Budget Covenants Clause Samples
A Budget Covenants clause sets out the obligations and restrictions related to the financial planning and spending of a party, typically within a business or project context. It often requires the party to prepare, submit, and adhere to a specified budget, and may restrict expenditures beyond approved amounts or mandate periodic financial reporting. This clause ensures financial discipline and transparency, helping to prevent overspending and providing assurance to stakeholders that funds are managed responsibly.
Budget Covenants. The Debtors shall only incur DIP Obligations and expend Cash Collateral and other DIP Collateral proceeds in accordance with the DIP Budget (and, in the case of the costs and expenses of the DIP Agent and the Existing RBL Agent, in accordance with the DIP Loan Documents and this Interim Order without being limited by the DIP Budget), subject to the Permitted Variances set forth in this paragraph, which shall be tested on each Friday (or, if such Friday is not a Business Day, the immediately preceding Business Day) immediately following each Reporting Date (such date, the “Variance Testing Date”). On or before 5:00 p.m. (prevailing Eastern Time) on each Variance Testing Date, the Debtors shall prepare and deliver, which shall be certified by a financial officer of the Debtors and in form and substance reasonably satisfactory to the DIP Agent, the Existing RBL Agent and the Existing Required Second Lien Lenders, a variance report tested as of the most recent Reporting Date for the four-week period ending on such Reporting Date (each such period, a “Variance Testing Period”, and each such report, a “Variance Report”) setting forth: (i) the aggregate disbursements of the Debtors for line items other than capital expenditures and aggregate receipts during the applicable Variance Testing Period, (ii) any variance (whether positive or negative, expressed as a percentage) between the aggregate disbursements for line items other than capital expenditures made during such Variance Testing Period by the Debtors against the aggregate disbursements for line items other than capital expenditures for the Testing Period set forth in the applicable 13-Week Cash Flow Forecast and DIP Budget, (iii) the aggregate disbursements of the Debtors for capital expenditures during the applicable Variance Testing Period, and (iv) any variance (whether positive or negative, expressed as a percentage) between the aggregate disbursements for capital expenditures for the testing Period set forth in the applicable 13-Week Cash Flow Forecast and DIP Budget; and (e) on the last calendar day of each week, the Debtors shall deliver to the DIP Agent, the Existing RBL Agent and the Existing Required Second Lien Lenders a variance report comparing the Debtors’ actual receipts and disbursements for the prior calendar week and the prior four calendar weeks (on a cumulative basis) with the projected receipts and disbursements for such week and the prior four calendar weeks (on a cumulative basis) as...
Budget Covenants. The Debtors shall not permit any of the following to occur (the “Budget Covenants”):
Budget Covenants. Borrowers shall not permit (i) actual "Operating Revenue" for Borrowers and their Subsidiaries for any five week period, calculated in a manner consistent with the Budget delivered to DIP Lenders on the Closing Date and as reported in the Variance Reports for such weeks, to be less than 80% of the "Operating Revenue" projected for the Borrowers and their Subsidiaries for such five week period in the Budget; (ii) the "Total Utilization" for any week, calculated in a manner consistent with the Budget delivered to DIP Lenders on the Closing Date and as reported in the Variance Report for such week, to exceed 110% of the "Total Utilization" projected for such week in the Budget; or (iii) the "Excess Availability" calculated in a manner consistent with the Budget delivered to DIP Lenders on the Closing Date and as reported in the Variance Report for any week, to be less than an amount equal to the greater of (a) the "Excess Availability" specified for such week in the Budget minus $15,000,000 and (b) ($25,000,000) (a negative number).
Budget Covenants. The Borrower shall operate in compliance with the Annual Budget in all material respects, provided that the Loan Parties may incur reasonable and necessary unanticipated expenditures, including, without limitation, unscheduled maintenance expenses or unscheduled capital expenditure expenses, up to $500,000 in the aggregate.
2.13 Section 9.1(c)(ii) of the Credit Agreement is hereby amended to add “or 7.17 (Budget Covenants),” after the phrase “6.1(d), (f), (g) or (h) (Financial Statements).”
2.14 Section 9.1 of the Credit Agreement is hereby amended by (i) deleting “or” at the end of clause (h) thereof, (ii) replacing the period at the end of clause (i) thereof with “; or” and adding the following new clause (j):
Budget Covenants. 103 7.7 Restriction on Fundamental Changes; Asset Sales ....................................................................................103 7.8 Remedies of DIP Agent...........................................................................................................................104 7.9 Transactions with Shareholders and Affiliates............................................................................................104 7.10 Sales and Lease-Backs..........................................................................................................................104 7.11 Conduct of Business..............................................................................................................................104 7.12 Amendments or Waivers of Certain Agreements; Amendments of Documents Relating to Subordinated Indebtedness....................................................................................................................................................104 7.13 Fiscal Year...........................................................................................................................................105 7.14 Cash Management Systems..................................................................................................................105 7.15 Sale or Discount of Receivables ..........................................................................................................105 7.16 Chapter 11 Claims..............................................................................................................................105 7.17 Agreements........................................................................................................................................106 Section 8. EVENTS OF DEFAULT...........................................................................................................106 8.1 Failure to Make Payments When Due ...................................................................................................106 8.2 Default in Post-Petition Liabilities...........................................................................................................106 8.3 Breach of Certain Covenants ................................................................................................................106 8.4 Breach of Warranty...............................................................................................................................106...
Budget Covenants