guarantee (a) by the Issuer or any of the Guarantors of Indebtedness of Holdings or a Restricted Subsidiary of Holdings that was permitted to be incurred by another provision of this Section 3.2; 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 (b) by any Non-Guarantor Restricted Subsidiary of Indebtedness of another Non-Guarantor Restricted Subsidiary and that is permitted to be incurred by another provision of this Section 3.2; (9) Indebtedness incurred by Holdings or any of its Restricted ~~Subsidiary~~ 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, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance~~ claims or self-~~insurance~~ 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 Holdings or any of its Restricted Subsidiaries of Indebtedness in respect of workers’ compensation claims~~, performance or surety bonds~~, health, disability or and other types of employee ~~benefits or~~ benefits, social security benefits, unemployment and other self-insurance obligations, vehicle, property, casualty or liability insurance or ~~self-insurance; (f) Indebtedness arising from agreements~~ other similar bonds, the financing of ~~Holdings or a Restricted Subsidiary providing for indemnification, adjustment~~ insurance premiums in the ordinary course of ~~purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdingsbankers’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insuranceacceptances, performance, ~~bid~~surety, ~~appeal~~ judgment, appeal, bid and ~~surety bonds~~ performance bonds, trade contracts and leases, cash management obligations and netting, overdraft protection and other similar facilities or arrangements and completion guarantees ~~and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case,~~ in the ordinary course of business; (i11) ~~Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of~~ the ~~net cash proceeds received~~ incurrence by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Restricted Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses of Indebtedness arising from (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient ~~funds in the ordinary course~~ funds, so long as such Indebtedness is covered within ten Business Days of ~~business~~notification to Holdings or any of its Restricted Subsidiaries of its incurrence and (b) Cash Management Obligations; (p12) ~~Indebtedness of~~ the incurrence by Holdings or any of its Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary Subsidiaries of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant arising from ~~and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness~~ agreements of Holdings or any of its Restricted Subsidiaries ~~consisting~~ providing for indemnification, adjustment of ~~(i) the financing of insurance premiums~~ purchase price, working capital adjustments, holdback, earn-outs or ~~(ii) take or pay~~ similar obligations ~~contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness~~ of Holdings or any of its Restricted Subsidiaries ~~undertaken~~ pursuant to such agreements, in each case, incurred in connection with ~~cash management and related activities with respect to~~ the acquisition or disposition of any ~~Subsidiary~~ Restricted Subsidiary, business, property or ~~joint venture in the ordinary course of business~~asset; (u13) ~~Indebtedness consisting of Indebtedness issued~~ the incurrence by Holdings or any of its Restricted Subsidiaries of Indebtedness to ~~future current~~ the extent the net proceeds thereof are promptly deposited in trust to defease the Notes or ~~former officers, directors, managers~~ to satisfy and ~~employees thereof, their respective estates, spouses or former spouses~~discharge this Indenture, in each case ~~to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described~~ in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies accordance with the ~~definition~~ terms of ~~“Permitted Other Indebtedness”~~this Indenture; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Indenture (CPI Card Group Inc.)

Limitation on Indebtedness. ~~Holdings will~~ The Borrower shall not, and ~~will~~ shall not permit any ~~Restricted Subsidiary~~ of its Subsidiaries to, ~~directly~~ incur or ~~indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)~~ at any time be liable with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x), by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply toexcept: (a) Indebtedness ~~arising~~ under ~~the Credit Documents~~this Agreement and Guaranty Obligations in respect thereto; (bi) Purchase money Indebtedness ~~represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof~~ in an aggregate principal amount at any time outstanding not to exceed $25,000,000 incurred or assumed for the purpose of financing all or any part of the cost of acquiring, constructing or improving fixed assets and (xii) ~~$375,000,000 minus (y)~~ Indebtedness existing at the ~~aggregate~~ time a Person is merged or consolidated with or into the Borrower or a Subsidiary, or at the time such Person becomes a Subsidiary or at the time such asset is acquired, so long as the principal amount of ~~Senior Notes redeemed~~ Indebtedness under this clause (ii) does not exceed $25,000,000 at any time outstanding and was not incurred in contemplation of such merger, consolidation or asset acquisition, and any subsequent extensions, renewals or replacements thereof so long as the principal amount thereof is not increased above the amount outstanding immediately prior thereto (except for the amount of any premium required to be paid pursuant to ~~a Special Mandatory Redemption (as defined~~ the terms of such Indebtedness, plus expenses reasonably incurred by the issuer of such Indebtedness, in ~~the Senior Notes Indenture~~connection with such extension, renewal or replacement); (c) ~~(i)~~ Indebtedness ~~outstanding on~~ of the ~~Closing Date listed on Schedule 10.1 and (ii) intercompany~~ Borrower owed to a Guarantor, or Indebtedness ~~outstanding on~~ of a Guarantor owed to the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to~~ Borrower or another ~~Credit Party)~~Guarantor; (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, Foreign Subsidiaries in an aggregate ~~principal~~ amount ~~or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant~~ not to ~~this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not~~ exceed ~~the greater of (x)~~ $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)25,000,000; (e) Indebtedness of the Borrower and its Subsidiaries not otherwise permitted by this Section 6.2 incurred ~~by Holdings or~~ after the Closing Date in an aggregate principal amount at any ~~Restricted Subsidiary constituting reimbursement obligations with respect~~ time outstanding not to ~~letters of credit issued in~~ exceed $10,000,000; provided, however, that the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees aggregate principal amount 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred Loan Parties pursuant to ~~in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of~~ this clause (~~f))~~e) shall not exceed $5,000,000 at any time outstanding; (i) Guaranty Obligations of the Borrower or any Guarantor of Indebtedness of the Borrower or any other Guarantor permitted by this Section 6.2 and (ii) Guaranty Obligations of any Subsidiary that is not a Guarantor of Indebtedness of the Borrower or any of its Subsidiaries permitted by this Section 6.2; (g) Indebtedness of ~~Holdings~~ a Foreign Subsidiary owed to a ~~Restricted~~ Foreign Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness (other than Indebtedness described in clauses (j), (k) and (l) below) outstanding as of ~~a Restricted Subsidiary owing to Holdings~~ the Closing Date and listed on Schedule 6.2, plus any subsequent extensions, renewals or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may bereplacements thereof; provided, ~~further~~however, ~~that~~ that, after giving effect to any ~~subsequent transfer~~ extensions, renewals or replacements, Indebtedness permitted pursuant to this Section 6.2(h) does not exceed the respective amount listed on Schedule 6.2 as of ~~any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)~~the Closing Date; (i) ~~shares~~ Indebtedness consisting of ~~preferred stock~~ obligations in respect of ~~a Restricted Subsidiary issued~~ performance and surety bonds and completion guaranties incurred (i) in the ordinary course of business not to ~~Holdings~~ exceed $500,000 in aggregate amount at any time outstanding and (ii) in connection with the appeal of judgments or ~~another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock~~ orders rendered against the Borrower or any ~~other event which results~~ of its Subsidiaries not to exceed $7,500,000 in aggregate amount at any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i)time outstanding; (j) ~~Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)~~Indebtedness of the Borrower incurred under the Existing Senior Secured Notes and the other Existing Senior Secured Note Documents in an aggregate outstanding principal amount not to exceed $275,000,000, and Permitted Refinancings thereof; (k) ~~obligations in respect~~ Indebtedness of ~~self-insurance, performance, bid, appeal~~ the Borrower incurred under the Existing Subordinated Notes and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ~~ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary~~ other Existing Subordinated Note Documents in an aggregate outstanding principal amount ~~or liquidation preference up~~ not to ~~100%~~ exceed $315,000,000, and Permitted Refinancings thereof; and (l) Indebtedness of the ~~net cash proceeds received by Holdings since immediately after~~ Borrower incurred under the ~~Closing Date from~~ New Senior Secured Notes and the ~~issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case,~~ other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder New Senior Secured Note Documents in an aggregate ~~principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then~~ outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantorto exceed $150,000,000, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees Permitted Refinancings thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes .

Appears in 1 contract

Sources: Credit Agreement (Tekni Plex Inc)

Limitation on Indebtedness. ~~Holdings will not, and will not permit~~ Neither the Borrower nor any of the Restricted ~~Subsidiary to~~Subsidiaries shall, directly or indirectly, create, incur, issue, assume, guarantee or ~~otherwise~~ in any manner become directly or indirectly liable, contingently or otherwise (in each case, to “incur”), for the payment of any Indebtedness, except as follows (the following, collectively, “~~incur” and collectively, an “incurrence~~Permitted Indebtedness”): (a) ~~with respect to any~~ Indebtedness (including ~~Acquired~~ Acquisition Indebtedness) ~~and Holdings will not issue any shares of Disqualified Stock and will not permit~~ incurred by the Borrower or any Restricted Subsidiary ~~to issue any shares of Disqualified Stock or~~so long as, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect theretoon a pro forma basis, the Fixed Charge Coverage Ratio ~~of Holdings and the Restricted Subsidiaries would be~~ is at least ~~2.00 to 1.00~~2.00:1.00; ~~provided, further,~~ provided that the aggregate amount of Indebtedness (including Acquisition Indebtedness~~, Disqualified Stock and preferred stock that may be~~ ) incurred ~~pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ by Restricted Subsidiaries that are not ~~Guarantors~~ Obligors pursuant to this clause 9.2(a), when taken together with the aggregate amount of Indebtedness incurred by Restricted Subsidiaries that are not Obligors pursuant to clause 9.2(b), shall not exceed the greater of ~~(x)~~ $~~85,000,000~~ 1,150,000,000 and ~~(y) 3.75~~50.0% of Consolidated ~~Total Assets for~~ EBITDA in the most ~~recently ended Test Period (calculated on a Pro Forma Basis)~~ recent Four Quarter Period, at any one time outstanding~~. The foregoing limitations will not apply to:~~ , on a pro forma basis (~~a) Indebtedness arising under~~ including pro forma application of the ~~Credit Documents~~proceeds therefrom); (b) Indebtedness ~~represented~~ incurred by the Borrower or any Restricted Subsidiary (x) in an aggregate principal amount outstanding at any time under this clause (b) (any Indebtedness incurred pursuant to this Section 9.2(b), “Incremental Equivalent Debt”), when taken together with the aggregate principal amount of outstanding Incremental Loans funded under Section 2.2 hereof, not to exceed the Available Incremental Amount (provided that any such Incremental Equivalent Debt shall be documented separately from this Agreement) and (y) any Refinancing Indebtedness with respect to the Indebtedness described in the preceding clause (x); provided, that (A) the aggregate amount of Indebtedness incurred by Restricted Subsidiaries that are not Obligors pursuant to this clause 9.2(b), when taken together with the aggregate amount of Indebtedness incurred by Restricted Subsidiaries that are not Obligors pursuant to clause 9.2(a), shall not exceed the greater of $1,150,000,000 and 50.0% of Consolidated EBITDA in the most recent Four Quarter Period and (B) such Indebtedness complies with the applicable Required Additional Debt Terms; (c) Indebtedness of the Borrower and its Restricted Subsidiaries (x) under (i) the 2019 Senior Notes ~~(including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof~~ Indenture in an aggregate principal amount not to exceed $1,200,000,000, (xii) the 2024 Senior Notes Indenture in an aggregate principal amount not to exceed $~~375,000,000 minus~~ 800,000,000, (iii) the 2025 Senior Notes Indenture in an aggregate principal amount not to exceed $2,750,000,000 and (iv) (I) the ABL Agreement in an aggregate principal amount not to exceed $4,000,000,000 and (II) Indebtedness that may be incurred pursuant to Sections 2.5 and 8.1(c) of the ABL Agreement as in effect on the Agreement Date and (y) Refinancing Indebtedness in respect of the ~~aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined~~ Indebtedness set forth in the ~~Senior Notes Indenture);~~ preceding clause (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Partyx); (d) Indebtedness of the Borrower and the Guarantors related to the Term Loans extended under this Agreement (including ~~Capital Lease Obligations)~~any Incremental Loans) and any Guarantees of such Term Loans, ~~Disqualified Stock~~ and ~~preferred stock incurred~~ any Indebtedness in respect thereof; (e) the incurrence by ~~Holdings or any Restricted Subsidiary, to finance~~ the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings Borrower or any Restricted Subsidiary of (x) the Indebtedness existing as of the Agreement Date that is described on Schedule 9.2 and (y) Refinancing Indebtedness in respect of the Indebtedness set forth in the preceding clause (x); (f) Indebtedness of the Borrower or any Restricted Subsidiary (x) under equipment purchase or ~~pursuant~~ lines of credit or Floor Plan Financing, or for Capital Lease Obligations or Purchase Money Obligations; provided that, immediately after giving effect to any ~~“synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or~~ such ~~Restricted Subsidiary~~incurrence, ~~in an~~ the aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount~~ of ~~all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ Indebtedness incurred ~~pursuant to~~ under this clause (df) and ~~all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d),~~ then outstanding does not exceed the greater of (x) $~~55,000,000~~ 1,400,000,000 and (y) ~~2.50~~15.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period~~ and (~~calculated on a Pro Forma Basis~~y) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Refinancing Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of ~~workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other~~ the Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, set forth in ~~each case, incurred or assumed in connection with~~ the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this preceding clause (f)x); (g) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary incurred in respect of (a) performance bonds, completion guarantees, surety bonds, bankers’ acceptances, letters of credit or other similar bonds, instruments or obligations, including Indebtedness evidenced by letters of credit issued to a support the insurance or self-insurance obligations of the Borrower or any of the Restricted Subsidiaries (including to secure workers’ compensation and other similar insurance coverages), but excluding letters of credit issued in respect of or to secure money borrowed, (b) obligations under Hedge Agreements entered into for bona fide hedging purposes of the Borrower and not for speculative purposes, (c) financing of insurance premiums or (d) cash management obligations and netting, overdraft protection and other similar facilities or arrangements, in each case arising under standard business terms of any bank at which the Borrower or any Restricted Subsidiary maintains such facility or arrangement; (h) Indebtedness consisting of accommodation guarantees for the benefit of trade creditors of the Borrower or any Restricted Subsidiary~~; provided that any such~~ ; (i) Indebtedness ~~owing to a Restricted Subsidiary that is not~~ of the Borrower or a ~~Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such~~ Restricted Subsidiary ~~ceasing~~ owed to ~~be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to~~ and held by the Borrower or another Restricted Subsidiary~~) shall be deemed~~; provided, ~~in each case to be an incurrence of such Indebtedness not permitted by this clause (g);~~however, that: (hi) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower or a any Guarantor ~~incurs~~ is the obligor on such Indebtedness ~~owing to a Restricted Subsidiary that~~ and the payee is not the Borrower or a Guarantor, such Indebtedness is must be expressly subordinated to the prior payment in ~~right~~ full in cash of ~~payment to~~ all Obligations under this Agreement, in the case of the Borrower, or the Guarantee of the Obligations, in the case of a Guarantor; and (ii) any transfer of such ~~Guarantor,~~ Indebtedness by the Borrower or a Restricted Subsidiary (other than to the Borrower or another Restricted Subsidiary) or the ~~Loans~~sale, transfer or other disposition by the Borrower or any Restricted Subsidiary of Capital Stock of a Restricted Subsidiary (other than to the Borrower or a Restricted Subsidiary) that results in such Indebtedness being held by a Person other than the Borrower or a Restricted Subsidiary shall, in each case, be deemed to constitute an incurrence of such Indebtedness by the Borrower or such Restricted Subsidiary, as the case may be~~; provided, further~~, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock was not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from (A) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (B) customer deposits and advance payments received in the ordinary course of business from customers for goods or services purchased or rented in the ordinary course of business; (k) Indebtedness of any Foreign Subsidiaries (x) in an aggregate principal amount at any time outstanding not exceeding an amount equal to the Foreign Borrowing Base and (y) Refinancing Indebtedness in respect of the Indebtedness set forth in the preceding clause (x); (l) Indebtedness arising from agreements of the Borrower or any Restricted Subsidiary providing for guarantees, indemnification, obligations in respect of earnouts or other purchase price adjustments or holdback of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; (i) Non-Recourse Indebtedness of any Special Purpose Vehicle in respect of any Securitization Transactions, (ii) Indebtedness arising from the making of Standard Securitization Undertakings by the Borrower or any Restricted Subsidiary and (iii) Refinancing Indebtedness in respect of the Indebtedness set forth in the preceding clauses (i) and (ii); (n) Guarantees by the Borrower or a Restricted Subsidiary of Indebtedness that was permitted to be incurred by the Borrower or any Restricted Subsidiary under this Agreement; provided that if the Indebtedness being Guaranteed is subordinated to or pari passu with any of the Obligations, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness Guaranteed; (o) Guarantees or other Indebtedness in respect of Indebtedness of (i) an Unrestricted Subsidiary, (ii) a Person in which the Borrower or a Restricted Subsidiary has a minority interest or (iii) joint ventures or similar arrangements; provided, however, that at the time of incurrence of any Indebtedness pursuant to this clause (o) the aggregate principal amount of all Guarantees and other Indebtedness incurred under this clause (o) and then outstanding does not exceed the greater of (x) $450,000,000 and (y) 5.0% of Consolidated Tangible Assets; (p) Indebtedness of ~~Holdings~~ (A) the Borrower or any Restricted Subsidiary ~~supported~~ incurred to finance or refinance, or otherwise incurred in connection with, any acquisition of assets (including Capital Stock), business or Person, or any merger or consolidation of any Person with or into the Borrower or any Restricted Subsidiary, or (B) any Person that is acquired by ~~a letter of credit issued pursuant~~ or merged or consolidated with or into the Borrower or any Restricted Subsidiary (including Indebtedness thereof incurred in connection with any such acquisition, merger or consolidation) (the Indebtedness described in the foregoing clauses (A) and (B), “Acquisition Indebtedness”) and any Refinancing Indebtedness incurred to ~~a credit facility otherwise permitted hereunder, in a principal amount not in excess~~ Refinance any of the ~~stated amount~~ foregoing Indebtedness; provided that on the date of such ~~letter of credit~~acquisition, merger or consolidation, after giving effect thereto, either (I) the Fixed Charge Coverage Ratio would be equal to or greater than 2.00:1.00 or (II) the Fixed Charge Coverage Ratio would be equal to or greater than the Fixed Charge Coverage Ratio immediately prior to giving effect thereto; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (ri) Indebtedness of the Borrower or any Restricted ~~Subsidiaries that are not Guarantors in an amount not to exceed~~Subsidiary, in addition to that described in clauses (a) through (p) above or (q)(ii) through (u) below; provided that immediately after giving effect to any such incurrence, the aggregate ~~at any one time outstanding, the greater~~ principal amount of ~~$35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any~~ Indebtedness incurred pursuant to this clause (rq)(i) ~~shall cease to be deemed incurred or~~ and then outstanding does not exceed the greater of (x) $900,000,000 and (y) 10.0% of Consolidated Tangible Assets and (ii) Indebtedness of any Foreign Subsidiary that is secured by a Lien on the asset of such Foreign Subsidiary incurring such Indebtedness, in an aggregate outstanding principal amount for ~~purposes of~~ all such Foreign Subsidiaries under this clause (q)(ii) not to exceed the great of (x) $900,000,000 and (y) 10% of Consolidated Tangible Assets at any time; (r) ~~but shall be deemed incurred for~~ (x) Contribution Indebtedness, less the ~~purposes~~ Contribution Amounts and (y) Refinancing Indebtedness in respect of the ~~first paragraph of this covenant from and after~~ Indebtedness set forth in the ~~first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this~~ preceding clause (r)x); (s) Indebtedness representing deferred compensation, severance and health and welfare retirement benefits to current and former employees of ~~Holdings~~ the Borrower or ~~any of its~~ a Restricted ~~Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case,~~ Subsidiary incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business;[reserved]; and (u) Indebtedness ~~consisting~~ of ~~Indebtedness issued by Holdings or~~ any ~~of its~~ Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of Subsidiary that is not an Obligor; provided that (i) ~~Permitted Other~~ such Indebtedness is not guaranteed by any Obligor, (ii) the holder of such Indebtedness does not have, directly or indirectly, any recourse to any Obligor, whether by reason of representations or warranties, agreement of the parties, operation of law or otherwise, and (iii) such Indebtedness is not secured by any assets other than assets of such Restricted Subsidiary or other Restricted Subsidiaries that are not Obligors. For the purposes of determining compliance with, and the outstanding principal amount of Indebtedness incurred pursuant to and in compliance with, this Section 9.2, (i) in the event that Indebtedness meets the criteria of more than one type of Indebtedness described in this Section 9.2, the Borrower, in its sole discretion, shall classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one or a combination of the clauses of this Section 9.2; provided that (x) Indebtedness outstanding on the Agreement Date under the ABL Agreement shall be treated as incurred pursuant to Section 9.2(c) above and (y) any other obligation of the obligor on such Indebtedness (or of any other Person who could have incurred such Indebtedness under this Section 9.2) arising under any guarantee, Lien, bankers’ acceptance, letter of credit or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such guarantee, Lien, letter of credit, bankers’ acceptance or other similar instrument or obligation secures the ~~Net Cash Proceeds therefrom are applied~~ principal amount of such Indebtedness, (ii) if any Indebtedness is incurred to refinance Indebtedness initially incurred in reliance on a basket measured by reference to a percentage of Consolidated Tangible Assets at the time of incurrence, and such refinancing would cause the percentage of Consolidated Tangible Assets restriction to be exceeded if calculated based on the Consolidated Tangible Assets on the date of such refinancing, such percentage of Consolidated Tangible Assets restriction shall not be deemed to be exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced, plus the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses (including accrued and unpaid interest) incurred or payable in connection with such refinancing and (iii) the principal amount of Indebtedness outstanding under any clause of this Section 9.2, shall be determined after giving effect to the ~~prepayment~~ application of ~~Term Loans~~ proceeds of any such Indebtedness to refinance any such other Indebtedness. In addition, with respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence. Except as provided in the ~~manner set forth~~ paragraph below, with respect to Indebtedness denominated in ~~Section 5.2(a)(i)~~a foreign currency, the amount of any Indebtedness outstanding as of any date shall be: (i) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (ii) the principal amount of the Indebtedness, in the case of any other Indebtedness; and 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 (iiB) the amount of the Indebtedness of the other Person. For purposes of determining compliance with any ~~refinancing~~Dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, ~~refunding~~the 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, ~~renewal~~ in the case of term Indebtedness, or ~~extension~~ first committed, in the case of ~~any Indebtedness specified in subclause~~ revolving credit Indebtedness; provided that (i) ~~above; provided that, (x)~~ the Dollar-equivalent principal amount of any such Indebtedness outstanding on the Agreement Date shall be calculated based on the relevant currency exchange rate in effect on the Agreement Date, (ii) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency (or in a different currency from such Indebtedness so being incurred), and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not ~~increased above~~ to have been exceeded so long as the principal amount ~~thereof~~ of such refinancing Indebtedness, calculated as described in the following sentence, does not exceed (x) the outstanding ~~immediately prior to~~ or committed principal amount (whichever is higher) of such ~~refinancing, refunding, renewal or extension~~ Indebtedness being refinanced plus (~~except for any original issue discount thereon and~~ y) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses ~~and premium and accrued and unpaid interest~~ incurred in connection with such ~~refinancing)~~ refinancing and (~~y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a~~iii) the ~~aggregate~~ Dollar-equivalent principal amount of ~~all such Permitted Other~~ Indebtedness ~~issued or~~ denominated in a foreign currency and incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes a Cre

Appears in 1 contract

Sources: Credit Agreement (Herc Holdings Inc)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock is issued would be have been at least 2.00 to 1.00, 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 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding. ~~The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~1004254246v19 (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior ~~Notes~~ Secured Notes, (~~including any guarantee thereof~~d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), up to an aggregate principal amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (A) $2,275.02,600 million and (B) the maximum aggregate principal amount (as of the date of incurrence of any such ~~notes~~ Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.50 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any ~~guarantee thereof~~ Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; (ii) [Reserved]Indebtedness in an aggregate ~~principal~~ amount at any time outstanding not to exceed $300.0 million incurred in reliance on Section 2.6(a)(i)(A) of this Agreement; (~~x) $375,000,000 minus (y~~iii) the ~~aggregate principal amount of Senior~~ Existing Unsecured Notes ~~redeemed pursuant to a Special Mandatory Redemption~~ and other Existing Indebtedness (~~as defined~~ other than Indebtedness described in ~~the Senior Notes Indenture~~clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such ~~assets and Indebtedness arising from~~ assets) provided that the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount~~ of ~~all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ Indebtedness incurred pursuant to this clause ~~(d) and all Refinancing Indebtedness incurred~~ to ~~Refinance~~ finance the acquisition of Capital Stock of any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does~~ Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)Tangible Assets; (ev) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary 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~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to ~~reimbursement~~ reimbursement-type obligations regarding workers’ compensation claims~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance;; provided 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; 1004254246v19 (fvi) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnouts 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause (f)~~clause); (gvii) Indebtedness of ~~Holdings~~ the Borrower owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Borrower or any Restricted Subsidiary; ~~provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee;~~ provided, ~~further~~however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event ~~which~~ that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of any such Indebtedness (except to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an~~ constitute the incurrence of such Indebtedness ~~not permitted~~ by ~~this clause~~ the issuer thereof and (~~g); (h~~B) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower ~~or a Guarantor incurs~~ is the obligor on such Indebtedness (other than any Existing Indebtedness) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is expressly subordinated ~~in right of payment~~ to the ~~Guarantee~~ prior payment in full in cash of ~~such Guarantor, or~~ all obligations of the ~~Loans, as~~ Borrower with respect to the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)Notes; (iviii) shares of ~~preferred stock~~ Preferred Stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower or ~~another~~ a 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 ~~preferred stock~~ Preferred Stock (except to ~~Holdings~~ the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of ~~preferred stock not permitted by this clause (i)~~Preferred Stock; (jix) Hedging Obligations of the Borrower or any Restricted Subsidiary (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting (A) interest rate risk with respect to any Indebtedness that is permitted to be incurred by the terms of this Agreement, (B) exchange rate risk with respect to any currency exchange or (C) commodity price risk; (kx) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (ixi) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~in an aggregate principal amount~~ or ~~liquidation preference up to 100%~~ Preferred Stock of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation ~~preference~~preference which, ~~which~~ when aggregated with the principal amount and liquidation preference of all other ~~Indebtedness, Disqualified~~ Indebtedness and Preferred Stock ~~and preferred stock~~ then outstanding and incurred pursuant to this clause (~~l)(ii~~xi), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 250.0 million and ~~3.75~~17.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ (it being understood that any ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ incurred pursuant to this clause (~~l)(ii~~xi) shall cease to be deemed incurred or outstanding for 1004254246v19 purposes of this clause (~~l)(ii~~xi) but shall be deemed incurred for the purposes of the ~~first paragraph of this~~ Section ~~10.1~~ 8.1(a) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ under ~~the first paragraph of this~~ Section ~~10.1~~ 8.1(a) without reliance on this clause (~~l)(ii~~xi)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. Holdings and the Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings and the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the ~~Fixed Charge Coverage~~ Consolidated Total Debt to Consolidated EBITDA Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries would be ~~at least 2.00~~ no more than 6.50 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 45,000,000 and (y) ~~3.75~~20.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Visant Corp)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any of its Restricted ~~Subsidiary to, directly or indirectly,~~ Subsidiaries to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ the Borrower and its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries would be at least 2.00 to 1.00; provided, further, that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 165,000,000 and (y) ~~3.75~~40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (bi) Indebtedness represented by the ~~Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes~~ ABL Facility and any guarantee thereof in an aggregate principal amount (together with any Refinancing Indebtedness in respect thereof and all accrued interest, fees and expenses) not to exceed the greater of (xA) $~~375,000,000 minus~~ 650,000,000 and (yB) the ~~aggregate principal amount~~ Borrowing Base Basket as of the date of such incurrence and (ii) Indebtedness represented by the Existing ▇▇▇▇▇ Notes and Existing Senior Notes ~~redeemed pursuant to a Special Mandatory Redemption (as defined in the~~ and any guarantee thereof; provided that such Existing ▇▇▇▇▇ Notes and Existing Senior Notes ~~Indenture)~~have been defeased; (c) (i) Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the ~~Closing~~ Restatement Effective Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 150,000,000 and (y) ~~2.50~~35% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by ~~Holdings~~ the Borrower or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business), ~~including letters of credit~~ in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a ~~Subsidiary~~Subsidiary or other Person, 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 such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Subsidiary Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings or~~ another Restricted ~~Subsidiary~~Subsidiary or the Borrower; provided that if ~~the Borrower or~~ a Subsidiary Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Subsidiary Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such ~~Guarantor, or the Loans,~~ Subsidiary Guarantor as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another ~~Restricted Subsidiary~~Subsidiary Guarantor) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (ki) obligations in respect of self-insurance, performance, bid, ~~appeal~~ appeal, and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or (ii) obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (i) Indebtedness, Disqualified Stock and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference (together with any Refinancing Indebtedness in respect thereof) up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the ~~Closing~~ Restatement Effective Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to ~~Holdings or~~ any of ~~its Subsidiaries or any Cure Amounts~~the Borrower’s Subsidiaries) as determined in accordance with Sections ~~10.5(a)(iii)(2~~10.5(a)(iii)(B) and ~~10.5(a)(iii)(3~~10.5(a)(iii)(C) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of (x) $~~85,000,000~~ 205,000,000 and ~~3.75~~(y) 50% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to ~~Refinance~~ refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) ~~and,~~ and this clause (m~~) and clause (n~~) below or any Indebtedness, Disqualified Stock or preferred stock issued to so ~~Refinance~~ refinance, replace, refund, extend, renew, defease, restructure, amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being ~~Refinanced~~refinanced, (2) to the extent such Refinancing Indebtedness ~~Refinances~~ refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, ~~respectively,~~ (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, ~~respectively~~ respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Subsidiary Guarantor that ~~Refinances~~ refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or a Subsidiary Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (i) $~~85,000,000~~ 165,000,000 and ~~3.75~~(ii) 40% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such ~~acquisition~~ acquisition, merger, consolidation or ~~merger~~ designation described in this clause (n), ~~either:~~ (i) either (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is equal to or greater than that immediately prior to such acquisition, ~~merger~~ merger, consolidation or ~~consolidation~~designation or (ii) either (1) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be either (A) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediate prior to such acquisition, merger, consolidation or designation or (2) less than or equal to 6.25:1.00; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (pi) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of ~~credit issued pursuant to a credit facility otherwise permitted hereunder~~credit, in a principal amount not in excess of the stated amount of such letter of ~~credit~~credit so long as such letter of credit is otherwise permitted to be incurred pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such ~~guarantee or~~ guarantee, (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower or (3) any co-issuance by Academy Finance Corporation of Indebtedness of the Borrower; (r) Indebtedness of Restricted Subsidiaries that are not ~~Guarantors in an~~ Guarantors; provided that the principal amount of such Indebtedness of which the primary obligor or a guarantor is a Restricted Subsidiary that is not to a Guarantor shall not exceed, in the aggregate at any one time outstanding, the greater of (x) $~~35,000,000~~ 105,000,00 and ~~1.5~~(y) 25.5% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of ~~business~~business or consistent with past practice; (ti) Indebtedness of ~~Holdings~~ the Borrower or any of ~~its~~ the Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business~~; (u) Indebtedness consisting~~ , including with respect to financial accommodations of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the ~~purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent~~ type described in ~~clause (4)~~ the definition of ~~Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net~~ Cash ~~Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i);~~ Management Services and (ii) ~~any refinancing, refunding, renewal or extension~~ Indebtedness owed on a short-term basis of ~~any Indebtedness specified~~ no longer than 30 days to banks and other financial institutions incurred in ~~subclause (i) above; provided that, (x)~~ the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes ordinary cour

Appears in 1 contract

Sources: Credit Agreement (Academy Sports & Outdoors, Inc.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Borrowers or Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, (A) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries (calculated on a Pro Forma Basis) would be at least 2.00 to ~~1.00~~1.00 or (B) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a Pro Forma Basis) shall be less than or equal to 5.00:1.00 (Indebtedness incurred pursuant to clauses (A) and/or (B), “Ratio Debt”); ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section ~~10.1(n)(x),~~ 10.1(n) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 640,000,000 and (y) ~~3.75~~40.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit ~~Documents~~Documents (including Section 2.14 hereof); (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)[reserved]; ~~(c)~~ (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 350,000,000 and (y) ~~2.50~~25.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnout, deferred compensation 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Ingersoll Rand Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified ~~Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock~~Stock; provided that ~~Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ the Borrower and ~~any~~ its Restricted ~~Subsidiary~~ Subsidiaries may incur Indebtedness (including Acquired Indebtedness), ~~issue shares of Disqualified Stock and issue shares of preferred stock,~~ if, after giving effect ~~thereto~~thereto on a Pro Forma Basis as of the last day of the most recently ended Test Period, (i) if such Indebtedness is secured, the ~~Fixed Charge Coverage~~ Consolidated Secured Debt to Consolidated EBITDA Ratio ~~of Holdings and the Restricted Subsidiaries~~ would ~~be at least 2.00~~ not exceed 3.00 to 1.00, and (ii) if such Indebtedness is unsecured, the Consolidated Total Debt to Consolidated EBITDA Ratio would not exceed 5.00 to 1.00 (collectively, “Ratio Indebtedness”); provided, further, that (1) the amount of Ratio Indebtedness (other than Acquired Indebtedness), ~~Disqualified Stock and preferred stock~~ that may be incurred pursuant to the ~~foregoing~~foregoing by Restricted Subsidiaries that are not Guarantors, together ~~with~~ with, without duplication, any amounts incurred under Section ~~10.1(n)(x),~~ 10.1(m)(x) by Restricted Subsidiaries that are not Guarantors and any amounts incurred pursuant to clause (q) below, shall not ~~exceed~~ exceed, an outstanding principal amount equal to the greater of (x) $~~85,000,000~~ 91,500,000 and (y) ~~3.75~~35.0% of TTM Consolidated ~~Total Assets for~~ EBITDA, (2) other than any Qualifying Bridge Loans, the ~~most recently ended Test Period~~ final maturity date of such Ratio Indebtedness shall be no earlier than (~~calculated on~~ x) the date that is ninety-one (91) days after the Revolving Credit Maturity Date and (y) the maturity date of any then-existing Incremental Term Loans (except that, in the case of this clause (2), customary term “a” loans provided by commercial banks shall not have a ~~Pro Forma Basis~~final maturity date earlier than the Revolving Credit Maturity Date), (2) at other than any ~~one time outstanding~~Qualifying Bridge Loans, the Weighted Average Life to Maturity of such Ratio Indebtedness shall be no less than the remaining Weighted Average Life to Maturity of any then-outstanding Term Loans, (3) the terms applicable to such Ratio Indebtedness shall comply with the Required Additional Debt Terms and (4) if such Ratio Indebtedness is secured, such Ratio Indebtedness shall be subject to a Permitted First Lien Intercreditor Agreement or a Permitted Junior Intercreditor Agreement, as applicable. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (Figma, Inc.)

Limitation on Indebtedness. ~~Holdings~~ (a) The Borrower will not, and will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into any guarantee of, or otherwise become directly or indirectly liable, contingently or ~~otherwise~~ otherwise, for (collectively, “incur~~” and collectively, an “incurrence~~”) ~~with respect to~~ any Indebtedness (including Acquired ~~Indebtedness)~~ Debt), and ~~Holdings will not issue any shares of Disqualified Stock and~~ the Borrower will not permit any of its Restricted ~~Subsidiary~~ Subsidiaries to issue any shares of ~~Disqualified Stock or~~Preferred Stock; provided, in however, that the ~~case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock,~~ Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired ~~Indebtedness),~~ Debt) and any Restricted Subsidiary may issue ~~shares of Disqualified~~ Preferred Stock ~~and issue shares of preferred stock, if, after giving effect thereto,~~ if the Fixed Charge Coverage Ratio ~~of Holdings and~~ for the ~~Restricted Subsidiaries~~ Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available (or, if earlier, were required to be delivered pursuant to Section 7.1(a) or (b)) immediately preceding the date on which such additional Indebtedness is incurred or such Preferred Stock is issued would be have been at least 2.00 to 1.00, 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 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; ~~provided, further,~~ provided further that the aggregate principal amount of ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness that may be incurred and the liquidation preference of Preferred Stock that may be issued pursuant to the ~~foregoing, together with any amounts incurred under Section 10.1(n)(x),~~ foregoing by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 100.0 million at any one time outstanding. ~~The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents;~~1004254246v19 (b) Notwithstanding the foregoing Section 8.1(a), the Borrower and its Restricted Subsidiaries may incur the following Indebtedness ~~represented by~~ (collectively, “Permitted Debt”): (i) (I) Indebtedness (a) pursuant to this Agreement and the other Loan Documents, (b) pursuant to any other Credit Agreement, (c) pursuant to the New Notes and the 2014 Senior ~~Notes~~ Secured Notes, (~~including any guarantee thereof~~d) constituting Rollover Indebtedness and ~~exchange notes issued~~ (e) in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.7 (and which does not generate any additional proceeds), up to an aggregate principal amount, together with amounts outstanding under a Qualified Securitization Financing incurred pursuant to clause (xvii) below, not to exceed at any one time outstanding the greater of (A) $2,275.02,600 million and (B) the maximum aggregate principal amount (as of the date of incurrence of any such ~~notes~~ Indebtedness and after giving pro forma effect to the incurrence thereof and the application of the net proceeds therefrom (or as of the date of the initial borrowing of such Indebtedness after giving pro forma effect to the incurrence of the entire committed amount of such Indebtedness)) that can be incurred without exceeding a Senior Secured Indebtedness to EBITDA Ratio for the Borrower of 4.50 to 1.00 (it being understood that for purposes of determining compliance under this clause (i) and under Section 2.6(a)(i), except as provided in clause (z) of the last proviso in Section 2.6(a)(i), any ~~guarantee thereof~~ Indebtedness incurred under this clause (i) and under Section 2.6(a)(i) (whether or not secured), other than Revolving Credit Agreement Indebtedness, will be included in the amount of Senior Secured Indebtedness for purposes of calculating the Senior Secured Indebtedness to EBITDA Ratio) and (II) Revolving Credit Agreement Indebtedness not to exceed at any time outstanding $180.0 million; (ii) [Reserved]Indebtedness in an aggregate ~~principal~~ amount at any time outstanding not to exceed $300.0 million incurred in reliance on Section 2.6(a)(i)(A) of this Agreement; (~~x) $375,000,000 minus (y~~iii) the ~~aggregate principal amount of Senior~~ Existing Unsecured Notes ~~redeemed pursuant to a Special Mandatory Redemption~~ and other Existing Indebtedness (~~as defined~~ other than Indebtedness described in ~~the Senior Notes Indenture~~clauses (i) and (vii)); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (div) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations~~), Disqualified Stock and preferred stock~~ ) incurred by ~~Holdings~~ the Borrower or any Restricted ~~Subsidiary,~~ Subsidiary and Preferred Stock issued by a Restricted Subsidiary to finance the purchase, ~~lease, construction, installation~~ lease or improvement of property (real or personal) or equipment that is used or useful in a ~~Similar Business,~~ Permitted Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such ~~assets and Indebtedness arising from~~ assets) provided that the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference which, when aggregated with the principal amount~~ of ~~all other Indebtedness, Disqualified Stock and preferred stock then outstanding and~~ Indebtedness incurred pursuant to this clause ~~(d) and all Refinancing Indebtedness incurred~~ to ~~Refinance~~ finance the acquisition of Capital Stock of any ~~other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does~~ Person at any time outstanding shall not exceed the greater of (x) $~~55,000,000~~ 50.0 million and (y) ~~2.50~~5.0% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations)Tangible Assets; (ev) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary 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~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to ~~reimbursement~~ reimbursement-type obligations regarding workers’ compensation claims~~, performance or surety bonds~~, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance;; provided 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; 1004254246v19 (fvi) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, ~~earnout~~ earnouts 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this ~~clause (f)~~clause); (gvii) Indebtedness of ~~Holdings~~ the Borrower owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Borrower or any Restricted Subsidiary; ~~provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee;~~ provided, ~~further~~however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event ~~which~~ that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any ~~other~~ subsequent transfer of any such Indebtedness (except to the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed, in each ~~case~~ case, to ~~be an~~ constitute the incurrence of such Indebtedness ~~not permitted~~ by ~~this clause~~ the issuer thereof and (~~g); (h~~B) ~~Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that~~ if the Borrower ~~or a Guarantor incurs~~ is the obligor on such Indebtedness (other than any Existing Indebtedness) owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is expressly subordinated ~~in right of payment~~ to the ~~Guarantee~~ prior payment in full in cash of ~~such Guarantor, or~~ all obligations of the ~~Loans, as~~ Borrower with respect to the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h)Notes; (iviii) shares of ~~preferred stock~~ Preferred Stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower or ~~another~~ a 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 ~~preferred stock~~ Preferred Stock (except to ~~Holdings~~ the Borrower or ~~another~~ a Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of ~~preferred stock not permitted by this clause (i)~~Preferred Stock; (jix) Hedging Obligations of the Borrower or any Restricted Subsidiary (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting (A) interest rate risk with respect to any Indebtedness that is permitted to be incurred by the terms of this Agreement, (B) exchange rate risk with respect to any currency exchange or (C) commodity price risk; (kx) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of ~~business~~business or consistent with past practice; (ixi) ~~Indebtedness, Disqualified Stock and preferred stock~~ Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary ~~in an aggregate principal amount~~ or ~~liquidation preference up to 100%~~ Preferred Stock of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation ~~preference~~preference which, ~~which~~ when aggregated with the principal amount and liquidation preference of all other ~~Indebtedness, Disqualified~~ Indebtedness and Preferred Stock ~~and preferred stock~~ then outstanding and incurred pursuant to this clause (~~l)(ii~~xi), does not at any one time outstanding exceed the greater of $~~85,000,000~~ 250.0 million and ~~3.75~~17.5% of Consolidated ~~Total~~ Tangible Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ (it being understood that any ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ incurred pursuant to this clause (~~l)(ii~~xi) shall cease to be deemed incurred or outstanding for 1004254246v19 purposes of this clause (~~l)(ii~~xi) but shall be deemed incurred for the purposes of the ~~first paragraph of this~~ Section ~~10.1~~ 8.1(a) from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such ~~Indebtedness, Disqualified~~ Indebtedness or Preferred Stock ~~or preferred stock~~ under ~~the first paragraph of this~~ Section ~~10.1~~ 8.1(a) without reliance on this clause (~~l)(ii~~xi)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1a) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as (in the case of ~~a guarantee~~ any such Indebtedness) the incurrence of such Indebtedness ~~of a~~ by such Restricted Subsidiary ~~that~~ is ~~not a Guarantor~~permitted under the terms of this Agreement, ~~such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee~~ or (2b) any guarantee by a Restricted Subsidiary of Indebtedness or other obligations of ~~Holdings~~the Borrower; provided that (in the case of any such guarantee of Indebtedness) such guarantee is incurred in accordance with the terms of this Agreement; (rxiii) Indebtedness or Preferred Stock of the Borrower or any Restricted ~~Subsidiaries~~ Subsidiary that ~~are not Guarantors in an amount not~~ serves to ~~exceed~~extend, ~~in the aggregate at any one time outstanding~~replace, ~~the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that~~ refund, refinance, renew or defease any Indebtedness incurred ~~pursuant~~ as permitted under Section 8.1(a) and Section 8.1(b)(i), (iii), (iv), (xiii) and (xiv) or any Indebtedness issued to ~~this clause~~ so extend, replace, refund, refinance, renew or defease such Indebtedness including additional Indebtedness incurred to pay premiums and fees in connection therewith (rthe “Refinancing Indebtedness”); provided that such Refinancing Indebtedness (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, (B) to the extent such Refinancing Indebtedness refinances Indebtedness that is subordinated to the Term Loan Facility Obligations, such Refinancing Indebtedness is subordinated to the Term Loan Facility Obligations at least to the same extent as the Indebtedness being refinanced or refunded, (C) shall ~~cease~~ not include (x) Indebtedness or Preferred Stock of a Subsidiary that is not a Guarantor that refinances Indebtedness or Preferred Stock of the Borrower or (y) Indebtedness or Preferred Stock of the Borrower or a Restricted Subsidiary that refinances Indebtedness or Preferred Stock of an Unrestricted Subsidiary, (D) shall not be in a principal amount (or, if issued with original issue discount, an aggregate issue price) in excess of the principal amount of, premium, if any, and accrued interest on, the Indebtedness being replaced, refunded, refinanced, renewed or defeased plus any fees, premiums, underwriting discounts, costs and expenses relating to ~~be deemed incurred~~ such extension, replacement, refunding, refinancing, renewal or ~~outstanding for purposes~~ defeasance, and (E) shall not have a Stated Maturity date prior to the Stated Maturity of the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased and provided, further, that subclauses (A), (B) and (E) of this clause (rxiii) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect will not apply to any ~~Subsidiary~~ refunding or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension refinancing of any Indebtedness ~~specified in subclause (i) above; provided that, (x) the principal amount of~~ under any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”Credit Agreement; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Incremental Commitment Amendment (Warner Music Group Corp.)

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ Holdings, the Borrowers and their Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio is equal to or less than 6.50:1.00 or the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount -154- of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 160,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate principal amount not to exceed (x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture); (c) (i) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and (ii) intercompany Indebtedness outstanding on the Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including Capital Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $55,000,000 and (y) 2.50% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement

Limitation on Indebtedness. Holdings will not, and will not permit any Restricted Subsidiary ~~to, directly or indirectly,~~ to create, incur, issue, assume, guarantee or otherwise become ~~directly or indirectly~~ liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that ~~Holdings~~ Holdings, the Borrowers and their Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if, after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio is equal to or less than 6.50:1.00 or the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of (x) $~~85,000,000~~ 160,000,000 and (y) ~~3.75~~30.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding. The foregoing limitations will not apply to: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness represented by the ~~Senior Notes~~ Unsecured Asset Sale Bridge (including any guarantee thereof) ~~and exchange notes issued~~ in ~~respect of such notes and any guarantee thereof in an~~ the aggregate ~~principal~~ amount not to exceed ~~(x) $375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~500,000,000€; (c) (i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1 to the Disclosure Letter (other than intercompany Indebtedness owed by a Credit Party to another Credit Party); (d) Indebtedness (including ~~Capital~~ Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by Holdings or any Restricted Subsidiary, to finance the purchase, lease, construction, ~~installation~~ installation, maintenance, replacement or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of Holdings or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of Holdings or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to ~~Refinance~~ refinance any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 185,000,000 and (y) ~~2.50~~35.0% of Consolidated ~~Total Assets~~ EBITDA for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; (f) Indebtedness arising from agreements of Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of Holdings or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected as Indebtedness on such balance sheet for purposes of this clause (f)); (g) Indebtedness of Holdings to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to Holdings’ Guarantee; provided, further, 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (g); (h) Indebtedness of a Restricted Subsidiary owing to Holdings or another Restricted Subsidiary; provided that if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor, or the Loans, as the case may be; provided, further, that any subsequent transfer of any such Indebtedness (except to Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause (h); (i) shares of preferred stock of a Restricted Subsidiary issued to Holdings 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 preferred stock (except to Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this clause (i); (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by Holdings or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (i) Indebtedness, Disqualified Stock and preferred stock of Holdings or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by Holdings since immediately after the Closing Date from the issue or sale of Equity Interests of Holdings or cash contributed to the capital of Holdings (in each case, other than Excluded Contributions or proceeds of Disqualified Stock or sales of Equity Interests to Holdings or any of its Subsidiaries or any Cure Amounts) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (b) of the definition thereof) and (ii) Indebtedness, Disqualified Stock or preferred stock of Holdings or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one time outstanding exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which Holdings or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (l)(ii)5.2(a); (m) the incurrence or issuance by Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to Refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (l)(i) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified Stock or preferred stock issued to so Refinance such Indebtedness, Disqualified Stock or preferred stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being Refinanced, (2) to the extent such Refinancing Indebtedness Refinances (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, respectively, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced and (3) shall not include Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of Holdings that is not the Borrower or Guarantor that Refinances Indebtedness, Disqualified Stock or preferred stock of the Borrower or Guarantor; (n) Indebtedness, Disqualified Stock or preferred stock of (x) Holdings or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness, Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed the greater of $85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at any one time outstanding or (y) Persons that are acquired by Holdings or any Restricted Subsidiary or merged into or consolidated with Holdings or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary); provided that after giving effect to any such acquisition or merger described in this clause (n), either: (1) Holdings would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of this Section 10.1 or (2) the Fixed Charge Coverage Ratio of Holdings and the Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (p) Indebtedness of Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to a credit facility otherwise permitted hereunder, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by Holdings or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as in the case of a guarantee of Indebtedness of a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary of Indebtedness of Holdings; (r) Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount not to exceed, in the aggregate at any one time outstanding, the greater of $35,000,000 and 1.5% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r)); (s) Indebtedness of Holdings or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (t) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (u) Indebtedness consisting of Indebtedness issued by Holdings or any of its Restricted Subsidiaries to future current or former officers, directors, managers and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings or any direct or indirect parent company of Holdings to the extent described in clause (4) of Section 10.5(b); (v) [reserved]; (w) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes

Appears in 1 contract

Sources: Credit Agreement (GoDaddy Inc.)

Limitation on Indebtedness. ~~Holdings~~ The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and ~~Holdings~~ the Borrower will not issue any shares of Disqualified ~~Stock~~ Equity Interests and will not permit any Restricted Subsidiary to issue any shares of Disqualified ~~Stock or, in the case of Restricted Subsidiaries that are not Guarantors,~~ Equity Interests or preferred stock; provided that ~~Holdings~~ the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified ~~Stock~~Equity Interests, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified ~~Stock~~ Equity Interests and issue shares of preferred stock, if, after giving effect thereto, the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries would be at least 2.00 to 1.00; ~~provided, further,~~ provided further that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified ~~Stock~~ Equity Interests and preferred stock that may be incurred pursuant to the ~~foregoing,~~ foregoing together with any amounts incurred under Section 10.1(n)(x), ) by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of (x)~~ $~~85,000,000 and (y) 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 200,000,000 at any one time outstanding. The foregoing limitations will not apply to: (a) (x) Indebtedness ~~arising~~ incurred pursuant to the ABL Facility by the Borrower or any Restricted Subsidiary; provided that immediately after giving effect to any such incurrence, the then-outstanding aggregate principal amount of all Indebtedness incurred under this clause (x) does not exceed the ~~Credit Documents~~greater of (A) $750,000,000 and (B) the Borrowing Base, and (y) Indebtedness incurred pursuant to this Agreement; (b) Indebtedness represented by the Senior Notes (including any guarantee thereof) and exchange notes issued in respect of such notes and any guarantee thereof in an aggregate ~~principal~~ amount not to exceed ~~(x)~~ $~~375,000,000 minus (y) the aggregate principal amount of Senior Notes redeemed pursuant to a Special Mandatory Redemption (as defined in the Senior Notes Indenture)~~1,300,000,000; (c~~) (i~~) Indebtedness outstanding on the Closing Date listed on Schedule 10.1 and the Existing Notes (~~ii) intercompany Indebtedness outstanding on~~ provided substantially all or all of the ~~Closing Date listed on Schedule 10.1 (other than intercompany Indebtedness owed~~ Existing Notes are purchased by a Credit ~~Party to another Credit~~ Party, repurchased, redeemed or defeased within 90 days after the Closing Date); (d) Indebtedness (including Capital Lease Obligations), Disqualified ~~Stock~~ Equity Interests and preferred stock incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary, to finance the purchase, lease, construction, installation or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the ~~Capital~~ Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of ~~Holdings~~ the Borrower or any Restricted Subsidiary under or pursuant to ~~any~~ the “synthetic lease” transactions to on-balance sheet Indebtedness of ~~Holdings~~ the Borrower or such Restricted Subsidiary, in an aggregate principal amount ~~or liquidation preference~~ which, when aggregated with the principal amount of all other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock then outstanding and incurred pursuant to this clause (d) and all Refinancing Indebtedness incurred to Refinance any other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) $~~55,000,000~~ 175,000,000 and (y) ~~2.50~~2.25% of Consolidated Total Assets ~~for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ at the time of incurrence; provided that Capitalized Lease Obligations incurred by Holdings or any Restricted Subsidiary pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation so long as the proceeds of such Permitted Sale Leaseback are used by Holdings or such Restricted Subsidiary to permanently repay outstanding Term Loans or other Indebtedness secured by a Lien on the assets subject to such Permitted Sale Leaseback (excluding any Lien ranking junior to the Lien securing the Obligations); (e) Indebtedness incurred by ~~Holdings~~ the Borrower or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance; provided 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; (f) Indebtedness arising from agreements of ~~Holdings~~ the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the 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 a Subsidiary for the purpose of financing such acquisition; provided that such Indebtedness is not reflected on the balance sheet of ~~Holdings~~ the Borrower or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected ~~as Indebtedness~~ on such balance sheet for purposes of this clause (f)); (g) Indebtedness of ~~Holdings~~ the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor is subordinated in right of payment to ~~Holdings’ Guarantee~~the Obligations; ~~provided, further,~~ provided further 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 Indebtedness (except to the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (g)~~clause; (h) Indebtedness of a Restricted Subsidiary owing to ~~Holdings~~ the Borrower or another Restricted Subsidiary; provided that if ~~the Borrower or~~ a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not ~~the Borrower or~~ a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor~~, or the Loans, as the case may be~~; ~~provided, further,~~ provided further that any subsequent transfer of any such Indebtedness (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this ~~clause (h)~~clause; (i) shares of preferred stock of a Restricted Subsidiary issued to ~~Holdings~~ the Borrower 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 preferred stock (except to ~~Holdings~~ the Borrower or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted by this ~~clause (i)~~clause; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes)) for the purpose of limiting interest rate risk with respect to any Indebtedness permitted to be incurred pursuant to this Agreement, exchange rate risk or commodity pricing risk; (k) obligations in respect of self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by ~~Holdings~~ the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business; (ia) Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by ~~Holdings~~ the Borrower since immediately after the Closing Date from the issue or sale of Equity Interests of ~~Holdings~~ the Borrower or cash contributed to the capital of ~~Holdings~~ the Borrower (in each case, other than Excluded Contributions or proceeds of Disqualified ~~Stock~~ Equity Interests or sales of Equity Interests to ~~Holdings~~ the Borrower or any of its ~~Subsidiaries or any Cure Amounts~~Subsidiaries) as determined in accordance with Sections 10.5(a)(iii)(2) and 10.5(a)(iii)(3) to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (bc) of the definition thereof) and (iib) Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock of ~~Holdings~~ the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified ~~Stock~~ Equity Interests and preferred stock then outstanding and incurred pursuant to this clause (~~l)(ii~~l)(b), does not at any one time outstanding exceed ~~the greater of~~ $~~85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) at the time of incurrence~~ 225,000,000 (it being understood that any Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock incurred pursuant to this clause (~~l)(ii~~l)(b) shall cease to be deemed incurred or outstanding for purposes of this clause (~~l)(ii~~l)(b) but shall be deemed incurred for the purposes of the first paragraph of this Section 10.1 from and after the first date on which ~~Holdings~~ the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock under the first paragraph of this Section 10.1 without reliance on this clause (~~l)(ii~~l)(b)); (m) the incurrence ~~or issuance~~ by ~~Holdings~~ the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock which serves to Refinance any Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock incurred as permitted under the first paragraph of this Section 10.1 and clauses (b) and (c) above, clause (~~l)(i~~l)(a) and, this clause (m) and clause (n) below or any Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock issued to so Refinance such Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock including additional Indebtedness, Disqualified Equity Interests or preferred stock incurred to pay premiums (including reasonable tender premiums), defeasance costs and fees in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity; ~~provided~~ provided, that such Refinancing Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining weighted average life to maturity of the Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock being Refinanced, (2) to the extent such ~~Refinancing Indebtedness Refinances~~ Refinancing (i) Indebtedness that is unsecured or secured by a Lien ranking junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to the Liens securing the ~~Obligations, respectively,~~ Obligations or (ii) Disqualified ~~Stock~~ Equity Interests or preferred stock, such Refinancing Indebtedness must be Disqualified ~~Stock~~ Equity Interests or preferred stock, ~~respectively and (iii) Indebtedness subordinated to the Obligations~~respectively, ~~such Refinancing Indebtedness is subordinated to the Obligations at least to the same extent as the Indebtedness being Refinanced~~ and (3) shall not include (x) Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock of a Subsidiary of ~~Holdings~~ the Borrower that is not ~~the Borrower or~~ a Guarantor that Refinances Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock of the Borrower, (y) Indebtedness, Disqualified Equity Interests or preferred stock of a Subsidiary of the Borrower that is not a Guarantor that Refinances Indebtedness, Disqualified Equity Interests or preferred stock of a Guarantor, or (z) Indebtedness, Disqualified Equity Interests or preferred stock of the Borrower or ~~Guarantor~~a Restricted Subsidiary that Refinances Indebtedness, Disqualified Equity Interests or preferred stock of an Unrestricted Subsidiary; (n) Indebtedness, Disqualified ~~Stock~~ Equity Interests or preferred stock of (x) ~~Holdings~~ the Borrower or a Restricted Subsidiary incurred or issued to finance an acquisition; provided that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified ~~Stock~~ Equity Interests and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under the first paragraph of ~~this~~ Section 10.1 by Restricted Subsidiaries that are not Guarantors shall not exceed ~~the greater of~~ $~~85,000,000 and 3.75% of Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis)~~ 200,000,000 at any one time ~~outstanding~~ outstanding, or (y) Persons that are acquired by ~~Holdings~~ the Borrower or any Restricted Subsidiary or merged into or consolidated with ~~Holdings~~ the Borrower or a Restricted Subsidiary in accordance with the terms ~~hereof (including designating an Unrestricted Subsidiary a Restricted Subsidiary)~~hereof; provided that after giving effect to ~~any~~ such acquisition or ~~merger described in this clause (n)~~merger, either: : (1) ~~Holdings~~ the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of ~~this~~ Section 10.1 or (2) the Fixed Charge Coverage Ratio of ~~Holdings~~ the Borrower and the Restricted Subsidiaries is ~~equal to or~~ greater than immediately prior to such acquisition, merger or consolidation; (o) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of its incurrence; (p) Indebtedness of ~~Holdings~~ the Borrower or any Restricted Subsidiary supported by a letter of credit issued pursuant to ~~a credit facility otherwise permitted hereunder~~any ABL Facility, in a principal amount not in excess of the stated amount of such letter of credit; (1) any guarantee by ~~Holdings~~ the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as as, in the case of a guarantee ~~of Indebtedness of~~ by a Restricted Subsidiary that is not a Guarantor, such Indebtedness could have been incurred directly by the Restricted Subsidiary providing such ~~guarantee~~ guarantee, or (2) any guarantee by a Restricted Subsidiary of Indebtedness of ~~Holdings~~the Borrower; (r) Indebtedness of ~~Restricted~~ Foreign Subsidiaries ~~that are not Guarantors~~ of the Borrower in an amount not to exceed, in the ~~aggregate~~ aggregate, at any one time ~~outstanding, the greater of $35,000,000 and 1.5~~outstanding 5.0% of the Consolidated Total Assets for the most recently ended Test Period (calculated on a Pro Forma Basis) (it being understood that any Indebtedness incurred pursuant to this clause (r) shall cease to be deemed incurred or outstanding for purposes of this clause (r) but shall be deemed incurred for the purposes of the ~~first paragraph~~ Foreign Subsidiaries at the time of ~~this covenant from and after the first date on which such Restricted Subsidiary could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (r))~~incurrence; (s) [Reserved] (t) Indebtedness of ~~Holdings~~ the Borrower or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business; (tu) Indebtedness of ~~Holdings~~ the Borrower or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business; (uv) Indebtedness consisting of Indebtedness issued by ~~Holdings~~ the Borrower or any of its Restricted Subsidiaries to future current or former officers, ~~directors, managers~~ directors and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of ~~Holdings~~ the Borrower or any direct or indirect parent company of ~~Holdings~~ the Borrower to the extent described in clause (4) of Section 10.5(b); (vw) ~~[reserved]~~guarantees furnished by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business of Indebtedness of another Person in an aggregate amount not to exceed $50,000,000 at any time outstanding; (x) Indebtedness incurred in connection with any Sale Leaseback; provided that the aggregate Indebtedness incurred pursuant to this clause shall not exceed $50,000,000 at any time outstanding. (y) Indebtedness in respect of (i) Permitted Additional Debt to the extent that the Net Cash Proceeds therefrom are, immediately after the receipt thereof, applied to the prepayment of Term Loans in accordance with Section 5.2(a)(i) and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above, provided that, except to the extent otherwise permitted hereunder, (w) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension, (x) the direct and contingent obligors with respect to such Indebtedness are not changed, (y) if the Indebtedness being refinanced, or any guarantee thereof, constituted Subordinated Indebtedness, then such replacement or refinancing Indebtedness, or such guarantee, respectively, shall be subordinated to the Obligations to substantially the same extent and (z) such Indebtedness otherwise complies with the definition of “Permitted Additional Debt;” (z) [Reserved] (aa) Indebtedness in respect of (i) Permitted Other Indebtedness to the extent that the Net Cash Proceeds therefrom are applied to the prepayment of Term Loans in the manner set forth in Section 5.2(a)(i); and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; provided that, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension (except for any original issue discount thereon and the amount of fees, expenses and premium and accrued and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted Other Indebtedness”; (x) Indebtedness in respect of (i) Permitted Other Indebtedness; provided that either (a) the aggregate principal amount of all such Permitted Other Indebtedness issued or incurred pursuant to this clause (i)(a) shall not exceed the Maximum Incremental Facilities Amount or (b) the Net Cash Proceeds thereof shall be applied no later than ten Business Days after the receipt thereof to repurchase, repay, redeem or otherwise defease Senior Notes set

Appears in 1 contract

Sources: Credit Agreement (Del Monte Foods Co)

Common use of Limitation on Indebtedness Clause in Contracts