Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness. (b) Notwithstanding Section 6.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”): (i) Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11; (ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof; (iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above); (iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; (v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09; (vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances; (vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence; (viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations; (ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business; (x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x); (xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence; (xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition); (xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition; (xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00; (xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding; (xvi) 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: (1) 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 (2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi) (xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08; (xviii) Contribution Indebtedness; (xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding; (xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law; (xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit; (xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and (xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million. (c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness. (d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 3 contracts
Samples: Indenture (Us Concrete Inc), Indenture (Bode Concrete LLC), Indenture (Bode Concrete LLC)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Parent and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities and Indebtedness of Restricted Joint Ventures in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 215.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer Parent and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Parent or the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Issuer’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence15.0 million;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception, clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Permitted Restricted Joint Venture Indebtedness and Indebtedness incurred pursuant to clause (8), (13) or (15) hereof or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiiiRatio Exception) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08covenant;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by Indebtedness of the Issuer Parent or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 10.0 million at any time outstanding; and
(xxiii15) The incurrence by the Issuer or any Restricted Subsidiary Indebtedness of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Consolidated Joint Ventures in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), outstanding not to exceed $5.0 million.
115.0 million less the aggregate amount of liabilities that would constitute Indebtedness of the Parent and the Restricted Subsidiaries but for clause (c) of the last paragraph of the definition of “Indebtedness” on the date of determination. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that (a) Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, above and (3b) a strategic rationale exists for such Investment or acquisition based Indebtedness of Joint Ventures on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness date they become Consolidated Joint Ventures shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations have been incurred under this paragraph shall be made by the Issuer acting in good faithclause (15) above.
Appears in 3 contracts
Samples: Indenture (William Lyon Homes Inc), Indenture (William Lyon Homes), Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11650.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation and guarantees thereof by the Issuer or any Restricted Subsidiary; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness and Capitalized Lease Obligations incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 25.0 million and 12.5% of Consolidated Net Tangible Assets at guarantees thereof by the time of the incurrenceIssuer or any Restricted Subsidiary;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided, that the maximum ;
(12) Indebtedness of Foreign Subsidiaries in an aggregate liability in respect of all such obligations amount not to exceed $30.0 million at any time outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of and guarantees thereof by the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such dispositionSubsidiary;
(xiv13) Any the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse to the Issuer or to any other Indebtedness Subsidiary of the Issuer or their assets (other than such Receivables Subsidiary and its assets and, as to the Issuer or any Restricted Subsidiary ifof the Issuer, after giving effect theretoother than pursuant to representations, the Total Leverage Ratio does warranties, covenants and indemnities customary for such transactions) and is not exceed 5.00:1.00;guaranteed by any such Person; and
(xv14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (14) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Indenture (American Greetings Corp), Indenture (American Greetings Corp)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquisition Indebtedness; provided that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquisition Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Company’s Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Indebtedness of the Company and the Restricted Subsidiaries to Consolidated Tangible Net Worth is less than 2.25 to 1.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary provisions hereof shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Company or any Subsidiary Guarantor from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness,
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on the Issue Date or the Exchange Notes,
(iii) the Company or any Subsidiary Guarantor from Incurring Indebtedness under Working Capital Facilities not to exceed the greater of $250 million or 15% of Consolidated Tangible Assets,
(iv) any Subsidiary Guarantee of Indebtedness of the Issuer Company under the Notes,
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money),
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any Guarantor other Subsidiary Guarantor, or the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred under the ABL Facility Indenture (other than Non-Recourse Indebtedness),
(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and (b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to the Company’s obligations under the Notes and the provisions hereof, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary,
(viii) the Company and any Subsidiary Guarantor from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Subsidiary Guarantor, as the case may be, in an aggregate amount not to exceed $20 million, and
(ix) Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 20 million.
(c) The Company shall not, and the Company will not cause or permit any Subsidiary Guarantor that is a Restricted Subsidiary to, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Subsidiary Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.
(d) For purposes of determining compliance with this Section 6.083.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in the above clauses (i) through (xxiii) aboveof this Section 3.03, the Issuer shall classify and may reclassifyCompany, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this covenant and may divide, classify and from time to time reclassify such item of Indebtedness in more than one of any manner in which such item could be Incurred at the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination time of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessreclassification.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Eighth Supplemental Indenture (Beazer Homes Usa Inc), Fifth Supplemental Indenture (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”); provided, however, that Acquired Indebtedness shall not exceed an aggregate principal amount of $20.0 million at any time outstanding.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed (a) the greater of (i) $102,500,000 300.0 million and (with letters of credit being deemed to have a principal amount equal to the maximum potential liability ii) 20.0% of the Issuer or such GuarantorIssuer’s Consolidated Tangible Assets, minus (b) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.12;
(ii2) Indebtedness under (a) the Notes and the Note Guarantees issued on the Issue Date and (b) the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to a Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses clause (i1), (2) or (5) and (ii) abovethe Issuer’s 7.125% Senior Notes due 2016);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, bid, performance, appeal or surety bonds and obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit for the account of the Issuer or any Restricted Subsidiary, as the case may be, in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 50.0 million and 12.5or (b) 15.0% of the Issuer’s Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x)10) or clause (14) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligationsobligations (including without limitation any Earn Out Obligations), in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Issuer or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 10% of such Foreign Restricted Subsidiaries’ Consolidated Tangible Assets;
(14) Permitted Acquisition Indebtedness; and
(15) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate principal amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 40.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (15) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Indenture (Basic Energy Services Inc), Indenture (Basic Energy Services Inc)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any of its Restricted Subsidiary toSubsidiaries to Incur any additional Indebtedness (other than Indebtedness between the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or among such Restricted 41 52 Subsidiaries which are Wholly Owned Subsidiaries), directly including Acquisition Debt, unless, after giving effect thereto or indirectlythe application of the proceeds therefrom, incur any the ratio of the Company's Indebtedness (excluding, for purposes of this calculation, Non-Recourse Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not greater than 3.0 to 1.0.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the following shall be permitted (the “Permitted Indebtedness”):
this Indenture will not prevent: (i) in addition to the Indebtedness permitted to be Incurred under clauses (ii), (iii) and (iv) of this sentence and Indebtedness permitted to be Incurred under Section 6.13(a) hereof, the Issuer Company and/or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital purposes or to finance the acquisition, holding or development of property by the Company and its Restricted Subsidiaries (including, without limitation, the financing of any Guarantor under related interest reserve) in the ABL Facility ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 50,000,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than excluding any Indebtedness referred to in Section 6.13(a) hereof and clauses (ii)(A), (i)(B), (ii), (iii) and (iv) of this Section 6.13(b)), (ii) above);
Unrestricted Subsidiaries from Incurring Indebtedness, (iviii) the Company and its Restricted Subsidiaries from Incurring Indebtedness under Hedging Obligations any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (including Swap Obligations) exclusive of the Issuer or any Restricted Subsidiary in the ordinary course and not obligation for the purpose payment of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; providedborrowed money), however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments each case Incurred in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary consistent with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence past practice and (biv) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Restricted Subsidiaries from guaranteeing Indebtedness of the Issuer Company or any another Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Senior Subordinated Indenture (U S Home Corp /De/), Senior Subordinated Indenture (U S Home Corp /De/)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, incur any Indebtedness.
; provided that the Parent, the Issuer or any Guarantor may incur additional Indebtedness if, after giving pro forma effect thereto (b) Notwithstanding Section 6.08(aincluding the application of the net proceeds therefrom), the Issuer and Consolidated Leverage Ratio would not exceed 3.00 to 1.00 (the Restricted Subsidiary “Incurrence Leverage Ratio”). Notwithstanding the above, each of the following, which shall be permitted to incur “Permitted Indebtedness”. Each of the following given independent effect in whole or in part, shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Parent and any Guarantor Restricted Subsidiary (including the Issuer) under the ABL Facility any Credit Facility, in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.1120,000,000;
(ii2) (a) the Initial Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofincluding any future Note Guarantee);
(iii3) Indebtedness of the Issuer Parent and the Restricted Subsidiaries (including the Issuer) to the extent outstanding on the Original Initial Issue Date after giving effect to the intended use of proceeds of the Initial Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii5)) above)in an amount not to exceed $3.0 million;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Parent or any Restricted Subsidiary in (including the ordinary course and Issuer) not for the purpose of speculation; provided that the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer Parent owed to a Restricted Subsidiary (including the Issuer) and Indebtedness of any Restricted Subsidiary (including the Issuer) owed to the Issuer Parent or any other Restricted SubsidiarySubsidiary (including the Issuer); provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Parent, the Issuer or a Restricted Subsidiary, the Parent, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(via) Indebtedness in respect of bid, performance, completion, guarantee, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue and similar bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances assurances issued for the account of the Issuer Parent or any Restricted Subsidiary (including the Issuer) in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary (including the Issuer) with respect to letters of credit supporting such bid, performance, completion, guarantee or surety bonds obligations (in each case other than for an obligation for money borrowed); and (b) Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of (i) workers’ compensation claimsclaims or self-insurance, (ii) other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance obligations and bankers acceptancesor (iii) for regulatory or insurance purposes;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofand/or Attributable Debt, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.510% of the Parent’s and its Restricted Subsidiaries (including the Issuer) Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of businessfunds; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and the Parent or a Restricted Subsidiary (b) without duplication of clause (aincluding the Issuer), Banking Services Obligationsas the case may be, being notified of such overdraft;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Incurrence Leverage Ratio or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii11) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, case incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer Parent or any Restricted Subsidiary (including the Issuer) or the acquisition, disposition, issuance or redemption of Equity Interests of the Parent or a Restricted SubsidiarySubsidiary (including the Issuer), other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds or value of the consideration actually received by the Issuer and the Restricted Subsidiaries (including the Issuer) in connection with such disposition;
(xiv12) Any other Indebtedness of the Issuer Parent or any Restricted Subsidiary if, after giving effect thereto, (including the Total Leverage Ratio does Issuer) that is attributable to or secured by Auction Rate Securities; provided that the holder of such Indebtedness shall not exceed 5.00:1.00have any recourse for the payment thereof except to the proceeds of the Auction Rate Securities securing such Indebtedness;
(xv13) Indebtedness of the Issuer Parent or any Restricted Subsidiary incurred in (including the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers Issuer) in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 10.0 million at any time outstanding;
(xvi14) The issuance by any Indebtedness consisting of the Issuer’s Restricted Subsidiaries Guarantees of Indebtedness otherwise permitted to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stockbe Incurred; and
(15) Acquired Indebtedness; provided, however, that:
(1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than at the Issuer or a time that Restricted Subsidiary of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee acquired by the Issuer or any the Parent or otherwise became a Restricted Subsidiary and after giving effect to the incurrence of the Issuer of Indebtedness of that Indebtedness, the Issuer or a Restricted Subsidiary of the Issuer, in each case, Parent would have been able to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of incur $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary 1.00 of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) the Incurrence Leverage Ratio. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Incurrence Leverage Ratio, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or and may later reclassify any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount item of Indebtedness under this covenant, guarantees, Liens as having been Incurred pursuant to the Incurrence Leverage Ratio or letter pursuant to any of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) through (15) above (provided that at the time of reclassification it meets the criteria in such Investment category or categories). Notwithstanding the foregoing, any Indebtedness Incurred pursuant to the Incurrence Leverage Ratio must have a greater Weighted Average Life to Maturity than the Notes and a stated maturity that is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all later than the stated maturity of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithNotes.
Appears in 2 contracts
Samples: Indenture (Gsi Group Inc), Indenture (Gsi Group Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 650.0 million (with letters of credit being deemed to have a principal amount equal to excluding the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11any Hedging Obligations);
(ii) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i) and ), (ii) aboveor (v));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation and guarantees thereof by the Issuer or any Restricted Subsidiary; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, reclamations, statutory obligations, bankers’ acceptances and bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances bonds issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance or similar obligations and bankers acceptances(in each case other than for an obligation for money borrowed) in the ordinary course of business;
(vii) Purchase Money Indebtedness and Capitalized Lease Obligations incurred by the Issuer or any Restricted Subsidiary, and guarantees thereof by the Issuer or any Restricted Subsidiary and Refinancing Indebtedness thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (x) $20.0 25.0 million and 12.5(y) 2.0% of Consolidated Net Tangible Assets at the time of the incurrenceTotal Assets;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.daylight
Appears in 2 contracts
Samples: First Supplemental Indenture (American Greetings Corp), First Supplemental Indenture (American Greetings Corp)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 600.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligation, under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv12) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi13) The issuance by any obligations for, pledge of assets in respect of, and guarantees of, bond financings of political subdivisions or enterprises thereof in the Issuer’s Restricted Subsidiaries to the Issuer or to any ordinary course of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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 Issuerbusiness; and
(214) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded mortgage lending Subsidiaries under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) warehouse lines of credit;
(xxii) , repurchase agreements and Indebtedness issued secured by mortgage loans and related assets of mortgage lending Subsidiaries in the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption ordinary course of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) a mortgage lending business. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Indenture (Meritage Homes CORP), Indenture (Meritage Homes CORP)
Limitations on Additional Indebtedness. (a) The Issuer will Borrower shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquired Indebtedness; provided that the Borrower and the Restricted Subsidiaries may Incur Indebtedness, including Acquired Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Borrower’s Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Adjusted Indebtedness of the Borrower and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth is less than 7.5 to 1.
(b) Notwithstanding the foregoing, Section 6.08(a), the Issuer and the Restricted Subsidiary 6.01(a) shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Borrower or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness;
(ii) the Borrower from Incurring (A) Indebtedness under this Agreement or any of the other Loan Documents or (B) Indebtedness under other cash collateralized loan agreements not to exceed $137,500,000;
(iii) the Borrower or any Restricted Subsidiary from Incurring Indebtedness under Credit Facilities not to exceed the greater of $250.0 million and 15.0% of Consolidated Tangible Assets of the Borrower;
(iv) the Borrower and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money);
(v) any Restricted Subsidiary from guaranteeing Indebtedness of the Issuer Borrower or any Guarantor other Restricted Subsidiary, or the Borrower from guaranteeing Indebtedness of any Restricted Subsidiary, in each case permitted to be Incurred hereunder (other than Non-Recourse Indebtedness);
(vi) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Borrower or any other Restricted Subsidiary that is a Wholly-Owned Subsidiary; provided that such Indebtedness shall only be permitted pursuant to this clause (vi)(a) for so long as the Person to whom such Indebtedness is owing is the Borrower or a Restricted Subsidiary that is a Wholly-Owned Subsidiary and (b) the Borrower from Incurring Indebtedness owing to any Restricted Subsidiary that is a Wholly-Owned Subsidiary; provided that (I) such Indebtedness is subordinated to the Obligations, and (II) such Indebtedness shall only be permitted pursuant to this clause (vi)(b) for so long as the Person to whom such Indebtedness is owing is a Restricted Subsidiary that is a Wholly-Owned Subsidiary;
(vii) the Borrower and any Restricted Subsidiary from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Borrower or such Restricted Subsidiary, as the case may be, in an aggregate amount at any time outstanding not to exceed $50.0 million;
(viii) the Borrower or any Restricted Subsidiary from Incurring obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business;
(ix) the Borrower or any Restricted Subsidiary from incurring Indebtedness owed to a seller of entitled land, lots under development or finished lots under the ABL Facility terms of which the Borrower or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such land or lots; and
(x) the Borrower or any Restricted Subsidiary from Incurring Indebtedness in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 100.0 million.
(c) The Borrower shall not, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Borrower unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Obligations to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Borrower.
(d) For purposes of determining compliance with this Section 6.086.01 hereof, in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in the above clauses (i) through (xxiii) aboveof this Section 6.01, the Issuer shall classify and may reclassifyBorrower, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this Section 6.01 and may divide, classify and from time to time reclassify such item of Indebtedness in more than one of any manner in which such item could be Incurred at the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination time of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessreclassification.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 2 contracts
Samples: Credit Agreement (Beazer Homes Usa Inc), Credit Agreement (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $200,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) Notes the Securities and Note the Security Guarantees issued on the Issue Date and the Exchange Securities and Security Guarantees issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofexchange therefor;
(iii3) Indebtedness of the Issuer Parent, the Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b) (i1) and (ii) above2));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in Senior Unsecured Facility and the ordinary course and not for the purpose of speculationrelated guarantees;
(v5) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(6) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(6); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi7) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii) 8) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25,000,000;
(viii9) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(10) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix11) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x12) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii), (iii), (xi2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.03(b)(12);
(xi13) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(9), (14) or (17) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent, Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii14) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix15) The incurrence by (x) Indebtedness of the Issuer Parent, the Company or any Subsidiary Guarantor incurred to finance an acquisition or merger or (y) Acquired Indebtedness of the Parent, the Company or any Restricted Subsidiary; provided, however, that in either case, after giving effect to the transactions that result in the incurrence or issuance thereof, on a pro forma basis, (a) the Parent would have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (b) the Consolidated Fixed Charge Coverage Ratio of the Parent is greater than such ratio immediately prior to such acquisition or merger, or (c) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth of the Parent is less than such ratio immediately prior to such acquisition or merger;
(16) Indebtedness of the Parent, Company or any Subsidiary of Indebtedness consisting of obligations to pay insurance premiums Guarantor in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess greater of $2.0 million 40,000,000 and 4.0% of Consolidated Tangible Assets at any time outstanding; and
(xxiii17) The incurrence (x) Security Guarantees by the Issuer Parent or any of its Restricted Subsidiary Subsidiaries in respect of additional Indebtedness incurred by Joint Ventures, and (y) GP Indebtedness of Parent or the issuance by the Issuer its Restricted Subsidiaries in respect of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Joint Ventures, in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to outstanding under this clause (xxiii)), Section 4.03(b)(17) not to exceed the greater of $5.0 million40,000,000 and 4% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.03(b)(1) through (xxiii17) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. Except as expressly permitted by Article II of the Mortgage and subject to the further limitations expressed in the next section, the Borrower shall not incur, assume, guarantee or otherwise become liable in respect of any debt for borrowed money and Restricted Rentals (including Subordinated Indebtedness) other than the following: ("Permitted Debt")
(a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.Additional Notes issued in compliance with Article II of the Mortgage;
(b) Notwithstanding Section 6.08(a)Purchase money indebtedness in non-Utility System property, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount exceeding 10% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Utility Plant;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, Rentals in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.55% of Consolidated Net Tangible Assets at the time of the incurrenceEquity during any 12 consecutive calendar month period;
(viiid) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such Unsecured lease obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliersexcept Restricted Rentals;
(e) Unsecured indebtedness for borrowed money, licensees, franchisees or customers in an aggregate amount, together with except when the aggregate amount of Investments under clause (12) such indebtedness exceeds 15% of Net Utility Plant and after giving effect to such unsecured indebtedness the definition Borrower's Equity is less than 30% of “Permitted Investments,” not to exceed $5.0 million at any time outstandingits Total Assets;
(xvif) The issuance Debt represented 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:
(1) 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 Issuerdividends declared but not paid; and
(2g) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the IssuerSubordinated Indebtedness approved by RUS. PROVIDED, will be deemedHowever, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision Borrower may incur Permitted Debt without the consent of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included RUS only so long as incurred there exists no Event of Default hereunder and there has been no continuing occurrence which with the passage of time and giving of notice could become an Event of Default hereunder. PROVIDED, FURTHER, by a Person executing this Agreement any consent of RUS that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred Borrower would otherwise be required to obtain under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment this section is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended hereby deemed to be used in, a Permitted Business, (2) substantially all given or waived by RUS by operation of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits law to the Issuer. For purposes extent, but only to the extent, that to impose such a requirement of this paragraph, the repayment of a note RUS consent would clearly violate federal laws or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithRUS Regulations.
Appears in 1 contract
Samples: Rus Loan Contract
Limitations on Additional Indebtedness. Until the Notes receive an Investment Grade rating from both Rating Agencies (a) The after which time this Section 4.06 shall no longer be in effect), the Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer and any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Event of Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 600.0 million and (with letters b) 30% of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) lessConsolidated Tangible Assets, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied by the Issuer or any of its Restricted Subsidiaries since the Issue Date to repayments repay permanently any Indebtedness under the a Credit Agreement in accordance with Facility pursuant to Section 6.114.09;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (including the 2021 Senior Notes and the guarantees thereof, and the Existing Convertible Notes and the guarantees thereof, but other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided, however, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or owed to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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; unsecured and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (M I Homes Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $200,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) Notes the Securities and Note the Security Guarantees issued on the Issue Date and the Exchange Securities and Security Guarantees issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofexchange therefor;
(iii3) Indebtedness of the Issuer Parent, the Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b) (i1) and (ii) above2));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25,000,000;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii), (iii), (xi2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.03(b)(11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8), (13) or (16) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent, Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by (x) Indebtedness of the Issuer Parent, the Company or any Subsidiary Guarantor incurred to finance an acquisition or merger or (y) Acquired Indebtedness of the Parent, the Company or any Restricted Subsidiary; provided, however, that in either case, after giving effect to the transactions that result in the incurrence or issuance thereof, on a pro forma basis, (a) the Parent would have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (b) the Consolidated Fixed Charge Coverage Ratio of the Parent is greater than such ratio immediately prior to such acquisition or merger, or (c) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth of the Parent is less than such ratio immediately prior to such acquisition or merger;
(15) Indebtedness of the Parent, Company or any Subsidiary of Indebtedness consisting of obligations to pay insurance premiums Guarantor in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess greater of $2.0 million 40,000,000 and 4.0% of Consolidated Tangible Assets at any time outstanding; and
(xxiii16) The incurrence (x) Security Guarantees by the Issuer Parent or any of its Restricted Subsidiary Subsidiaries in respect of additional Indebtedness incurred by Joint Ventures, and (y) GP Indebtedness of Parent or the issuance by the Issuer its Restricted Subsidiaries in respect of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Joint Ventures, in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to outstanding under this clause (xxiii)), Section 4.03(b)(16) not to exceed the greater of $5.0 million40,000,000 and 4% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.03(b)(1) through (xxiii16) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 165.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligation, under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence15.0 million;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Xxxxx only on such real property;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x);above; and
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv12) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 15.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
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Samples: Indenture (Meritage Corp)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, that the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.08(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility one or more Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 under this Section 4.08(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $550,000,000 and 50.0% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries Subsidiary Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (iSection 4.08(b)(1) and (ii) above2));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Company and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.08, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Company’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.08(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount outstanding not to exceed at any the time outstanding of incurrence the greater of $20.0 million 25,000,000 and 12.52.5% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii8) Non-Recourse Indebtedness of the Company or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii)the Ratio Exception, (iii), (xiSection 4.08(b)(2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.08(b)(11);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer Company or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) other than Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)Section 4.08(b)(8), not to exceed $5.0 million.
(c13) For purposes of determining compliance with this Section 6.08or (16) or, in the event that an item of Indebtedness meets the criteria of more than one case of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred guarantee by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary tothat is not a Subsidiary Guarantor, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits pursuant to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.Ratio Exception or
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Issuers shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided, however, that so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , incurrence of each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount outstanding at any the time outstanding of incurrence not to exceed $102,500,000 the amount of the Borrowing Base as of the date of such incurrence (provided that, in calculating compliance with letters of credit being deemed to have a principal amount equal this Section 4.06, accrued interest, fees and expenses related to the maximum potential liability of the Issuer or such Guarantor) less, Credit Facilities shall not be considered outstanding Indebtedness to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, they are not considered outstanding Indebtedness in calculating availability under the aggregate amount of Net Available Proceeds applied to repayments Borrowing Base under the Credit Agreement Facilities and provided further that it shall not constitute a Default of this Section 4.06 if Indebtedness is incurred in accordance with Section 6.11error in excess of the Borrowing Base as so calculated so long as such excess amount is repaid to the lenders under the Credit Facilities within five (5) Business Days of discovery of such error);
(ii2) (a) the Notes and the Note Guarantees issued on the Issue Date and any of the Issuer’s 9.5% senior subordinated notes and the related note guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes not exchanged for Notes) and guarantees thereofin the Exchange Offer;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1), (2) and or (ii) above5));
(iv4) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided, however, that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s Obligations, under the Notes and this Indenture and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptancesbusiness (in each case other than for an obligation for money borrowed);
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii7) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix) 8) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x9) Indebtedness owed to a seller of Developed Land under the terms of which the Issuer or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such Developed Land in an amount not to exceed 5% of the gross sales price or, in the case of profit sharing agreements between such seller and the Issuer or such Restricted Subsidiary, an amount that is reasonable and customary in the industry and market;
(10) Indebtedness owing under Capitalized Lease Obligations incurred in the ordinary course of business for the acquisition of office equipment and other personal property not to exceed $250,000 in any single instance;
(11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii1), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x)11) or (12) or (13) below;
(xi12) (A) Acquired up to $30,000,000 of Indebtedness outstanding at any one time incurred solely for the acquisition of the Issuer or any Restricted Subsidiaryreal estate assets, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated borrowed from third parties unaffiliated with the Issuer or a Restricted Subsidiary Permitted Holders which Indebtedness may rank senior in priority in right of payment to the IssuerNotes; provided that to the extent any or all of such Indebtedness is secured from parties affiliated with the Permitted Holders, such Indebtedness shall not exceed rank no higher than pari passu in right of payment with the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;Notes; and
(xii13) Acquired up to $30,000,000 of Indebtedness outstanding at any one time ranking pari passu in right of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection payment with the acquisition or disposition of any business or assets of Notes; provided that in no event shall the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees aggregate of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed pursuant to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 above and this clause (xvi)
(xvii13) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess sum of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) 60,000,000. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) above, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify or later reclassify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. 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 reclassification of preferred equity as Indebtedness due to a change in accounting principles will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.06. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.06, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ashton Woods USA L.L.C.)
Limitations on Additional Indebtedness. Section 5.13 of the Indenture is hereby amended and restated to read as follows:
(a) The Issuer Company will not, and will not permit any of its Restricted Subsidiary toSubsidiaries to Incur any Indebtedness (other than Indebtedness between the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or among such Restricted Subsidiaries which are Wholly Owned Subsidiaries), directly or indirectlyincluding Acquisition Debt, incur any Indebtednessunless, after giving effect thereto and the application of the proceeds therefrom, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the following shall be permitted (the “Permitted Indebtedness”):
this Indenture will not prevent: (i) in addition to the Indebtedness permitted to be Incurred under clauses (ii) and (iii) of this sentence and Indebtedness permitted to be Incurred under Section 5.13(a) hereof, the Issuer Company or any Guarantor under Restricted Subsidiary from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital purposes or to finance the ABL Facility acquisition, holding or development of property by the Company and its Restricted Subsidiaries (including, without limitation, the financing of any related interest reserve) in the ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 50,000,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than excluding any Indebtedness referred to in clauses Section 5.13(a) hereof and subclauses (ii)(A), (i)(B), (ii) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b5.13(b)), less the amount of any Indebtedness repaid pursuant to Section 5.11 (a)(ii)(A) or this clause hereof, provided that until June 30, 1997, the incurrence of such indebtedness for the refinancing of Acquisition Debt other than Existing Debt shall be no more than $25,000,000 unless the Company's Consolidated Fixed Charge Coverage Ratio exceeds 1.75 to 1, (x);
ii) Unrestricted Subsidiaries from Incurring Indebtedness, (xiiii) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (A) Acquired Indebtedness exclusive of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by obligation for the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part payment of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisitionborrowed money);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
Company or the Restricted Subsidiary consistent with past practice and (xviiv) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of from guaranteeing Indebtedness of the Issuer Company or a another Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i)Subsidiary; provided that the amount tangible net assets of all Restricted Subsidiaries guaranteeing Indebtedness permitted of the Company or other Restricted Subsidiaries (other than Indebtedness Incurred from time to be incurred time under this clause (xxithe Existing Credit Facility) supported by at the end of the fiscal quarter immediately preceding the date of Incurring any such letter(s) of credit guaranty, as determined in accordance with GAAP, shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests 10% of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 millionCompany's Consolidated Tangible Net Assets.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Borrower shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that Borrower or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the Restricted Subsidiary “Coverage Ratio Exception”). Notwithstanding the above, each of the following, which shall be permitted to incur “Permitted Indebtedness”. Each of the following given independent effect in whole or in part, shall be permitted (the “Permitted Indebtedness”):
(ia) Indebtedness of the Issuer or Borrower and any Guarantor under this Agreement, the ABL Revolving Credit Facility and any other Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 100,000,000, less, to the extent a permanent repayment and/or commitment reduction is required thereunder under a Credit Facility as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.116.8 and (y) the sum of (i) 85% of the book value of the accounts receivable of Borrower and the Restricted Subsidiaries plus (ii) 65% of the book value of inventory of Borrower and the Restricted Subsidiaries, in each case, calculated on a consolidated basis and in accordance with GAAP;
(iib) (a) the Notes and Note Guarantees the guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iiic) Indebtedness of the Issuer Borrower and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (Effective Date, other than Indebtedness referred to in clauses clause (i) and a), (ii) aboveb), or (e));
(ivd) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Borrower or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 6.5, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(ve) Indebtedness of the Issuer Borrower owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Borrower or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Borrower or a Restricted Subsidiary, the Issuer Borrower or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (ve); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, completion, guarantee, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue and similar bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances assurances issued for the account of the Issuer Borrower or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Borrower or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, completion, guarantee or surety bonds obligations (in each case other than for an obligation for money borrowed); and (ii) Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of (x) workers’ compensation claimsclaims or self-insurance, (y) other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance obligations and bankers acceptancesor (z) for regulatory or insurance purposes;
(viig) Purchase Money Indebtedness incurred by the Issuer Borrower or any Restricted Subsidiary, Refinancing Indebtedness thereof and any subsequent Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10,000,000;
(viiih) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication Borrower or a Restricted Subsidiary, as the case may be, being notified of clause (a), Banking Services Obligationssuch overdraft;
(ixi) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(xj) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xib) or (xiic) of this Section 6.08(b) above or this clause (xj);
(xik) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer Borrower or any Restricted Subsidiary or the acquisition, disposition, issuance or redemption of Equity Interests of Borrower or a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (i) any amount of such obligations included (or that would be required to be included) on the face of the balance sheet of Borrower or any Restricted Subsidiary at the time of closing of such acquisition, that disposition, issuance or redemption shall not be permitted under this clause (k) and (ii) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiiik) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds or value of the consideration actually received by the Issuer Borrower and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xvl) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers Foreign Subsidiaries in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million 20,000,000 at any time outstanding;
(xvim) The issuance by any Indebtedness of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer Borrower or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million 15,000,000 at any time outstanding; and
(xxiiin) The incurrence by Bank Products Obligations incurred in the Issuer or any Restricted Subsidiary ordinary course of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) business. For purposes of determining compliance with this Section 6.086.5, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (ia) through (xxiiim) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyBorrower shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Effective Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (ia) above, and may later reclassify any item of Indebtedness described in clauses (a) through (n) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 6.5, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Company or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio, determined on a pro forma basis giving effect to such incurrence and the application of the proceeds thereof, would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)4.10(a) of this Indenture, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Company and any Guarantor under the ABL Facility Credit Facilities (including reimbursement obligations with regard to letters of credit) incurred pursuant to this clause (1) in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11150.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes including the repayment of the Existing Notes);
(iv4) Indebtedness under Hedging Obligations; provided that such Hedging Obligations (including Swap Obligations) of are incurred by the Issuer Company or any Restricted Subsidiary in the ordinary course of business and not for the purpose of speculation;.
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 50.0 million and 12.5(b) 20% of Consolidated Net Tangible Assets at the time net book value of the incurrenceaircraft owned by the Company and the Restricted Subsidiaries;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xia) Indebtedness of any Foreign Subsidiary (or guarantees thereof by the Company or any Guarantor in respect thereof) (A“Foreign Indebtedness”) in an aggregate amount not to exceed at any one time outstanding $15.0 million and (b) guarantees of Indebtedness of a partnership or joint venture (other than an Unrestricted Subsidiary) by the Company or any Guarantor provided that (x) such guarantee does not exceed the proportion of such Indebtedness that is equal to the Company’s or Guarantor’s proportionate equity ownership of such partnership or joint venture and (y) the aggregate principal amount of such indebtedness at any time outstanding does not exceed $30.0 million;
(12) Acquired Indebtedness so long as at the time such Acquired Indebtedness is incurred, the Consolidated Interest Coverage Ratio determined on a pro forma basis giving effect to such incurrence and the application of the Issuer proceeds thereof, would be (a) at least 2.0 to 1.0 or any Restricted Subsidiary, (b) equal to or greater than the Consolidated Interest Coverage Ratio determined for such four quarter period without giving effect to such acquisition and incurrence of such Indebtedness; and
(B13) Indebtedness incurred by of the Issuer Company or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify or later reclassify such item of Indebtedness and may divide, divide and classify and or later reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement and outstanding on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Phi Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Parent and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities and Indebtedness of Restricted Joint Ventures in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 215.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii) (a) the Notes and the Note Guarantees issued on the Issue Date and the Exchange Notes and the guarantees in respect thereof to be issued pursuant to the Registration Rights Agreement and (b) if unsecured, Convertible the Existing Notes (other than Convertible issued on the Existing Notes exchanged for Notes) Issue Date and guarantees thereofthe Existing Notes Guarantees;
(iii3) Indebtedness of the Issuer Parent and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Parent or the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Issuer’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence15.0 million;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception, clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Permitted Restricted Joint Venture Indebtedness and Indebtedness incurred pursuant to clause (8), (13) or (15) hereof or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiiiRatio Exception) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08covenant;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by Indebtedness of the Issuer Parent or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 10.0 million at any time outstanding; and
(xxiii15) The incurrence by the Issuer or any Restricted Subsidiary Indebtedness of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Consolidated Joint Ventures in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), outstanding not to exceed $5.0 million.
115.0 million less the aggregate amount of liabilities that would constitute Indebtedness of the Parent and the Restricted Subsidiaries but for clause (c) of the last paragraph of the definition of “Indebtedness” on the date of determination. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that (a) Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Existing Notes Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, above and (3b) a strategic rationale exists for such Investment Indebtedness of Joint Ventures on the date they became or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness become Consolidated Joint Ventures shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations have been incurred under this paragraph shall be made by the Issuer acting in good faithclause (15) above.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquired Indebtedness; provided that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquired Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Company’s Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth is less than 7.5 to 1.
(b) Notwithstanding the foregoing, Section 6.08(a), the Issuer and the Restricted Subsidiary 3.05(a) shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Company or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness;
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on the Issue Date;
(iii) the Company or any Subsidiary Guarantor from Incurring Indebtedness under Credit Facilities not to exceed the greater of $250.0 million and 15.0% of Consolidated Tangible Assets of the Company;
(iv) any Subsidiary Guarantee of Indebtedness of the Issuer Company under the Notes;
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money);
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any other Subsidiary Guarantor, or the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred hereunder (other than Non-Recourse Indebtedness);
(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary and (b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to the Company’s obligations hereunder and under the ABL Facility Notes and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary;
(viii) the Company and any Restricted Subsidiary from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Restricted Subsidiary, as the case may be, in an aggregate amount not to exceed $50.0 million;
(ix) the Company or any Restricted Subsidiary from Incurring obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business;
(x) the Company or any Restricted Subsidiary from incurring Indebtedness owed to a seller of entitled land, lots under development or finished lots under the terms of which the Company or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such land or lots; and
(xi) the Company or any Restricted Subsidiary from Incurring Indebtedness in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 100.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Thirteenth Supplement Indenture (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case (1) if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”) and (2) if such additional Indebtedness or Acquired Indebtedness is in an aggregate principal amount in excess of $10,000,000, either:
(A) such Indebtedness is pari passu in right of payment with the Notes or such Guarantor’s Note Guarantee, as the case may be, and is expressly subordinated in right of payment to the Credit Agreement Obligations at least to the same extent as the Notes, or
(B) such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Note Guarantee, as the case may be, or
(C) at the Issuer’s option, either:
(i) the Issuer elects to redeem the Notes in whole, but not in part, at a purchase price equal to 100% of the principal amount thereof plus accrued but unpaid interest, if any, to, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); or
(ii) the Issuer elects to have Article 10 of this Indenture and paragraph 5 of the Notes cease to apply to all outstanding Notes.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11650.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses clause (i1), (2) or (5)), including the 7 3/8% Senior Notes and (ii) above)the guarantees related thereto;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation and guarantees thereof by the Issuer or any Restricted Subsidiary; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness and Capitalized Lease Obligations incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 25.0 million and 12.5% of Consolidated Net Tangible Assets at guarantees thereof by the time of the incurrenceIssuer or any Restricted Subsidiary;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided, that the maximum ;
(12) Indebtedness of Foreign Subsidiaries in an aggregate liability in respect of all such obligations amount not to exceed $30.0 million at any time outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of and guarantees thereof by the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such dispositionSubsidiary;
(xiv13) Any the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse to the Issuer or to any other Indebtedness Subsidiary of the Issuer or their assets (other than such Receivables Subsidiary and its assets and, as to the Issuer or any Restricted Subsidiary ifof the Issuer, after giving effect theretoother than pursuant to representations, the Total Leverage Ratio does warranties, covenants and indemnities customary for such transactions) and is not exceed 5.00:1.00;guaranteed by any such Person; and
(xv14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Reference Date or on the Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (14) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
. In addition, notwithstanding the foregoing, all Indebtedness outstanding on the Issue Date, including the Notes, that was incurred on or after the Reference Date but on or prior to the Issue Date pursuant to Sections 4.10(b)(1), (db)(7), (b)(12) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use (b)(14) of the proceeds of Indebtedness Senior Notes Indenture shall be deemed to have been incurred under Permitted Indebtedness clause (i) this Indenture on the Issue Date pursuant to make any Permitted Investments of the types described in clauses (1)(i)(b1), (7), (1612) or (14) above, respectively, and shall not be deemed to have been incurred on the Issue Date pursuant to clause (2) or (3) above, provided that after the Issue Date, the Issuer may reclassify any item of Indebtedness described in clauses (7), (19), (2112) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (314) a strategic rationale exists for above (provided that at the time of reclassification it meets the criteria in such Investment category or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcategories).
Appears in 1 contract
Samples: Indenture (American Greetings Corp)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that an Issuer or any Subsidiary Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding the provisions of Section 6.08(a4.09(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness and other Obligations, including Hedging Obligations, of a Securitization Subsidiary, the Issuer or Company and/or any Subsidiary Guarantor under the ABL any Liquidity Facility in an aggregate principal amount outstanding at any the time outstanding of such incurrence not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability in excess of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Borrowing Base;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreements;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Note (other than Indebtedness referred to in clauses Section 4.09(b)(1), (i2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Company or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation (including those that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices); provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.09, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or obligations of a similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances nature issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 15.0 million and 12.5(b) 2.0% of Consolidated Net Tangible Assets at the time of the incurrencethat time;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iithe Coverage Ratio Exception or Section 4.09(b)(2), (iii), (xi3) or (xii) of this Section 6.08(b7) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationarising from indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer Company or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Company or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer Company and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Indebtedness consisting of Indebtedness issued by the Issuer Company or any Restricted Subsidiary ifto future, after giving effect theretocurrent or former officers, directors, consultants and employees thereof, their respective estates, spouses or former spouses, in each case to finance the Total Leverage Ratio does not exceed 5.00:1.00purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company to the extent permitted by Section 4.07(b)(4);
(xv13) any guarantee by the Company or any of the Guarantors of Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer Company or a Restricted Subsidiary of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee must be subordinated or pari passu to the same extent as the Indebtedness guaranteed; and
(xviii14) Contribution Indebtedness;
(xix) The incurrence by Indebtedness of the Issuer Company or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect greater of such insurance premiums at any one time outstanding;
(xxa) Indebtedness related to unfunded pension fund $30.0 million and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxib) Indebtedness supported by one or more letters 2% of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million Consolidated Net Tangible Assets at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Liquidity Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (14) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.09, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) . The Issuer will not, accrual of interest or preferred stock dividends and the accretion or amortization of original issue discount will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments or an issuance of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) Disqualified Equity Interests for purposes of that definition or to purchase real property or other fixed assetsthis Section 4.09; provided, in each case such case, that the amount of any such accrual or accretion is included in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all Consolidated Interest Expense of the business operations of such Person, or substantially all of such assets, Company as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issueraccrued. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer After the date hereof: (i) the Company will not, and will not permit any of its Restricted Subsidiary Subsidiaries to, directly or indirectly, incur any Indebtedness.
create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (b) Notwithstanding Section 6.08(acollectively, "incur"), any Indebtedness (including without limitation Acquired Indebtedness), other than (A) Junior Subordinated Indebtedness incurred by the Issuer and Company in compliance with the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the immediately following shall be permitted sentence or (B) Indebtedness between the “Permitted Indebtedness”):
Company and its Wholly Owned Restricted Subsidiaries (i) provided that such Indebtedness of the Issuer or Company to any Guarantor under the ABL Facility Wholly Owned Restricted Subsidiary is expressly subordinated in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters right of credit being deemed to have a principal amount equal payment to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the or among such Wholly Owned Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness being owed to any Person (other than the Issuer or to a Wholly Owned Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an issuance the incurrence of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee Indebtedness by the Issuer or Company) and (ii) the Company will not permit any of its Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, Subsidiaries to issue (except to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer Company or any of its direct Wholly Owned Restricted Subsidiaries) any Capital Stock having a preference in liquidation or indirect parent companies permitted by Section 6.09(b)(ivwith respect to the payment of dividends, unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least:
(1) hereof not in excess of $2.0 million at any time outstanding2.25 to 1, if such date is on or prior to February 28, 1998; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of 2.50 to 1, if such Persondate is after February 28, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.1998,
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that an Issuer or any Subsidiary Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding the provisions of Section 6.08(a4.09(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness and other Obligations, including Hedging Obligations, of a Securitization Subsidiary, the Issuer or Company and/or any Subsidiary Guarantor under the ABL any Liquidity Facility in an aggregate principal amount outstanding at any the time outstanding of such incurrence not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability in excess of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Borrowing Base;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreements;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Note (other than Indebtedness referred to in clauses Section 4.09(b)(1), (i2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Company or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation (including those that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices); provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.09, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or obligations of a similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances nature issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 15.0 million and 12.5(b) 2.0% of Consolidated Net Tangible Assets at the time of the incurrencethat time;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iithe Coverage Ratio Exception or Section 4.09(b)(2), (iii3), (xi7) or (xii) of this Section 6.08(b15) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationarising from indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer Company or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Company or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer Company and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Indebtedness consisting of Indebtedness issued by the Issuer Company or any Restricted Subsidiary ifto future, after giving effect theretocurrent or former officers, directors, consultants and employees thereof, their respective estates, spouses or former spouses, in each case to finance the Total Leverage Ratio does not exceed 5.00:1.00purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company to the extent permitted by Section 4.07(b)(4);
(xv13) any guarantee by the Company or any of the Guarantors of Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer Company or a Restricted Subsidiary of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee must be subordinated or pari passu to the same extent as the Indebtedness guaranteed;
(xviii14) Contribution Indebtedness;
(xix) The incurrence by Indebtedness of the Issuer Company or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect greater of such insurance premiums at any one time outstanding;
(xxa) Indebtedness related to unfunded pension fund $30.0 million and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxib) Indebtedness supported by one or more letters 2% of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million Consolidated Net Tangible Assets at any time outstanding; and
(xxiii15) The incurrence by Indebtedness of the Issuer Company or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed $200 million at any time outstanding; provided that such Indebtedness (i) is incurred within 180 days of the date of this First Supplemental Indenture; (ii) bears interest at a rate no greater than 12% per annum; (iii) may not be secured; (iv) has a final maturity date that is no earlier than 91 days after the final maturity date of the Notes; and (v) may not by its terms be redeemable at the Company’s option prior to the date on which the aggregate principal amount of Notes outstanding is less than $100 million other than (a) with the net cash proceeds of one or more Qualified Equity Offerings or, (b) in the event that the issuer of such Indebtedness has become, or has reasonably determined that it would become, obligated to pay on the next date on which any amount would be payable with respect to such Indebtedness, any Additional Amounts as a result of a Change in Tax Law, if such Change in Tax Law is announced and becomes effective on or after the issue date of such Indebtedness and the issuer of such Indebtedness reasonably determines that such obligation cannot be avoided by the use of reasonable measures available to them (not including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge a substitution of the issuer); provided that any Indebtedness or liquidation value incurred optional redemption pursuant to this clause (xxiii)), not to exceed $5.0 million.
(cb) may be made only with the cash proceeds of a Qualified Equity Offering or the incurrence of Refinancing Indebtedness. For purposes of determining compliance with this Section 6.084.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Liquidity Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (15) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.09, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) . The Issuer will not, accrual of interest or preferred stock dividends and the accretion or amortization of original issue discount will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments or an issuance of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) Disqualified Equity Interests for purposes of that definition or to purchase real property or other fixed assetsthis Section 4.09; provided, in each case such case, that the amount of any such accrual or accretion is included in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all Consolidated Interest Expense of the business operations of such Person, or substantially all of such assets, Company as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issueraccrued. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Samples: First Supplemental Indenture (Johnstone Tank Trucking Ltd.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Subsidiary Guarantor may incur additional Indebtedness, including Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) (x) Indebtedness of the Issuer or any Subsidiary Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed exceed, when taken together with all other Indebtedness incurred pursuant to this clause (1)(x) and then outstanding, the greater of (a) $102,500,000 350.0 million and (with letters b) the Borrowing Base as of credit being deemed to have a principal amount equal to the maximum potential liability date of such incurrence and (y) Indebtedness of the Issuer or such Guarantorany Subsidiary Guarantor under the Credit Facilities in an aggregate amount not to exceed, when taken together with all other Indebtedness incurred pursuant to this clause (1)(y) lessand then outstanding, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, (A) $575.0 million and (B) the aggregate amount of Net Available Proceeds applied Indebtedness that may be incurred under this clause (1)(y) (with all such Indebtedness being deemed, for purposes of this clause (1)(y) only, to repayments under be secured by a Lien) that would cause the Credit Agreement in accordance with Section 6.11Consolidated Secured Debt Ratio to be equal to 4.0 to 1.0;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date including the Senior Secured Notes and the Existing Senior Notes (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding exceed, when taken together with all other Indebtedness incurred pursuant to this clause (7) and then outstanding, the greater of (a) $20.0 35.0 million and 12.5(b) 10% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception, clause (ii2), (iii3) (other than the Senior Secured Notes and the Existing Senior Notes), (xi7), (11)(B) or (xiiC) or (13)(B) of this Section 6.08(b4.10(b) or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Refinancing Indebtedness thereof, in an aggregate amount not to exceed, when taken together with all other Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed this clause (11)(A) and then outstanding, the greater of (x) $15.0 20.0 million or 10and (y) 7.5% of the Consolidated Net Tangible Assets at the time of incurrence;
, (xiiB) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)5.01(a) and (bC) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) The issuance by any of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stockAcquired Indebtedness; provided, however, that:
(1) 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
(2) any sale or other transfer of any such preferred stock , with respect to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Acquired Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.clause
Appears in 1 contract
Samples: Indenture (Ply Gem Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Fixed Charge Coverage Ratio would be at least 2.0 to 1.0 (the Restricted Subsidiary shall be permitted to incur “Permitted IndebtednessCoverage Ratio Exception”). Each Notwithstanding the above, each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (x) the sum of (i) $102,500,000 212.0 million, less (with letters of credit being deemed to have a principal amount equal to ii) any Indebtedness outstanding under the maximum potential liability of the Issuer or such GuarantorGeneral Scrap Facilities less (iii) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.114.10, and (y) 85% of the book value of the accounts receivable plus 60% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP and in the case of each of clause (x) and (y) less the Outstanding Receivables Amount;
(ii2) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible the Original Notes (other than Convertible and a like amount of Exchange Notes exchanged issued in exchange for such Notes) and guarantees thereofthe Note Guarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes as set forth in the Offering Memorandum);
(iv4) Indebtedness under Hedging Obligations; provided that (a) such Hedging Obligations are designed to protect against fluctuations in interest or currency rates or commodity prices and (including Swap Obligationsb) in the case of any Hedging Obligations under clause (1) of the Issuer or any Restricted Subsidiary in definition thereof, (I) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (II) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of businessSubsidiary, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Indebtedness under Capitalized Lease Obligations, industrial revenue bonds or mortgage financing incurred by the Issuer or any Restricted Subsidiary for the purpose of financing all or any part of the purchase price or cost of development of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii2), (iii3), (xi12), (13) or (xii16) of this Section 6.08(b) or this clause (x)4.06;
(xi11) the guarantee by the Issuer or any Guarantor of Indebtedness of the Issuer or a Guarantor incurred pursuant to the Coverage Ratio Exception or another clause in this Section 4.06;
(A12) Acquired Indebtedness of the Issuer or any Restricted Subsidiary (including letters of credit) in order to provide security for workers’ compensation claims, payment obligations in connection with self-insurance, or similar requirements of the Issuer or any Restricted Subsidiary in the ordinary course of business;
(13) customary indemnification, adjustment of purchase price or similar obligations, including title insurance, of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability );
(14) Indebtedness consisting of take-or-pay obligations contained in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) supply agreements entered into in the case ordinary course of an acquisition, $5.0 million business;
(provided that 15) Indebtedness evidenced by promissory notes subordinated to the amount of such liability shall be deemed Notes and the Note Guarantees issued to be the amount thereof, if any, reflected on the balance sheet current or former employees or directors of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (bor their respective spouses or estates) in the case lieu of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with cash payments for Equity Interests being repurchased from such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers Persons in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi16) The issuance by any Indebtedness of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of to refinance the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08Montpelier Sale and Leaseback Obligations;
(xviii17) Contribution IndebtednessIndebtedness under the General Scrap Facilities in an amount not to exceed $12.0 million;
(xix18) The incurrence by Indebtedness of the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 40.0 million at any time outstanding; and
(xxiii19) The incurrence by Indebtedness of the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by incurred during any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Suspension Period. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii19) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifymay, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof this Section 4.06. In addition, for purposes of determining any particular The maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this Section 4.06 shall not be deemed to be exceeded solely as the result of fluctuations in the exchange rates of currencies. In determining the amount of Indebtedness outstanding under this covenantone of the clauses above, guaranteesthe outstanding principal amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such Person or any other Person arising under any guarantee, Liens or Lien, letter of credit obligations or similar instrument supporting such Indebtedness otherwise included in the determination of such particular amount shall not be included disregarded so long as it is permitted to be incurred by a the Person that could have incurred or Persons incurring such Indebtednessobligation.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ipsco Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less40.0 million, less to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13(d) and (y) the sum of (i) 85% of the book value of the accounts receivable plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP; provided that any letter of credit referred to in clause (11) of this Section 4.10(b) that is undrawn shall be deemed to constitute Indebtedness for purposes of this clause (1);
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices; provided that if such Hedging Obligations are of the type described in clause (including Swap Obligations1) of the Issuer or any Restricted Subsidiary in definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) (x) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary, (y) guarantees by the Issuer of any Indebtedness of a Restricted Subsidiary and guarantees by any Restricted Subsidiary that is a Guarantor of any Indebtedness of the Issuer or any other Restricted Subsidiary that is a Guarantor, and (z) guarantees by any Restricted Subsidiary that is not a Guarantor of any Indebtedness of any other Restricted Subsidiary that is not a Guarantor; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii2), (iii), (xi3) or (xii15) of this Section 6.08(b) or this clause (x4.10(b);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi11) Indebtedness supported by one or more letters of credit issued under the ABL Facility Credit Facilities in accordance with clause (i1); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi11) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit; provided further that upon any reduction, cancellation or termination of such letter(s) of credit, there shall be deemed to be an incurrence of Indebtedness under this Indenture that must be otherwise permitted to be incurred under this Indenture equal to the excess of the amount of such Indebtedness outstanding immediately after such reduction, cancellation or termination over the remaining stated amount, if any, of such letter(s) of credit or the stated amount of any letter(s) of credit issued in a contemporaneous replacement of such letter(s) of credit;
(xxii12) Indebtedness issued by the Issuer or any Guarantor of Foreign Subsidiaries in an aggregate amount not to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of exceed $2.0 5.0 million at any one time outstanding; and;
(xxiii13) The incurrence Attributable Indebtedness incurred by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 millionmillion at any one time outstanding;
(14) Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $15.0 million at any one time outstanding;
(a) if the Consolidated Net Leverage Ratio as of the date of such incurrence after giving pro forma effect thereto is equal to or less than 4.00 to 1.00, Indebtedness of the Issuer, Co-Issuer or any Guarantor in the form of new senior secured second lien Indebtedness, (b) if the Consolidated Net Leverage Ratio as of the date of such incurrence after giving pro forma effect thereto is equal to or less than 5.00 to 1.00, Indebtedness of the Issuer, Co-Issuer or any Guarantor in the form of new unsecured Indebtedness, and (c) exchange notes and guarantees in respect of any Indebtedness incurred pursuant to the foregoing clauses (a) or (b) pursuant to any registration rights agreement; provided that the net proceeds of any Indebtedness incurred pursuant to the foregoing clauses (a) or (b) shall be used to Retire Parent Debt (including the payment of premium, accrued and unpaid interest and fees and expenses in connection therewith) in accordance with the provisions of this Indenture; and
(16) Indebtedness of the Issuer or any Restricted Subsidiary under any Cash Management Obligations.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.10(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in each case in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.10(b). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Norcraft Holdings, L.P.)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 2.25 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $75,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) Notes the Securities and Note the Security Guarantees issued on the Issue Date and the Exchange Securities issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofexchange therefor;
(iii3) Indebtedness of the Issuer Parent and the Restricted Subsidiaries Guarantors to the extent outstanding or committed on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b) (i1) and (ii2)) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10,000,000;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii), (iii), (xi2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.03(b)(11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8), (13) or (15) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent, Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by Indebtedness of the Issuer Parent, Company or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums Guarantor in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess greater of $2.0 million 7,500,000 and 1.5% of Consolidated Tangible Assets at any time outstanding; and
(xxiii15) The incurrence (x) Security Guarantees by the Issuer Parent or any of its Restricted Subsidiary Subsidiaries in respect of additional Indebtedness incurred by Joint Ventures, and (y) GP Indebtedness of Parent or the issuance by the Issuer its Restricted Subsidiaries in respect of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Joint Ventures, in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to outstanding under this clause (xxiii)), Section 4.03(b)(15) not to exceed the greater of $5.0 million20,000,000 and 4% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.03(b)(1) through (xxiii15) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, that the Company or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, upon giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.02(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Guarantor (and the Guarantee thereof by the Company or any such Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility one or more Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 under this Section 4.02(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) lessnot to exceed, to at the extent a permanent repayment and/or commitment reduction is required thereunder as a result time of such applicationincurrence thereof, the aggregate amount greater of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes the sum of (x) $1,240,000,000 and Note Guarantees in respect thereof (y) an additional amount equal to the lesser of (I) $385,000,000 and (II) an amount equal to the Borrowing Base minus $1,240,000,000 and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;75% of Consolidated Tangible Assets;
(iii2) the Notes and the Guarantees issued on the Issue Date;
(3) Indebtedness of the Issuer Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (iSection 4.02(b)(1) and (ii) above);4.02(b)(2));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Company and the Restricted Subsidiaries under Hedging Obligations; provided that such Hedging Obligations are not incurred for speculative purposes;
(5) Indebtedness of the Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; Subsidiary; provided, however, that (a) any Indebtedness of the Company owed to a Restricted Subsidiary that is not a Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Company’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;4.02(b)(5);
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds homeowners’ association obligations, community facility district bonds, metro district bonds, Xxxxx-Xxxx bonds, subdivision improvement bonds, and workers’ compensation claims, self-insurance obligations and bankers acceptances;similar bonding requirements arising in the ordinary course of business of a homebuilder;
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate principal amount outstanding not to exceed at the time of incurrence the greater of $110,000,000 and 5% of Consolidated Tangible Assets; provided, that the Company or any Restricted Subsidiary shall be permitted to enter into any model home lease back in the normal course of business in which the Company or such Restricted Subsidiary is a tenant, and such model home leases shall not be subject to the limitation of this Section 4.02(b)(7);
(8) Non-Recourse Indebtedness of the Company or any Restricted Subsidiary in an aggregate outstanding principal amount not to exceed at any the time outstanding of incurrence the greater of $20.0 million 120,000,000 and 12.515% of Consolidated Tangible Net Tangible Assets at the time of the incurrence;Worth;
(viii9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;incurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iithe Ratio Exception, Section 4.02(b)(2), (iii4.02(b)(3) or 4.02(b)(7), (xithis Section 4.02(b)(11) or (xii) of this Section 6.08(b) or this clause (x);Acquired Indebtedness;
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Company or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.02(b)(8), Section 4.02(b)(13) or Section 4.02(b)(16) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.02(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Company, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;4.02;
(xviii13) Contribution Indebtedness;Indebtedness of Financial Services Subsidiaries and VIEs, in each case so long as neither the Company nor any Restricted Subsidiary has guaranteed or is otherwise obligated with respect to such Indebtedness or has pledged collateral to secure such Indebtedness (other than in respect of circumstances customarily excluded by lenders from exculpation provisions and/or included in separate guaranty or indemnification agreements in non-recourse financings);
(xix14) The (x) Indebtedness of the Company or any Guarantor incurred to finance an acquisition or merger or (y) Acquired Indebtedness of the Company or any Restricted Subsidiary; provided, however, that in either case, upon giving effect to the transactions that result in the incurrence or issuance thereof, on a pro forma basis, (a) the Company would have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (b) the Consolidated Fixed Charge Coverage Ratio of the Company is greater than such ratio immediately prior to the applicable transaction or transactions, or (c) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth of the Company is less than such ratio immediately prior to the applicable transaction or transactions;
(15) Indebtedness of the Company or any Guarantor in an aggregate principal amount outstanding not to exceed the greater of $220,000,000 and 10% of Consolidated Tangible Assets at the time of incurrence;
(16) the guarantee by the Company or any Restricted Subsidiary in respect of Indebtedness incurred by Joint Ventures in an aggregate principal amount outstanding under this Section 4.02(b)(16) not to exceed the greater of $220,000,000 and 10% of Consolidated Tangible Assets at the time of incurrence other than customary “bad boy” guarantees, which shall not be subject to such limitation;
(17) the incurrence by the Issuer Company or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstandingPermitted Deferred Purchase Price Indebtedness; and
(xxiii18) The incurrence by unsecured Indebtedness of the Issuer Company or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Guarantor, in an aggregate principal amount (or accreted value, as applicableoutstanding under this Section 4.02(b)(18) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed the greater of $5.0 million620,000,000 and 50% of the commitments under the Credit Agreement at the time of the incurrence of such Indebtedness, in each case, less the amount of Notes outstanding at such time.
(c) For purposes of determining compliance with this Section 6.084.02, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.02(b)(1) through (xxiii18) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such IndebtednessSection 4.02(b)(1).
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) ; provided that, the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the Indebtedness to Tangible Net Worth Ratio would be no more than 2.25 to 1.00.
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the incurrence by the Issuer or any Restricted Guarantor (and the guarantee thereof by the Issuer or any such Restricted Subsidiary) of Indebtedness under the ABL Facility one or more Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorand its Restricted Subsidiaries thereunder) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the in an aggregate amount outstanding at any time not to exceed the greater of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $150.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof27.5% of Consolidated Tangible Assets at the time of incurrence;
(iii2) the Securities and the Security Guarantees issued on the Issue Date and the Exchange Securities issued in exchange therefor (and any guarantee thereof);
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b)(1), (i2), (4), (5), (6), (9), (10), (12), (14), (15), (16) and (ii) above18));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in the ordinary course and not for the purpose of speculationSubsidiaries under Hedging Obligations;
(v5) Indebtedness of the Issuer owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligations under this Indenture and the Securities, (b) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture, the Securities or its Security Guarantee, as applicable, and (c) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, completion bonds, bid bonds, surety bonds, appeal bonds, performance, completion and compliance guarantees or other similar obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business; provided, including guarantees however, that upon the drawing of letters of credit for reimbursement obligations, or obligations the incurrence of the Issuer or any Restricted Subsidiary other reimbursement-type Indebtedness with respect to letters of credit supporting the foregoing, such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptancesare reimbursed within 30 days following such drawing or incurrence;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount amount, together with any Refinancing Indebtedness incurred in respect thereof pursuant to Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $20.0 million and 12.5(b) 3.0% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iiSection 4.03(a) and Sections 4.03(b)(2), (iii3), (xi) or 7), (xii) of this Section 6.08(b13), (19) or this clause (x11);
(xi12) the guarantee by (Aa) Acquired the Issuer or any Guarantor of Indebtedness (other than Indebtedness incurred pursuant to Sections 4.03(b)(8) or (15) of the Issuer or any a Restricted SubsidiarySubsidiary that was permitted to be incurred by another provision of this Section 4.03; provided, that to the extent such Indebtedness is a subordinated obligation, the guarantee thereof by the Issuer or such Guarantor shall be subordinated in right of payment to the Securities or the applicable Security Guarantee, as the case may be and (Bb) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture;
(13) Indebtedness of Persons incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged into, the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or (other than Indebtedness incurred (a) to provide all or any part portion of the funds or credit support utilized to consummate, consummate the transaction or series of related transactions pursuant to which such Person Restricted Subsidiary became a Restricted Subsidiary of or was otherwise acquired by the Issuer or a such Restricted Subsidiary or was merged (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Person is acquired, either
(a) the Issuer would have been able to incur at least $1.00 of additional Indebtedness pursuant to Section 4.03(a) on a pro forma basis after giving effect to the incurrence of such Indebtedness pursuant to this Section 4.03(b)(13);
(b) on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is higher than such ratio immediately prior to such acquisition or merger; or
(c) on a pro forma basis, the Indebtedness to Tangible Net Worth Ratio of the Issuer and the Restricted Subsidiaries is less than such ratio immediately prior to such acquisition or merger;
(14) Indebtedness incurred in connection with or into or consolidated with a Sale and Leaseback Transaction of any Model Home Unit;
(15) the incurrence of Indebtedness by the Issuer or a Restricted Subsidiary deemed to exist pursuant to the terms of a joint venture agreement as a result of the Issuerfailure of the Issuer or any Restricted Subsidiary to make a required capital contribution therein; provided that the only recourse on such Indebtedness shall is limited to the Issuer’s or such Restricted Subsidiary’s equity interests in the related joint venture;
(16) obligations of the Issuer or any Restricted Subsidiary under an agreement with any governmental authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;
(17) Guarantees by the Issuer or any Restricted Subsidiary in respect of Indebtedness incurred by Joint Ventures and GP Indebtedness of the Issuer or its Restricted Subsidiaries in respect of Joint Ventures, in an aggregate amount at any time outstanding under this Section 4.03(b)(17) not to exceed the greater of (a) $15.0 million or 10and (b) 3.0% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii18) Acquired the incurrence of Indebtedness of by the Issuer or any a Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;PAPA; and
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv19) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Refinancing Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred thereof pursuant to this clause (xxiii)Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $5.0 million15.0 million and (b) 3.0% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, (1) in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in clauses (iSection 4.03(b) through (xxiii) aboveor is permitted under Section 4.03(a), the Issuer shall classify and may reclassifyIssuer, in its sole discretion, shall classify such item of Permitted Indebtedness on the date of incurrence and may later reclassify such item of Indebtedness in any manner that then complies with this Section 4.03 and may divide, classify will be entitled to divide the amount and reclassify type of such Indebtedness in among more than one of such clauses under Sections 4.03(a) and (b); provided that all Indebtedness outstanding on the types of Indebtedness described, except that Indebtedness incurred Issue Date under the Credit Agreement on Facilities, after giving effect to the Original Issue Date by the Issuer or any Guarantor use of proceeds of this offering, shall be deemed to have been incurred under clause Section 4.03(b)(1) and not Section 4.03(a) or Section 4.03(b)(3) and may not later be reclassified, (i2) above. In addition, for purposes if obligations in respect of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter letters of credit are incurred pursuant to a revolving Credit Facility and relate to other Indebtedness, then such letters of credit shall be treated as incurred pursuant to Section 4.03(b)(1) and such other Indebtedness shall not be included, and (3) except as provided in Section 4.03(b)(2), Security Guarantees of, or obligations supporting in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of such a particular amount of Indebtedness shall not be included so long as incurred by a Person that could have incurred such Indebtednessincluded.
(d) The Issuer will notAccrual of interest, accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness, the reclassification of any obligation as Indebtedness due to a change in accounting principles and the payment of dividends in the form of additional shares of preferred stock or Disqualified Equity Interests will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments for purposes of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuerthis Section 4.03. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Parent and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities and Indebtedness of Restricted Joint Ventures in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 215.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees issued on the Issue Date and the Exchange Notes and the guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer Parent and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) aboveabove and in clauses (7), (14) and (15) below, and after giving effect to the intended use of proceeds of the Notes);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Parent or the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Issuer’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence15.0 million;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception, clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Permitted Restricted Joint Venture Indebtedness and Indebtedness incurred pursuant to clause (8), (13) or (15) hereof or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiiiRatio Exception) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08covenant;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by Indebtedness of the Issuer Parent or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 10.0 million at any time outstanding; and
(xxiii15) The incurrence by the Issuer or any Restricted Subsidiary Indebtedness of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Consolidated Joint Ventures in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), outstanding not to exceed $5.0 million.
115.0 million less the aggregate amount of liabilities that would constitute Indebtedness of the Parent and the Restricted Subsidiaries but for clause (c) of the last paragraph of the definition of “Indebtedness” on the date of determination. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that (a) Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Measurement Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, above and (3b) a strategic rationale exists for such Investment Indebtedness of Joint Ventures on the date they became or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness become Consolidated Joint Ventures shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations have been incurred under this paragraph shall be made by the Issuer acting in good faithclause (15) above.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness (bincluding Acquired Indebtedness) Notwithstanding Section 6.08(a)if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, the Issuer Consolidated Leverage Ratio would be less than (a) 3.50 to 1.00 if such Indebtedness is incurred before March 1, 2008 or (ii) 3.00 to 1.00 if such Indebtedness is incurred on or after March 1, 2008 (the “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 500.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate and (c) such Hedging Obligations are entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculation;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated to the Issuer’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed);
(7) Indebtedness incurred by the Issuer or any Restricted Subsidiary with respect to letters of credit issued in the ordinary course of business, surety bonds and including, without limitation, in respect of workers’ compensation claims, self-insurance insurance, real estate taxes, xxxxxxx money deposits and utility installation and other infrastructure developments, or other Indebtedness with respect to obligations and bankers acceptancesregarding workers’ compensation claims;
(vii) 8) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 15.0 million and 12.5(b) 1.5% of Consolidated Net Tangible Assets at the time of the incurrenceTotal Assets;
(viii9) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property;
(10) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix11) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x12) Refinancing Indebtedness with respect owed to Indebtedness incurred pursuant a seller of Developed Land under the terms of which the Issuer or such Restricted Subsidiary, as obligor, is required to clause (ii)make a payment upon the future sale of such Developed Land in an amount not to exceed 5% of the gross sales price or, (iii)in the case of profit sharing agreements between such seller and the Issuer or such Restricted Subsidiary, (xi) or (xii) of this Section 6.08(b) or this clause (x)an amount that is reasonable and customary in the industry and market;
(xi13) Indebtedness of any Mortgage Subsidiary under warehouse lines of credit and purchase and sale agreements and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Mortgage Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Mortgage Subsidiary, any other Mortgage Subsidiary and their respective assets;
(A14) Acquired Indebtedness evidenced by promissory notes subordinated to the Notes and the Note Guarantees issued to current or former employees or directors of the Issuer or any Subsidiary (or their respective spouses or estates) in lieu of cash payments for Equity Interests of the Issuer being repurchased from such Person;
(15) Indebtedness arising under a guarantee of Indebtedness of any joint venture (provided that such guarantee shall be deemed to be an Investment in such joint venture and such Investment shall constitute a Permitted Investment or otherwise be permitted by Section 4.08;
(16) Indemnification, adjustment of purchase price or similar obligations, including title insurance, of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, case incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition); provided, however, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, Indebtedness is not reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., it being understood that contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the amount of such liability balance sheet shall not be deemed to be zero if no amount is reflected on such balance sheetsheet for purposes of this clause (16)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition);
(xiv17) Any other Refinancing Indebtedness of with respect to Indebtedness incurred pursuant to the Issuer Ratio Exception or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;clause (2) or (3) above or this clause (17); and
(xv18) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii18) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify (and may later reclassify) such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In additionAccrual 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, and the payment of dividends on any Disqualified Equity Interests in the form of additional shares of the same class of Disqualified Equity Interests will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Equity Interests for purposes of determining this Section 4.06. Notwithstanding any particular other provision of this Section 4.06, the maximum amount of Indebtedness under that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount Section 4.06 shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended deemed to be used in, exceeded solely as a Permitted Business, (2) substantially all result of the business operations of such Person, fluctuations in exchange rates or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$2.8 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under any Credit Facility (including any Credit Agreement) pursuant to Section 4.10(c), and (y) 85% of the Credit Agreement book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Initial Notes and Note the Guarantees in respect thereof, and the Exchange Notes and the related guarantees thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness describeddescribed in Section 4.07(a) or Section 4.07(b) in any manner that complies with this Section 4.07, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.07(b). Any item of Indebtedness entitled to be incurred pursuant to the Coverage Ratio Exception and classified by the Issuer within such type of Indebtedness shall retain such classification (and the amount thereof shall not be counted in the determination of the amount of Indebtedness under any of clauses (1) through (16) of Section 4.07(b)) notwithstanding that the Coverage Ratio Exception is not available at any later time. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.07 or any category of Permitted Indebtedness, guarantees, Liens or Liens, letter of credit obligations or other obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest (or in the form of Qualified Equity Interests) will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSection 4.07.
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Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that, the Issuer or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be no more than 2.25 to 1.00 (either (a) or (b), the “Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the incurrence by the Issuer or any Subsidiary Guarantor (and the guarantee thereof by the Issuer or any such Subsidiary Guarantor) of Indebtedness under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorand its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $125.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof25.0% of Consolidated Tangible Assets at the time of incurrence;
(iii2) the Securities and the Security Guarantees issued on the Issue Date and the Exchange Securities and Securities Guarantees issued in exchange therefor;
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding or committed on the Original Issue Date (other than Indebtedness referred to in clauses (iSection 4.03(b)(1) and (ii) above2));
(iv4) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business (as determined in good faith by the Issuer) and not for the purpose of speculationspeculative purposes;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that upon any such Restricted Subsidiary ceasing Indebtedness of the Issuer owed to be a Restricted Subsidiary or that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligations under this Indenture and the Securities and (b) upon such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, completion bonds, bid bonds, surety bonds, appeal bonds, performance, completion and compliance guarantees or other similar obligations and bankers acceptances issued for the account of incurred by the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of business (as determined in good faith by the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptancesIssuer);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 10.0 million and 12.5(b) 2.0% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of businessbusiness (as determined in good faith by the Issuer); provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of businessbusiness (as determined in good faith by the Issuer);
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Sections 4.03(b)(1)(b) (iiprovided that such Indebtedness continues to be incurred under such Section 4.03(b)(1)(b)), (iii2), (xi3), (7), (11), (19), (22) or (xii) of this Section 6.08(b) or this clause (x23);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Sections 4.03(b)(8), (13) (other than a Mortgage Subsidiary) or (23) or, in the Issuer case of Indebtedness the guarantee by a Restricted Subsidiary that is not a Subsidiary Guarantor, pursuant to the Ratio Exception) of the Issuer or a any Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii13) Contribution IndebtednessNon-Recourse Indebtedness of any Mortgage Subsidiary under warehouse lines of credit and repurchase agreements, and Non-Recourse Indebtedness secured by mortgage loans and related assets of such Mortgage Subsidiary, in each case incurred in the ordinary course of such business;
(xix14) The the incurrence of Indebtedness by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of Obligations to pay the deferred purchase price of goods or services or progress payments in connection with such insurance premiums at goods and services; provided that such Obligations are incurred in connection with open accounts extended by suppliers on customary trade terms (which require that all such payments be made within 60 days after the incurrence of the related obligation) in the ordinary course of business (as determined in good faith by the Issuer) and not in connection with the borrowing of money or any one time outstandingHedging Obligations;
(xx15) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary consisting of additional Indebtedness or (a) the issuance by the Issuer financing of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) insurance premiums or (22b) of that definition or to purchase real property or other fixed assetstake-or-pay obligations contained in supply arrangements, in each case in an Investment amount the ordinary course of business (as determined in good faith by the Issuer);
(16) the incurrence of Indebtedness by the Issuer or purchase price in excess a Restricted Subsidiary deemed to exist pursuant to the terms of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in joint venture agreement as a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all result of the business operations failure of the Issuer or any Restricted Subsidiary to make a required capital contribution therein; provided that the only recourse on such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits Indebtedness is limited to the Issuer. For purposes of this paragraph, ’s or such Restricted Subsidiary’s equity interests in the repayment of a note or other obligation in respect related joint venture
(17) Obligations of the deferred purchase price Issuer or any Restricted Subsidiary under an agreement with any governmental authority, adjoining (or common master plan) landowner or seller of an Investment real property, in each case entered into in the ordinary course of business (as determined in good faith by the Issuer) in connection with the acquisition of real property, to entitle, develop or asset from construct infrastructure thereupon;
(18) the proceeds incurrence of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made Obligations by the Issuer acting and its Restricted Subsidiaries for the pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business (as determined in good faith.faith by the Issuer);
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Samples: Indenture (WCI Communities, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 80.0 million (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) The Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above, and immediately following the Issue Date after giving effect to the intended use of proceeds of the Notes);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;; and
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xviiA) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.086.08 and (B) guarantees by the Issuer or any Restricted Subsidiary of the Issuer provided to the Excluded Joint Venture to the extent permitted by clause (24) of the definition of “Permitted Investments”;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer Company or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and;
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)xxii), not to exceed $5.0 million; and
(xxiv) Indebtedness of the Issuer or any Restricted Subsidiaries in an amount not to exceed $1.5 million and incurred in connection with the sale of the Excluded Joint Venture; provided that any such Indebtedness shall be unsecured.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiiixxiv) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Us Concrete Inc)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.; provided that the Company or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.25 to 1.00 (the "Coverage Ratio Exception");
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or Company and any Guarantor under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less50.0 million, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.114.15 of this Indenture and (y) 80% of the book value of the accounts receivable plus 50% of the book value of inventory of the Company and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations; provided that (A) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant, and (including Swap ObligationsB) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationIndebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in other than for an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists obligation for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.money borrowed);
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will the Issuer shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.; provided, however, that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, the Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least:
(bi) Notwithstanding Section 6.08(a)2.25 to 1.00, if such date is on or before December 31, 2002 or (ii) 2.50 to 1.00, if such date is after December 31, 2002, in each case determined on a pro forma basis as if the Issuer incurrence of such additional Indebtedness and the Restricted Subsidiary application of the net proceeds therefrom, had occurred at the beginning of the Four-Quarter Period used to calculate the Issuer's Consolidated Fixed Charge Coverage Ratio (the "Coverage Ratio Exception"). Notwithstanding the above, so long as no Default shall have occurred and be permitted to incur “Permitted continuing at the time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Credit Facility in an aggregate principal amount at any time outstanding (whether incurred under the Coverage Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 80.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, incurrence (provided that in no case shall the aggregate amount of Net Available Proceeds applied Indebtedness permitted pursuant to repayments under the Credit Agreement in accordance with Section 6.11this clause (1) exceed $100.0 million at any one time outstanding);
(ii2) (a) the Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided, however, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this SECTION 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary Guarantor and Indebtedness of any Restricted Subsidiary Guarantor owed to the Issuer or any other Restricted SubsidiaryGuarantor; provided, however, that (a) that any Indebtedness of the Issuer owed to a Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Issuer's obligation, under this Indenture and the Notes and (b) upon any such Restricted Subsidiary Guarantor ceasing to be a Restricted Subsidiary Guarantor or such Indebtedness being owed to any Person other than the Issuer or a Restricted SubsidiaryGuarantor, the Issuer or such Restricted SubsidiaryGuarantor, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofGuarantor, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence8.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Coverage Ratio Exception or clauses (ii2), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b3), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (312) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of in this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.SECTION 4.06;
Appears in 1 contract
Samples: Indenture (Res Care Inc /Ky/)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $200,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(2) (i) the Securities and the Security Guarantees issued on the Issue Date, (ii) any Securities (aand related Security Guarantees) Notes and Note Guarantees issued after the Issue Date in respect thereof exchange for Bridge Loans as provided in the Bridge Loan Agreement, and (biii) if unsecuredand, Convertible Notes (other than Convertible Notes exchanged for Notes) in each case, the Exchange Securities and guarantees thereofSecurity Guarantees issued in exchange therefor;
(iii3) Indebtedness of the Issuer Parent, the Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Bridge Loan Closing Date (other than Indebtedness referred to in clauses (iSection 4.03(b)(1) and (ii) above2)), including the Bridge Loans and the Guarantees in respect thereof;
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25,000,000;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii), (iii), (xi2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.03(b)(11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8), (13) or (16) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent, Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by (x) Indebtedness of the Issuer Parent, the Company or any Subsidiary Guarantor incurred to finance an acquisition or merger or (y) Acquired Indebtedness of the Parent, the Company or any Restricted Subsidiary; provided, however, that in either case, after giving effect to the transactions that result in the incurrence or issuance thereof, on a pro forma basis, (a) the Parent would have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (b) the Consolidated Fixed Charge Coverage Ratio of the Parent is greater than such ratio immediately prior to such acquisition or merger, or (c) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth of the Parent is less than such ratio immediately prior to such acquisition or merger;
(15) Indebtedness of the Parent, Company or any Subsidiary of Indebtedness consisting of obligations to pay insurance premiums Guarantor in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess greater of $2.0 million 40,000,000 and 4.0% of Consolidated Tangible Assets at any time outstanding; and
(xxiii16) The incurrence (x) Security Guarantees by the Issuer Parent or any of its Restricted Subsidiary Subsidiaries in respect of additional Indebtedness incurred by Joint Ventures, and (y) GP Indebtedness of Parent or the issuance by the Issuer its Restricted Subsidiaries in respect of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Joint Ventures, in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to outstanding under this clause (xxiii)), Section 4.03(b)(16) not to exceed the greater of $5.0 million40,000,000 and 4% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.03(b)(1) through (xxiii16) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any of its Restricted Subsidiary toSubsidiaries to Incur any Indebtedness (other than Indebtedness between the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or among such Restricted Subsidiaries which are Wholly Owned Subsidiaries), directly including Acquisition Debt, unless, after giving effect thereto or indirectlythe application of the proceeds therefrom, incur any the (i) Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0; and (ii) ratio of the Company's Indebtedness (excluding Non-Recourse Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not greater than 2.25 to 1.0.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the following shall be permitted (the “Permitted Indebtedness”):
this Indenture will not prevent: (i) in addition to the Indebtedness permitted to be Incurred under clauses (ii) and (iii) of this sentence and Indebtedness permitted to be Incurred under Section 6.13(a) hereof, the Issuer Company from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital purposes or to finance the acquisition, holding or development of property by the Company and its Restricted Subsidiaries (including, without limitation, the financing of any Guarantor under related interest reserve) in the ABL Facility ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 130,000,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than excluding any Indebtedness referred to in clauses Section 6.13(a) hereof and subclauses (ii)(A), (i)(B), (ii) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x6.13(b);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary), and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that less the amount of such liability shall be deemed any Indebtedness repaid pursuant to be Section 6.11(a)(ii)(A) hereof, (ii) Unrestricted Subsidiaries from Incurring Indebtedness, (iii) the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) Company and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of from Incurring Indebtedness under this covenantany deposits made to secure performance of tenders, guaranteesbids, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will notleases, statutory obligations, surety and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.appeal bonds,
Appears in 1 contract
Limitations on Additional Indebtedness. Until the Notes receive an Investment Grade rating from both Rating Agencies (a) The after which time this Section 4.06 shall no longer be in effect), the Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer and any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Event of Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 750.0 million and (with letters b) 30% of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) lessConsolidated Tangible Assets, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied by the Issuer or any of its Restricted Subsidiaries since the Issue Date to repayments repay permanently any Indebtedness under the a Credit Agreement in accordance with Facility pursuant to Section 6.114.09;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (including the 2025 Senior Notes and the guarantees thereof, but other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided, however, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xia) Indebtedness of the Issuer or any Restricted Subsidiary incurred to finance an acquisition or merger or (Ab) Acquired Indebtedness of the Issuer or any Restricted Subsidiary; provided, and however, that in either case, after giving effect to the transaction(s) that result in the incurrence, issuance or acquisition of such Indebtedness, on a pro forma basis, (Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation ofwould have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (ii) the Consolidated Fixed Charge Coverage Ratio of the Issuer would be greater than such ratio immediately prior to such transaction(s), or in connection with, or (iii) the ratio of Consolidated Indebtedness to provide all or any part Consolidated Tangible Net Worth of the funds or credit support utilized Issuer would be less than such ratio immediately prior to consummate, the transaction or series of related transactions such transaction(s); and
(13) in addition to Indebtedness allowed pursuant to which such Person became a Subsidiary the other clauses in this definition of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired “Permitted Indebtedness,” Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect greater of such insurance premiums (a) $100.0 million and (b) 5% of Consolidated Tangible Assets at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, classify divide and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (M/I Homes, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$1.75 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Agreements pursuant to Section 4.10(c), and (y) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the August 2009 Senior Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and the guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date August 11, 2009 (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21Section 4.07(a) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.or
Appears in 1 contract
Samples: Third Supplemental Indenture (Inverness Medical Innovations Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”); provided, however, that Acquired Indebtedness shall not exceed an aggregate principal amount of $20.0 million at any time outstanding.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11100.0 million;
(ii2) Indebtedness under (a) the Notes and the Note Guarantees issued on the Issue Date and (b) the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, bid, performance, appeal or surety bonds and obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit for the account of the Issuer or any Restricted Subsidiary, as the case may be, in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 50.0 million and 12.5or (b) 15.0% of the Issuer’s Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligationsobligations (including without limitation any Earn Out Obligations), in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Issuer or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 10% of such Foreign Restricted Subsidiaries’ Consolidated Tangible Assets; and;
(14) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate principal amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 40.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (14) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. Until the Notes receive an Investment Grade rating from both Rating Agencies (a) The after which time this Section 4.06 shall no longer be in effect), the Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less750.0 million, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied by the Issuer or any of its Restricted Subsidiaries since the Issue Date to repayments repay permanently any Indebtedness under a Credit Facility pursuant to Section 4.09, and (y) the Credit Agreement in accordance with Section 6.11amount of the Borrowing Base as of the date of such incurrence;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness incurred under a Warehouse Facility, provided that the amount of such Indebtedness (including funding drafts issued thereunder) outstanding at any time pursuant to this clause (4) does not exceed the value of the Mortgages to be financed with the proceeds thereof;
(5) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (including Swap Obligationsb) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(6) Indebtedness of the Issuer owed to a Wholly-Owned Restricted Subsidiary and Indebtedness of any Wholly-Owned Restricted Subsidiary owed to the Issuer or any other Wholly-Owned Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
Subsidiary; provided, however, that (va) any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (ab) that upon any such Wholly-Owned Restricted Subsidiary ceasing to be a Wholly-Owned Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Wholly-Owned Restricted Subsidiary, the Issuer or such Wholly-Owned Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v6); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi7) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii) 8) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii9) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property;
(10) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix11) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x12) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x);above; and
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv13) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi) The issuance by any of the Issuer’s Restricted Subsidiaries . Notwithstanding anything to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock; providedcontrary contained in this Section 4.06, however, that:
(1) 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 shall not permit any Restricted Subsidiary of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer a Guarantor to incur any Indebtedness 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 (xvi)
(xvii) The guarantee by the Issuer or otherwise provide credit support for any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Guarantor. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, classify divide and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (M I Homes Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Issuers shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer "Ratio Exception"). Notwithstanding the above, so long as no Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or Issuers and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $102,500,000 300.0 million and (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes and the Note Guarantees issued on the Issue Date and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1), (2) or (5), and (ii) aboveafter giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided, however, that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer's Obligations, under the Notes and this Indenture and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course letters of business and workers’ compensation claims, self-insurance obligations and bankers acceptances credit issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. Until the Notes receive an Investment Grade rating from both Rating Agencies (a) The after which time this Section 4.06 shall no longer be in effect), the Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer and any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Event of Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 500.0 million and (with letters b) 30% of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) lessConsolidated Tangible Assets, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied by the Issuer or any of its Restricted Subsidiaries since the Issue Date to repayments repay permanently any Indebtedness under the a Credit Agreement in accordance with Facility pursuant to Section 6.114.09;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (including the 2018 Senior Notes and the guarantees thereof, to the extent not acquired with the proceeds of the Notes and the Existing Notes and the guarantees thereof, but other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided, however, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or owed to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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; unsecured and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (M I Homes Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), so long as no Default shall have occurred and be continuing at the Issuer and time of or as a consequence of the Restricted Subsidiary shall be permitted to incur “Permitted incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness (including Refinancing Indebtedness) under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $200,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) Notes the Securities and Note the Security Guarantees issued on the Issue Date and the Exchange Securities and Security Guarantees issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofexchange therefor;
(iii3) Indebtedness of the Issuer Parent, the Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b) (i1) and (ii2)) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25,000,000;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii), (iii), (xi2) or (xii) of this Section 6.08(b3) or this clause (xSection 4.03(b)(11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8), (13) or (16) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer Parent, Company or any another Restricted Subsidiary (e.g.Subsidiary, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any of its Restricted Subsidiary toSubsidiaries to Incur any additional Indebtedness (other than Indebtedness between the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or among such Restricted Subsidiaries which are Wholly Owned Subsidiaries), directly including Acquisition Debt, unless, after giving effect thereto or indirectlythe application of the proceeds therefrom, incur any the (i) Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0; and (ii) ratio of the Company's Indebtedness (excluding Non-Recourse Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not greater than 2.25 to 1.0.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the following shall be permitted (the “Permitted Indebtedness”):
this Indenture will not prevent: (i) in addition to the Indebtedness permitted to be Incurred under clauses (ii), (iii) and (iv) of this sentence and Indebtedness permitted to be Incurred under Section 6.13(a) hereof, the Issuer Company and/or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital purposes or to finance the acquisition, holding or development of property by the Company and its Restricted Subsidiaries (including, without limitation, the financing of any Guarantor under related interest reserve) in the ABL Facility ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 130,000,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than excluding any Indebtedness referred to in clauses Section 6.13(a) hereof and subclauses (ii)(A), (i)(B), (ii), (iii) and (iv) of this Section 6.13(b)), less the amount of any Indebtedness repaid pursuant to Section 6.11(a)(ii)(A) hereof, (ii) above);
Unrestricted Subsidiaries from Incurring Indebtedness, (iviii) the Company and its Restricted Subsidiaries from Incurring Indebtedness under Hedging Obligations any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (including Swap Obligations) exclusive of the Issuer or any Restricted Subsidiary in the ordinary course and not obligation for the purpose payment of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; providedborrowed money), however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments each case Incurred in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any the Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary consistent with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence past practice and (biv) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Restricted Subsidiaries from guaranteeing Indebtedness of the Issuer Company or any another Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that the tangible net assets of all Restricted Subsidiaries guaranteeing Indebtedness of the Company or other Restricted Subsidiaries at the end of the fiscal quarter immediately preceding the date of Incurring any such Indebtedness guaranty, as determined in accordance with GAAP, shall not exceed the greater of $15.0 million or 10% of the Company's Consolidated Tangible Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 millionAssets.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided that, the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the Indebtedness to Tangible Net Worth Ratio would be no more than 3.00 to 1.00.
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the incurrence by the Issuer or any Restricted Guarantor (and the guarantee thereof by the Issuer or any such Restricted Subsidiary) of Indebtedness under the ABL Facility one or more Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorand its Restricted Subsidiaries thereunder) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the in an aggregate amount outstanding at any time not to exceed the greater of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $640.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof30.0% of Consolidated Tangible Assets at the time of incurrence;
(iii2) the Securities and the Security Guarantees issued on the Issue Date and the Exchange Securities issued in exchange therefor (and any guarantee thereof);
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b)(1), (i) 2), (4), (5), (6), (9), (10), (12), (14), (15), (16), and (ii) above18));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in the ordinary course and not for the purpose of speculationSubsidiaries under Hedging Obligations;
(v5) Indebtedness of the Issuer owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligations under this Indenture and the Securities, (b) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture, the Securities or its Security Guarantee, as applicable, and (c) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, completion bonds, bid bonds, surety bonds, appeal bonds, performance, completion and compliance guarantees or other similar obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business; provided, including guarantees however, that upon the drawing of letters of credit for reimbursement obligations, or obligations the incurrence of the Issuer or any Restricted Subsidiary other reimbursement-type Indebtedness with respect to letters of credit supporting the foregoing, such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptancesare reimbursed within 30 days following such drawing or incurrence;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount amount, together with any Refinancing Indebtedness incurred in respect thereof pursuant to Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $20.0 25.0 million and 12.5(b) 3.0% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iiSection 4.03(a) and Sections 4.03(b)(2), (iii3), (xi) or 7), (xii) of this Section 6.08(b13), (19) or this clause (x11);
(xi12) the guarantee by (Aa) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Guarantor of Indebtedness (B) other than Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of Sections 4.03(b)(8) or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii15) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03; provided, that to the extent such Indebtedness is a subordinated obligation, the guarantee thereof by the Issuer or such Guarantor shall be subordinated in right of payment to the Securities or the applicable Security Guarantee, as the case may be and (b) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture;
(xviii13) Contribution Indebtedness;
Indebtedness (xixi) The incurrence by outstanding on the date on which a Person becomes a Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Issuer or any Restricted Subsidiary or (ii) incurred to provide all or a portion of Indebtedness consisting the funds utilized to consummate the transaction or series of obligations related transactions pursuant to pay insurance premiums which a Person became a Restricted Subsidiary or was otherwise acquired by (including pursuant to any acquisition of assets and assumption of related liabilities) the Issuer or a Restricted Subsidiary; provided, however, that, in an amount not to exceed each of clauses 4.03(b)(13)(i) and (ii), at the annual premiums in respect time of such insurance premiums acquisition or other transaction, either
(a) the Issuer would have been able to incur at any one time outstandingleast $1.00 of additional Indebtedness pursuant to Section 4.03(a) on a pro forma basis after giving effect to the incurrence of such Indebtedness pursuant to this Section 4.03(b)(13);
(xxb) on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is higher than or equal to such ratio immediately prior to such acquisition or merger; or
(c) on a pro forma basis, the Indebtedness related to unfunded pension fund Tangible Net Worth Ratio of the Issuer and other employee benefit plan obligations and liabilities the Restricted Subsidiaries is less than or equal to the extent they are permitted such ratio immediately prior to remain unfunded under applicable lawsuch acquisition or merger;
(xxi14) Indebtedness supported by one or more letters incurred in connection with a Sale and Leaseback Transaction of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of creditModel Home Unit;
(xxii15) the incurrence of Indebtedness issued by the Issuer or any Guarantor a Restricted Subsidiary deemed to current or former officers, directors and employees, their respective estates, spouses or former spouses exist pursuant to finance the purchase or redemption terms of Equity Interests a joint venture agreement as a result of the Issuer or any failure of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary to make a required capital contribution therein; provided that the only recourse on such Indebtedness is limited to the Issuer’s or such Restricted Subsidiary’s equity interests in the related joint venture;
(16) obligations of additional the Issuer or any Restricted Subsidiary under an agreement with any governmental authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;
(17) Indebtedness or of any Mortgage Subsidiary under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Mortgage Subsidiary, in each case incurred in the issuance ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiaries and/or their respective assets;
(18) the incurrence of Indebtedness by the Issuer or a Restricted Subsidiary in respect of Disqualified Stock a PAPA; and
(19) Indebtedness of the Issuer or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted valueamount, as applicable) or liquidation value at together with any time outstanding, including all Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred in respect thereof pursuant to this clause (xxiii)Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $5.0 million50.0 million and (b) 5.0% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, (1) in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in clauses (iSection 4.03(b) through (xxiii) aboveor is permitted under Section 4.03(a), the Issuer shall classify and may reclassifyIssuer, in its sole discretion, shall classify such item of Permitted Indebtedness on the date of incurrence and may later reclassify such item of Indebtedness in any manner that then complies with this Section 4.03 and may divide, classify will be entitled to divide the amount and reclassify type of such Indebtedness in among more than one of such clauses under Sections 4.03(a) and (b); provided that all Indebtedness outstanding on the types of Indebtedness described, except that Indebtedness incurred Issue Date under the Credit Agreement on Facilities, after giving effect to the Original Issue Date by the Issuer or any Guarantor use of proceeds of this offering, shall be deemed to have been incurred under clause Section 4.03(b)(1) and not Section 4.03(a) or Section 4.03(b)(3) and may not later be reclassified, (i2) above. In addition, for purposes if obligations in respect of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter letters of credit are incurred pursuant to a revolving Credit Facility and relate to other Indebtedness, then such letters of credit shall be treated as incurred pursuant to Section 4.03(b)(1) and such other Indebtedness shall not be included, and (3) except as provided in Section 4.03(b)(2), Security Guarantees of, or obligations supporting in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of such a particular amount of Indebtedness shall not be included so long as incurred by a Person that could have incurred such Indebtednessincluded.
(d) The Issuer will notAccrual of interest, accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness, the reclassification of any obligation as Indebtedness due to a change in accounting principles and the payment of dividends in the form of additional shares of preferred stock or Disqualified Equity Interests will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments for purposes of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuerthis Section 4.03. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquired Indebtedness; provided that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquired Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Company’s Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth is less than 7.5 to 1.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary provisions of Section 4.10(a) shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Company or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness;
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on the Issue Date or any Exchange Notes issued in exchange therefor;
(iii) the Company or any Subsidiary Guarantor from Incurring Indebtedness under Credit Facilities not to exceed the greater of $250.0 million and 15% of Consolidated Tangible Assets;
(iv) any Subsidiary Guarantee of Indebtedness of the Issuer Company under the Notes or any Exchange Notes issued in exchange therefor;
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money);
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any other Subsidiary Guarantor, or the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred under this Indenture (other than Non-Recourse Indebtedness);
(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and (b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to the Company’s obligations under the ABL Facility Notes and this Indenture, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary;
(viii) the Company and any Restricted Subsidiary from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Restricted Subsidiary, as the case may be, in an aggregate amount at any time outstanding not to exceed $50.0 million;
(ix) the Company or any Restricted Subsidiary from Incurring obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business (as determined in good faith by the Company);
(x) the Company or any Restricted Subsidiary from incurring Indebtedness owed to a seller of entitled land, lots under development or finished lots under the terms of which the Company or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such land or lots; and
(xi) the Company or any Restricted Subsidiary from Incurring Indebtedness in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 100.0 million.
(c) The Company shall not, and shall not cause or permit any Subsidiary Guarantor that is a Restricted Subsidiary to, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Subsidiary Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, at least to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.
(d) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in the above clauses (i) through (xxiii) aboveof this Section 4.10, the Issuer shall classify and may reclassifyCompany, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this Section 4.10 and may divide, classify and from time to time reclassify such item of Indebtedness in more than one of any manner in which such item could be Incurred at the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination time of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessreclassification.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (other than Permitted Indebtedness); provided, that the Issuer or any Guarantor may incur additional Subordinated Indebtedness if, (a) no Default or Event of Default shall have occurred and be continuing, or would result therefrom, and (b) after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 25.0 million, less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.09;
(ii2) (a) the Discount Notes and the Discount Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date and disclosed in the Memorandum (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Discount Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business for bona fide hedging purposes (and not for the purpose of speculation) that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices; provided, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claimscompensation, self-insurance obligations and bankers acceptances obligations, bid, performance or surety bonds issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including but not limited to guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, however that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Subordinated Indebtedness issued to former employees or directors of Issuer or any Subsidiary in lieu of cash payments for the Equity Interests being repurchased from such Persons pursuant to clause (4) of Section 4.08(b);
(11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x);above; and
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or including but not limited to provide all or any part letters of the funds or credit support utilized provided to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred vendors in the ordinary course of business under guarantees of Indebtedness of suppliersbusiness, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveof Section 4.06(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any of its Restricted Subsidiary Subsidiaries to, directly or indirectlyIncur any Indebtedness (including Acquired Indebtedness) if, incur any Indebtednessimmediately after giving effect to the Incurrence of such additional Indebtedness and the receipt and application of the proceeds therefrom, the aggregate principal amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis determined in conformity with GAAP is greater than 60% of Adjusted Total Assets.
(b) Notwithstanding Section 6.08(a)The Issuer will not, and will not permit any of its Restricted Subsidiaries to, Incur any Subsidiary Debt or any Secured Indebtedness if, immediately after giving effect to the Incurrence of such additional Subsidiary Debt or Secured Indebtedness and the receipt and application of the proceeds therefrom, the Issuer aggregate principal amount of all outstanding Subsidiary Debt and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Secured Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis determined in conformity with GAAP is greater than 40% of Adjusted Total Assets.
(c) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes issued on the Closing Date and other Indebtedness existing on the Closing Date); provided, however, that the Issuer or any Guarantor of the Subsidiary Guarantors may Incur Indebtedness if, after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Interest Coverage Ratio of the Issuer and its Restricted Subsidiaries on a consolidated basis would be greater than 2.0 to 1.
(d) Notwithstanding paragraph (a), (b) or (c) above, the Issuer or any of its Restricted Subsidiaries (except as specified below) may Incur each and all of the following:
(1) Indebtedness outstanding under the ABL Facility Line of Credit at any time in an aggregate principal amount at any time outstanding not to exceed $102,500,000 200 million;
(with letters of credit being deemed to have a principal amount equal to the maximum potential liability of 2) Indebtedness owed to:
(i) the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;evidenced by an unsubordinated promissory note,
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness being owed to any Person (other than to the Issuer or a any other Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, ) shall be deemed deemed, in each case, to have incurred constitute an Incurrence of such Indebtedness not permitted by this clause (v2); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi3) Indebtedness issued in exchange for, or the net proceeds of which are used to refinance or refund, outstanding Indebtedness (other than Indebtedness Incurred under clause (1), (2) or (4) of this paragraph (d)) and any refinancings thereof in an amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided, however, that Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that ranks equally with or subordinate in right of payment to, the Notes shall only be permitted under this clause (3) if:
(i) in case the Notes are refinanced in part or the Indebtedness to be refinanced ranks equally with the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is outstanding, ranks equally with or is expressly made subordinate in right of payment to the remaining Notes;
(ii) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes at least to the extent that the Indebtedness to be refinanced is subordinated to the Notes; and
(iii) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded; provided further, however, that in no event may Indebtedness of the Issuer that ranks equally with or subordinate in right of payment to the Notes be refinanced by means of any Indebtedness of any Restricted Subsidiary pursuant to this clause (3);
(4) Indebtedness:
(i) in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue appeal bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary provided in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;,
(viiii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, under Currency Agreements and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of businessInterest Rate Agreements; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
agreements (x) Refinancing are designed solely to protect the Issuer or any of its Restricted Subsidiaries against fluctuations in foreign currency exchange rates or interest rates and (y) do not increase the Indebtedness with respect to Indebtedness incurred pursuant to clause (ii)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; and
(iii)) arising from agreements providing for indemnification, (xi) adjustment of purchase price or (xii) similar obligations, or from Guarantees or letters of this Section 6.08(b) credit, surety bonds or this clause (x);
(xi) (A) Acquired Indebtedness performance bonds securing any obligations of the Issuer or any of its Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions Subsidiaries pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligationsagreements, in each case, incurred or assumed any case Incurred in connection with the acquisition or disposition of any business business, assets or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees Guarantees of Indebtedness incurred Incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Restricted Subsidiary for the purpose of financing any such acquisition; provided), that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time a principal amount not to exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the its Restricted Subsidiaries on a consolidated basis in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv5) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;net proceeds thereof are promptly:
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through used to purchase Notes tendered in an Offer to Purchase made as a result of a Change in Control, or
(xxiiiii) abovedeposited to defease the Notes as described in Sections 8.02 and 8.03, or
(iii) deposited to discharge the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred obligations under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under Notes and this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long Indenture as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.Section 8.01;
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided, however; that the Company or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (i) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00, or (ii) the Indebtedness to Tangible Net Worth Ratio would be no more than 2.25 to 1.00.
(b) Notwithstanding Section 6.08(a), 4.09(a) shall not prohibit the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each incurrence of the following shall be permitted Indebtedness (the collectively, “Permitted Indebtedness”):
(i1) Indebtedness of the incurrence by the Company, the Corporate Issuer or any Guarantor (and the Guarantee thereof by the Company, the Corporate Issuer or any such Guarantor) of Indebtedness under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 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 such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $100.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof25% of Consolidated Tangible Assets at the time of incurrence;
(iii2) the Notes and the Note Guarantees issued on the Issue Date;
(3) Indebtedness of the Company, the Corporate Issuer and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses (i1), (2), (4), (5), (6), (8), (9), (10), (12), (14), (15), (16) and (ii17) aboveof this Section 4.09(b));
(iv4) Indebtedness of the Company and the Restricted Subsidiaries under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business and not for the purpose of speculationspeculative purposes;
(v5) Indebtedness of the Issuer Company owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer Company or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Company or the Corporate Issuer owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company’s or Corporate Issuer’s obligations under this Indenture and the Notes, (b) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture and its Note Guarantee, and (c) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) The incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations obligations, bankers’ acceptances, performance and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary surety bonds in the ordinary course of business, including guarantees deposits made to secure performance of tenders, bids, leases, statutory obligations, progress payments, government contracts or other ordinary course obligations of (in each case, not constituting Indebtedness for borrowed money) customary in the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptanceshomebuilding industry;
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing any Indebtedness thereofof the Company or a Restricted Subsidiary which serves to refund or refinance any Indebtedness incurred pursuant to this clause (7), in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 10.0 million and 12.5(b) 2.5% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii8) Non-Recourse Indebtedness of the Company or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) ten Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause Section 4.09(a) and clauses (ii2), (iii3), (xi) or (xii) of this Section 6.08(b13) or this clause (x11) of this Section 4.09(b);
(xi12) the guarantee by (Aa) Acquired Indebtedness of the Company, the Corporate Issuer or any Guarantor of Indebtedness (other than Indebtedness incurred pursuant to clause (8) or (16) of this Section 4.09(b)) of the Company or a Restricted SubsidiarySubsidiary that was permitted to be incurred by another provision of this Section 4.09; provided, that to the extent such Indebtedness is a subordinated obligation, the guarantee thereof by the Company, the Corporate Issuer or such Guarantor shall be subordinated in right of payment to the Notes or the applicable Note Guarantee, as the case may be and (Bb) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the Issuer provisions of this Indenture;
(13) Indebtedness of Persons incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged into, the Company or any Restricted Subsidiary in contemplation of, or in connection with, or (other than Indebtedness incurred (a) to provide all or any part portion of the funds or credit support utilized to consummate, consummate the transaction or series of related transactions pursuant to which such Person Restricted Subsidiary became a Restricted Subsidiary of or was otherwise acquired by the Issuer Company or such Restricted Subsidiary or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Person is acquired, either
(A) the Company would have been able to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(a) on a pro forma basis after giving effect to the incurrence of such Indebtedness pursuant to this clause (13); or
(B) on a pro forma basis, either (i) the Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries would be higher than such ratio immediately prior to such acquisition or merger; or (ii) the Indebtedness to Tangible Net Worth Ratio of the Company and its Restricted Subsidiaries would be lower than such ratio immediately prior to such acquisition or merger;
(14) the incurrence of Indebtedness by the Company or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or in respect of a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrencePAPA;
(xii15) Acquired Indebtedness of the Issuer incurrence by the Company or any of its Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Subsidiaries of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, guarantees and pledges (in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiiiIndebtedness for borrowed money) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees pursuant to arrangements customary in the homebuilding industry relating to (i) the formation of or payments due in respect of community facility district, metro-district, local improvement and other similar financing and assessment districts; or (ii) bond financings of political subdivisions or enterprises thereof;
(16) any guarantee of Indebtedness or other obligations of suppliers, licensees, franchisees or customers a joint venture engaged in an aggregate amount, together with the aggregate amount of Investments a Permitted Business; provided that such Guarantee constitutes a Permitted Investment under clause (1218) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstandingthereof or is a Restricted Payment that is made in accordance Section 4.08;
(xvi17) The issuance the incurrence by any of the Issuer’s Restricted Subsidiaries to the Issuer Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
obligations (1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than in respect of Indebtedness for borrowed money) under an arrangement customary in the Issuer homebuilding industry with any government authority, quasi-governmental entity, utility, adjoining (or a Restricted Subsidiary common master plan) landowner or seller of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedreal property, in each casecase entered into in the ordinary course of business in connection with the acquisition of real property, to constitute an issuance of entitle, develop or construct infrastructure upon such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08real property;
(xviii18) Contribution Indebtedness;
(xix) The the incurrence by the Issuer Company or any Restricted Subsidiary of Indebtedness consisting of obligations deemed to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities exist pursuant to the extent they are permitted terms of a joint venture agreement as a result of a failure of the Company or such Restricted Subsidiary to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i)make a required capital contribution therein; provided that the amount of only recourse on such Indebtedness permitted is limited to be incurred under this clause (xxi) supported by any the Company’s or such letter(s) of credit shall not exceed Restricted Subsidiary’s equity interests in the amount of such letter(s) of credit;related joint venture; and
(xxii19) Indebtedness issued by of the Issuer Company or any Guarantor Restricted Subsidiary in an aggregate amount, not to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of exceed $2.0 20.0 million at any time outstanding; and
. No Restricted Subsidiary (xxiii) The incurrence by other than the Corporate Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicablea Guarantor) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge shall incur any Indebtedness under Section 4.09(a) and Section 4.09(b) if the proceeds thereof are used, directly or liquidation value incurred pursuant indirectly, to this clause (xxiii))refinance any Indebtedness of the Company, not to exceed $5.0 millionthe Corporate Issuer or a Guarantor.
(c) For purposes of determining compliance with this Section 6.08, 4.09:
(1) in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in clauses (i) through (xxiii) aboveSection 4.09(b), the Issuer shall classify and may reclassifyCompany, in its sole discretion, will classify such item of Permitted Indebtedness on the date of incurrence and may later reclassify such item of Indebtedness in any manner that complies with Section 4.09(b) and may divide, classify will be entitled to divide the amount and reclassify type of such Indebtedness in among more than one of the types of such clauses under Section 4.09(b); provided that all Indebtedness described, except that Indebtedness (or portion thereof) incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor Section 4.09(b)(1), shall be deemed to have been incurred under clause Section 4.09(b)(1) and not Section 4.09(a) or Section 4.09(b)(3) and may not later be reclassified;
(i2) above. In addition, for purposes if obligations in respect of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter letters of credit are incurred pursuant to a Credit Facility and relate to other Indebtedness, then such letters of credit shall be treated as incurred pursuant to Section 4.09(b)(1) above and such other Indebtedness shall not be included; and
(3) except as provided in Section 4.09(c)(2), Guarantees of, or obligations supporting in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of such a particular amount of Indebtedness shall not be included so long as incurred by a Person that could have incurred such Indebtednessincluded.
(d) The Issuer will notAccrual of interest, accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness and will the payment of dividends in the form of additional shares of preferred stock or Disqualified Equity Interests shall not permit be deemed to be an incurrence of Indebtedness for purposes of this Section 4.09; provided, however, that each of the foregoing shall be treated as an incurrence of Indebtedness for purposes of calculating the Indebtedness to Tangible Net Worth Ratio.
(e) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) may incur pursuant to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness covenant shall not be deemed to constitute an indirect use be exceeded solely as a result of fluctuations in exchange rates or currency values. The principal amount of 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 Refinancing Indebtedness is denominated that is in effect on the date of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithrefinancing.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Company or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio, determined on a pro forma basis giving effect to such incurrence and the application of the proceeds thereof, would be at least 2.25 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)4.10(a) of this Indenture, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Company and any Guarantor under the ABL Facility Credit Facilities (including reimbursement obligations with regard to letters of credit) incurred pursuant to this clause (1) in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 85.0 million and (with letters of credit being deemed to have a principal amount equal to the maximum potential liability y) 80% of the Issuer or such Guarantor) lessbook value of the accounts receivable plus 50% of the book value of inventory of the Company and the Restricted Subsidiaries, to the extent calculated on a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement consolidated basis and in accordance with Section 6.11GAAP (giving pro forma effect to acquisitions made in connection with the borrowing of any such Indebtedness);
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations; provided that such Hedging Obligations (including Swap Obligations) of are incurred by the Issuer Company or any Restricted Subsidiary in the ordinary course of business and not for the purpose of speculation;.
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 50.0 million and 12.5(b) 20% of Consolidated Net Tangible Assets at the time net book value of the incurrenceaircraft owned by the Company and the Restricted Subsidiaries;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xia) Indebtedness of any Foreign Subsidiary (or guarantees thereof by the Company or any Guarantor in respect thereof) (A“Foreign Indebtedness”) Acquired and (b) guarantees of Indebtedness of a partnership or joint venture (other than an Unrestricted Subsidiary) by the Company or any Guarantor provided that such guarantee does not exceed the proportion of such Indebtedness that is equal to the Company’s or Guarantor’s proportionate equity ownership of such partnership or joint venture, and provided that the aggregate principal amount of Indebtedness at any time outstanding incurred pursuant to the foregoing clauses (a) and (b) does not exceed $15.0 million; and
(12) Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer Company or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 30.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify or later reclassify such item of Indebtedness and may divide, divide and classify and or later reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement and outstanding on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Phi Inc)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that an Issuer or any Subsidiary Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding the provisions of Section 6.08(a4.09(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness and other Obligations, including Hedging Obligations, of a Securitization Subsidiary, the Issuer or Company and/or any Subsidiary Guarantor under the ABL any Liquidity Facility in an aggregate principal amount outstanding at any the time outstanding of such incurrence not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability in excess of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Borrowing Base;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries (including the First Lien Notes) to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses Section 4.09(b)(1), (i2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Company or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation (including those that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices); provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.09, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or obligations of a similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances nature issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 30.0 million and 12.5(b) 4.0% of Consolidated Net Tangible Assets at the time of the incurrencethat time;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iithe Coverage Ratio Exception or Section 4.09(b)(2), (iii3), (xi7), (11) or (xii) of this Section 6.08(b14) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationarising from indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer Company or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided, that ;
(12) Indebtedness consisting of Indebtedness issued by the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer Company or any Restricted Subsidiary (e.g.to future, current or former officers, directors, consultants and employees thereof, their respective estates, spouses or former spouses, in each case to finance the amount purchase or redemption of such liability shall be deemed Equity Interests of the Company or any direct or indirect parent company of the Company to be zero if no amount is reflected on such balance sheetthe extent permitted by Section 4.07(b)(4)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv13) Any other any guarantee by the Company or any of the Guarantors of Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer Company or a Restricted Subsidiary of the Issuer; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee must be subordinated or pari passu to the same extent as the Indebtedness guaranteed;
(xviii14) Contribution Indebtedness;
(xix) The incurrence , Disqualified Equity Interests or Preferred Stock of Persons that are acquired by the Issuer Company or any Restricted Subsidiary or merged into the Company or a Restricted Subsidiary in accordance with the terms of the applicable Indenture; provided that such Indebtedness, Disqualified Equity Interests or Preferred Stock is not incurred in contemplation of such acquisition or merger; provided further that after giving effect to such acquisition or merger,
(A) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio; and
(B) the Consolidated Interest Coverage Ratio of the Company and its Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition or merger;
(15) Indebtedness of the Company or any Restricted Subsidiary consisting of obligations to pay the financing of insurance premiums in the ordinary course of business; and
(16) Indebtedness of the Company or any Restricted Subsidiary in an aggregate amount not to exceed the annual premiums in respect greater of such insurance premiums at any one time outstanding;
(xxa) Indebtedness related to unfunded pension fund $45.0 million and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxib) Indebtedness supported by one or more letters 5% of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million Consolidated Net Tangible Assets at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Liquidity Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (16) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.09, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) . The Issuer will notaccrual of interest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on preferred stock or Disqualified Equity Interests in the form of additional shares of the same class of preferred stock or Disqualified Equity Interests will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments or an issuance of the types described in clauses (1)(i)(b), (7), (16), (19), (21) preferred stock or (22) Disqualified Equity Interests for purposes of that definition or to purchase real property or other fixed assetsthis Section 4.09; provided, in each case such case, that the amount of any such accrual or accretion is included in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all Consolidated Interest Expense of the business operations of such Person, or substantially all of such assets, Company as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issueraccrued. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit Neither the Company nor any of its Restricted Subsidiary toSubsidiaries may, directly or indirectly, incur Incur any Indebtedness.
(b) Notwithstanding Section 6.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
Indebtedness except (i) Non-Recourse Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds Incurred in the ordinary course of business; provided(ii) Indebtedness evidenced by Notes issued on the Issue Date; (iii) Indebtedness of the Company solely to any Restricted Subsidiary, howeveror Indebtedness of any Restricted Subsidiary solely to the Company or to any Restricted Subsidiary, provided that (x) neither the Company nor any Restricted Subsidiary shall become liable to any Person with respect to such Indebtedness other than the Company or a Restricted Subsidiary and (y) any such Indebtedness of the Company (other than to the Company's financial services segment Subsidiaries) is extinguished within five subordinate and junior in right of payment to the Notes; (5iv) Business Days Refinancing Indebtedness (x) of incurrence and any Indebtedness permitted to be Incurred pursuant to this clause (iv) or the immediate following paragraph (b) without duplication or (y) of clause any Indebtedness to the extent outstanding on the Issue Date (aother than under the Bank Credit Facility), Banking Services Obligations;
; (ixv) Indebtedness arising Incurred solely in connection with endorsement respect of instruments for deposit performance, completion, guaranty and similar bonds and similar purpose undertakings and Indebtedness under any earnest money notes, tenders, bxxx, xxases, statutory obligations, surety and appeal bonds, progress statements, government contracts, letters of credit, escrow agreements and other obligations of like nature and deposits made to secure performance of any of the foregoing, in each case in the ordinary course of business;; (vi) Indebtedness under the Bank Credit Facility in an aggregate principal amount not to exceed $175,000,000 at any time, and guaranties thereof; (vii)
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness which represents the assumption by the Company or a Restricted Subsidiary of Indebtedness of the Issuer or any a Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with represented by guaranties in respect of Indebtedness of another Restricted Subsidiary permitted to be Incurred pursuant to this Indenture and Indebtedness of the Issuer or Company represented by guaranties in respect of Indebtedness of a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed permitted to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary Incurred pursuant to this Indenture; (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)viii) and Capitalized Lease Obligations; (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xvix) Indebtedness under warehouse lines of the Issuer or any Restricted Subsidiary incurred credit, repurchase agreements and Indebtedness secured by mortgage loan servicing of mortgage lending Subsidiaries in the ordinary course of business under guarantees a mortgage lending business; (x) obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business; (xi) Indebtedness of suppliers, licensees, franchisees or customers secured by mortgages and mortgage-related assets and Indebtedness representing all mortgage-related liabilities in an aggregate amount, together with the aggregate amount of Investments under clause (12) ordinary course of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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 Issuermortgage lending and asset management business; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (MDC Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any of its Restricted Subsidiary Subsidiaries to, directly Incur any additional Indebtedness (other than Indebtedness between the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or indirectlyamong such Restricted Subsidiaries which are Wholly Owned Subsidiaries), incur any including Acquisition Debt, unless, after giving effect thereto or the application of the proceeds therefrom, the ratio of the Company's Indebtedness (excluding, for purposes of this calculation, Non-Recourse Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not greater than 3.0 to 1.0.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the following shall be permitted (the “Permitted Indebtedness”):
this Indenture will not prevent: (i) in addition to the Indebtedness permitted to be Incurred under clauses (ii), (iii) and (iv) of this sentence and Indebtedness permitted to be Incurred under Section 6.13(a) hereof, the Issuer Company and/or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness and (C) Indebtedness Incurred for working capital purposes or to finance the acquisition, holding or development of property by the Company and its Restricted Subsidiaries (including, without limitation, the financing of any Guarantor under related interest reserve) in the ABL Facility ordinary course of business in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 50,000,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than excluding any Indebtedness referred to in Section 6.13(a) hereof and clauses (ii)(A), (i)(B), (ii), (iii) and (iv) of this Section 6.13(b)), (ii) above);
Unrestricted Subsidiaries from Incurring Indebtedness, (iviii) the Company and its Restricted Subsidiaries from Incurring Indebtedness under Hedging Obligations any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (including Swap Obligations) exclusive of the Issuer or any Restricted Subsidiary in the ordinary course and not obligation for the purpose payment of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; providedborrowed money), however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments each case Incurred in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary consistent with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence past practice and (biv) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Restricted Subsidiaries from guaranteeing Indebtedness of the Issuer Company or any another Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer After December 31, 1999: (i) the Company will not, and will not permit any of its Restricted Subsidiary Subsidiaries to, directly or indirectly, incur any Indebtedness.
create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (b) Notwithstanding Section 6.08(acollectively, "incur"), any Indebtedness (including without limitation Acquired Indebtedness), other than (A) Junior Subordinated Indebtedness incurred by the Issuer and Company in compliance with the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each provisions of the immediately following shall be permitted sentence or (B) Indebtedness between the “Permitted Indebtedness”):
Company and its Wholly Owned Restricted Subsidiaries (i) provided that such Indebtedness of the Issuer or Company to any Guarantor under the ABL Facility Wholly Owned Restricted Subsidiary is expressly subordinated in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters right of credit being deemed to have a principal amount equal payment to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the or among such Wholly Owned Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness being owed to any Person (other than the Issuer or to a Wholly Owned Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an issuance the incurrence of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee Indebtedness by the Issuer or Company) and (ii) the Company will not permit any of its Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, Subsidiaries to issue (except to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer Company or any of its direct Wholly Owned Restricted Subsidiaries) any Capital Stock having a preference in liquidation or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess with respect to the payment of $2.0 million dividends, unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at any time outstanding; and
(xxiii) The least 2.50 to 1, determined on a pro forma basis as if the incurrence by the Issuer or any Restricted Subsidiary of such additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted valuesuch Capital Stock, as applicable) or liquidation value at any time outstandingthe case may be, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in and the event that an item of Indebtedness meets the criteria of more than one application of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) abovenet proceeds therefrom, had occurred at the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one beginning of the types of Indebtedness described, except that Indebtedness incurred under four-quarter period used to calculate the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.Company's Consolidated Fixed Charge
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 (the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”"Coverage Ratio Exception"). Each Notwithstanding the above, each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $102,500,000 110 million, less the sum of (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorx) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with the covenant described in Section 6.114.10 and (y) the aggregate Outstanding Receivables Amount with respect to Qualified Securitization Transactions and (ii) the sum of (x) 75% of the net book value of the accounts receivable of the Issuer and the Restricted Subsidiaries and (y) 50% of the net book value of the inventory of the Issuer and the Restricted Subsidiaries.
(2) the Notes issued on the Issue Date (and any registered exchange Notes issued in exchange for such Notes) and the Note Guarantees;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations; provided that (a) such Hedging Obligations are designed to protect against fluctuations in interest or currency rates or commodity prices and (including Swap Obligationsb) in the case of any Hedging Obligations under clause (1) of the Issuer or any Restricted Subsidiary in definition thereof, (I) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (II) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, payment, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or and other similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of businessSubsidiary, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, payment, performance, appeal or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Indebtedness under Capitalized Lease Obligations, industrial revenue bonds or mortgage financing incurred by the Issuer or any Restricted Subsidiary for the purpose of financing all or any part of the purchase price or cost of development of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.55% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x)15) below;
(xi11) the guarantee by the Issuer or any Guarantor of Indebtedness of the Issuer or a Guarantor incurred pursuant to the Coverage Ratio Exception or another clause in this Section 4.06;
(A12) Acquired Indebtedness of the Issuer or any Restricted Subsidiary (including letters of credit) in order to provide security for workers' compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance arrangements, reclamation, statutory obligations, surety and appeal bonds, government contracts, return-of-money bonds, or similar requirements of the Issuer or any Restricted Subsidiary in the ordinary course of business;
(13) customary indemnification, adjustment of purchase price or similar obligations, including title insurance, of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv14) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does in an aggregate amount not to exceed 5.00:1.00;$100 million at any time outstanding; and
(xv15) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at during any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Suspension Period. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifymay, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except . The maximum amount of Indebtedness that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor Restricted Subsidiary may incur pursuant to this Section 4.06 shall not be deemed to have been incurred under clause (i) abovebe exceeded solely as the result of fluctuations in the exchange rates of currencies. In addition, for purposes of determining any particular the amount of Indebtedness outstanding under this covenantone of the clauses above, guaranteesthe outstanding principal amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such Person or any other Person arising under any guarantee, Liens or Lien, letter of credit obligations or similar instrument supporting such Indebtedness otherwise included in the determination of such particular amount shall not be included disregarded so long as it is permitted to be incurred by a the Person that could have incurred or Persons incurring such Indebtednessobligation.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Massey Energy Co)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds therefrom), the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters the greater of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $300.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) an amount of indebtedness at the time of Incurrence and guarantees thereofafter giving effect to the Incurrence of such Indebtedness and the application of the proceeds therefrom that does not cause the Secured Leverage Ratio of the Issuer to exceed 3.5 to 1.0;
(iii2) Indebtedness under (a) the Notes and the Note Guarantees initially issued on the Issue Date and (b) guarantees of the Additional Notes permitted to be issued under this Indenture;
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect in due course to the intended use of proceeds of the Notes (other than Indebtedness referred to in other clauses (i) and (ii) aboveof this Section 4.10(b);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, customs, stay, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course other obligations of business and workers’ compensation claims, self-insurance obligations and bankers acceptances a like nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, customs, stay, bid, performance, appeal or surety bonds and or other obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit issued in the ordinary course of business, including letters of credit in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptancesfor the account of the Issuer or any Restricted Subsidiary, as the case may be;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 175.0 million and 12.5(b) 7.5% of the Issuer’s Consolidated Net Tangible Assets determined at the time of incurrence on a pro forma basis to give effect to the incurrenceassets purchased;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x)10) or clause (15) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that, that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness in respect of insurance premium financing for insurance being acquired by the Issuer or a Restricted Subsidiary under customary terms and conditions;
(14) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 30.0% of the aggregate Consolidated Tangible Assets of all of the Foreign Restricted Subsidiaries, determined at the time of incurrence;
(15) Permitted Acquisition Indebtedness;
(16) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof the proceeds which are used to finance the acquisition by Discovery Offshore or any Restricted Subsidiary of one or more jackup rigs and related equipment and assets; and
(17) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause outstanding the greater of (xxiii)), not to exceed a) $5.0 million.
100.0 million and (cb) 5.0% of the Issuer’s Consolidated Tangible Assets as determined at the time of incurrence. For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii17) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by after giving effect to the Issuer or any Guarantor application of the proceeds from the issuance of the Notes shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (17) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not. For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and will not permit any Restricted Subsidiary to, directly or indirectly use such refinancing would cause the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended applicable U.S. dollar-denominated restriction to be used in, a Permitted Business, (2) substantially all of exceeded if calculated at the business operations relevant currency exchange rate in effect on the date of such Personrefinancing, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness U.S. dollar-denominated restriction shall be deemed not to constitute an indirect use have been exceeded so long as the principal amount of such proceeds Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to make such Investment or purchase such assets. All determinations under this paragraph refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be made by calculated based on the Issuer acting currency exchange rate applicable to the currencies in good faithwhich such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Notwithstanding any other provision of this Section 4.10, in no event shall the reclassification of any lease or other liability as indebtedness due to a change in accounting principles after the Issue Date be deemed to be an incurrence of Indebtedness.
Appears in 1 contract
Samples: Indenture (Hercules Offshore, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; PROVIDED, HOWEVER, that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least (a) 2.00 to 1.00 if the incurrence occurs on or prior to the third anniversary of the Issue Date and (b) 2.25 to 1.00 if the incurrence occurs thereafter (the "COVERAGE RATIO EXCEPTION").
(b) Notwithstanding Section 6.08(a4.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”"PERMITTED INDEBTEDNESS"):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less75.0 million, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, LESS the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.114.11 and (y) 85% of the book value of the accounts receivable plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business for BONA FIDE hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity process; PROVIDED, HOWEVER, that if such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Guarantor or a Foreign Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Issuer, any Guarantor or any other Foreign Restricted Subsidiary; providedPROVIDED, howeverHOWEVER, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Is- xxxx, a Guarantor or a Foreign Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Issuer, any Guarantor or any Foreign Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Issuer, any Guarantor or any Foreign Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Issuer, any Guarantor or any Foreign Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence15.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; providedPROVIDED, howeverHOWEVER, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness incurred by the Issuer, any Guarantor or any other Restricted Subsidiary with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii) of this Section 6.08(b) or this clause (x);
(xi3) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiaryabove; PROVIDED, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; providedHOWEVER, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a dispositionRestricted Subsidiary other than a Guarantor, the gross proceeds actually received by the Issuer and the such Restricted Subsidiaries in connection with such dispositionSubsidiary shall only be allowed to refinance its own Indebtedness or Indebtedness of another Restricted Subsidiary that is not a Guarantor;
(xiv11) Any other Indebtedness of the Issuer or any Foreign Restricted Subsidiary if, after giving effect thereto, the in an aggregate amount at any time outstanding not to exceed 5% of Consolidated Total Leverage Ratio does not exceed 5.00:1.00;Assets; and
(xv12) Indebtedness of the Issuer Issuer, any Guarantor or any Foreign Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 20.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.084.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveof Section 4.08(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.08(b). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.08, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assetsSection 4.08. All determinations under this paragraph shall be made by the Issuer acting in good faith.-44-
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness, and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 250.0 million less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13 and (b) the Borrowing Base as of the date of such incurrence;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date including the Old Notes and the 13.125% Senior Subordinated Notes (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that if such Hedging Obligations are of the type that relate to Indebtedness described in clause (1) of the definition of Indebtedness, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Subsidiary Guarantors is either a Permitted Investment or permitted by Section 6.094.11;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception, clause (ii2), (iii3) (other than the Old Notes), (xi11)(B) or (xii13)(B) of this Section 6.08(b4.10(b) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed $20.0 million at any time outstanding and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition5.01(a);
(xiii12) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii12) shall at no time exceed (a) in the case of an acquisition, $5.0 10.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv13) Any other (A) Indebtedness of the Issuer or Foreign Subsidiaries in an aggregate amount not to exceed $30.0 million at any Restricted Subsidiary time outstanding and (B) Indebtedness of Foreign Subsidiaries if, after giving effect thereto, thereto the Total Leverage Consolidated Interest Coverage Ratio does not exceed 5.00:1.00(with the references to the Issuer and the Restricted Subsidiaries in the definitions used in the calculation thereof being to Foreign Subsidiaries (other than Unrestricted Subsidiaries)) of all Foreign Subsidiaries would be at least 2.00 to 1.00; provided that Indebtedness under this clause (13) may be incurred under any Credit Facility;
(xv14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (1213) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi15) The issuance by any Indebtedness of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 50.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ply Gem Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; PROVIDED that the Issuer or any Guarantor may incur additional Indebtedness, and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the "COVERAGE RATIO EXCEPTION").
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”"PERMITTED INDEBTEDNESS"):
(i1) Indebtedness of the Issuer or any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less250.0 million LESS, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13 (PROVIDED that the amount under this clause (a) shall in no event be reduced to below $65.0 million) and (b) the amount that is 2.5 times Consolidated Cash Flow for the Four-Quarter Period;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer Company or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; PROVIDED that if such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; providedPROVIDED, howeverHOWEVER, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ ' compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ ' compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; providedPROVIDED, howeverHOWEVER, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception, clause (ii2), (iii3), (xi11)(B) or (xii13)(B) of this Section 6.08(b4.10(b) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed $20.0 million at any time outstanding and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition5.01(a);
(xiii12) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, PROVIDED that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii12) shall at no time exceed (a) in the case of an acquisition, $5.0 10.0 million (provided PROVIDED that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g.E.G., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv13) Any other (A) Indebtedness of the Issuer or Foreign Subsidiaries in an aggregate amount not to exceed $30.0 million at any Restricted Subsidiary time outstanding and (B) Indebtedness of Foreign Subsidiaries if, after giving effect thereto, thereto the Total Leverage Consolidated Interest Coverage Ratio does not exceed 5.00:1.00(with the references to the Issuer and the Restricted Subsidiaries in the definitions used in the calculation thereof being to Foreign Subsidiaries (other than Unrestricted Subsidiaries)) of all Foreign Subsidiaries would be at least 2.00 to 1.00; PROVIDED that Indebtedness under this clause (13) may be incurred under any Credit Facility;
(xv14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (1213) of the definition of “"Permitted Investments,” " not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(215) any sale or other transfer Indebtedness of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 25.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ply Gem Industries Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness, and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 150.0 million less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13 and (b) the Borrowing Base as of the date of such incurrence;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that if such Hedging Obligations are of the type that relate to Indebtedness described in clause (1) of the definition of Indebtedness, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Subsidiary Guarantors is either a Permitted Investment or permitted by Section 6.094.11;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception, clause (ii2), (iii3), (xi11)(B) or (xii13)(B) of this Section 6.08(b4.10(b) or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed $20.0 million at any time outstanding and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition5.01(a);
(xiii12) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii12) shall at no time exceed (a) in the case of an acquisition, $5.0 10.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv13) Any other Indebtedness of the Issuer or Foreign Subsidiaries in an aggregate amount not to exceed $30.0 million at any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00time outstanding; provided that Indebtedness under this clause (13) may be incurred under any Credit Facility;
(xv14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (1213) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(215) any sale or other transfer Indebtedness of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 25.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ply Gem Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Fixed Charge Coverage Ratio would be at least 2.0 to 1.0 (the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”"Coverage Ratio Exception"). Each Notwithstanding the above, each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (x) the sum of (i) $102,500,000 212.0 million, less (with letters of credit being deemed to have a principal amount equal to ii) any Indebtedness outstanding under the maximum potential liability of the Issuer or such GuarantorGeneral Scrap Facilities less (iii) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.114.10, and (y) 85% of the book value of the accounts receivable plus 60% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP and in the case of each of clause (x) and (y) less the Outstanding Receivables Amount;
(ii2) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible the Original Notes (other than Convertible and a like amount of Exchange Notes exchanged issued in exchange for such Notes) and guarantees thereofthe Note Guarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes as set forth in the Offering Memorandum);
(iv4) Indebtedness under Hedging Obligations; provided that (a) such Hedging Obligations are designed to protect against fluctuations in interest or currency rates or commodity prices and (including Swap Obligationsb) in the case of any Hedging Obligations under clause (1) of the Issuer or any Restricted Subsidiary in definition thereof, (I) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (II) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of businessSubsidiary, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Indebtedness under Capitalized Lease Obligations, industrial revenue bonds or mortgage financing incurred by the Issuer or any Restricted Subsidiary for the purpose of financing all or any part of the purchase price or cost of development of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii2), (iii3), (xi12), (13) or (xii16) of this Section 6.08(b) or this clause (x)4.06;
(xi11) the guarantee by the Issuer or any Guarantor of Indebtedness of the Issuer or a Guarantor incurred pursuant to the Coverage Ratio Exception or another clause in this Section 4.06;
(A12) Acquired Indebtedness of the Issuer or any Restricted Subsidiary (including letters of credit) in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance, or similar requirements of the Issuer or any Restricted Subsidiary in the ordinary course of business;
(13) customary indemnification, adjustment of purchase price or similar obligations, including title insurance, of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability );
(14) Indebtedness consisting of take-or-pay obligations contained in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) supply agreements entered into in the case ordinary course of an acquisition, $5.0 million business;
(provided that 15) Indebtedness evidenced by promissory notes subordinated to the amount of such liability shall be deemed Notes and the Note Guarantees issued to be the amount thereof, if any, reflected on the balance sheet current or former employees or directors of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (bor their respective spouses or estates) in the case lieu of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with cash payments for Equity Interests being repurchased from such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers Persons in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi16) The issuance by any Indebtedness of the Issuer’s Restricted Subsidiaries to the Issuer or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of to refinance the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08Montpelier Sale and Leaseback Obligations;
(xviii17) Contribution IndebtednessIndebtedness under the General Scrap Facilities in an amount not to exceed $12.0 million;
(xix18) The incurrence by Indebtedness of the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 40.0 million at any time outstanding; and
(xxiii19) The incurrence by Indebtedness of the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by incurred during any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Suspension Period. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii19) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifymay, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof this Section 4.06. In addition, for purposes of determining any particular The maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this Section 4.06 shall not be deemed to be exceeded solely as the result of fluctuations in the exchange rates of currencies. In determining the amount of Indebtedness outstanding under this covenantone of the clauses above, guaranteesthe outstanding principal amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such Person or any other Person arising under any guarantee, Liens or Lien, letter of credit obligations or similar instrument supporting such Indebtedness otherwise included in the determination of such particular amount shall not be included disregarded so long as it is permitted to be incurred by a the Person that could have incurred or Persons incurring such Indebtednessobligation.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Ipsco Inc)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquisition Indebtedness; PROVIDED that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquisition Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Indebtedness of the Company and the Restricted Subsidiaries to Consolidated Tangible Net Worth is less than 2.25 to 1.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary provisions hereof shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Company or any Subsidiary Guarantor from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness,
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on the Issue Date or the Exchange Notes,
(iii) the Company or any Subsidiary Guarantor from Incurring Indebtedness under Working Capital Facilities not to exceed the greater of $150 million or 15% of Consolidated Tangible Assets,
(iv) any Subsidiary Guarantee of Indebtedness of the Issuer Company under the Notes,
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money),
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any Guarantor other Subsidiary Guarantor, or the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred under the ABL Facility Indenture (other than Non-Recourse Indebtedness).
(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; PROVIDED that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and (b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly owned Subsidiary and a Restricted Subsidiary; PROVIDED that (I) such Indebtedness is subordinated to the Company's obligations under the Notes and the provisions hereof, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary.
(viii) the Company and any Subsidiary Guarantor from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Subsidiary Guarantor, as the case may be, in an aggregate amount not to exceed $20 million, and
(ix) Indebtedness of the Company or any Restricted Subsidiary in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 20 million.
(c) The Company shall not, and the Company will not cause or permit any Subsidiary Guarantor that is a Restricted Subsidiary to, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Subsidiary Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.
(d) For purposes of determining compliance with this Section 6.083.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in the above clauses (i) through (xxiii) aboveof this Section 3.03, the Issuer shall classify and may reclassifyCompany, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this covenant and may divide, classify and from time to time reclassify such item of Indebtedness in more than one of any manner in which such item could be Incurred at the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination time of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessreclassification.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: First Supplemental Indenture (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 (the Restricted Subsidiary shall be permitted to incur “Permitted IndebtednessCoverage Ratio Exception”). Each Notwithstanding the above, each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $102,500,000 500.0 million, less the sum of (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorx) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with the covenant described in Section 6.114.10 and (y) the aggregate Outstanding Receivables Amount with respect to Qualified Securitization Transactions and (ii) the sum of (x) 75% of the net book value of the accounts receivable of the Issuer and the Restricted Subsidiaries and (y) 50% of the net book value of the inventory of the Issuer and the Restricted Subsidiaries;
(ii2) the Notes issued on the Issue Date (a) and any registered exchange Notes and Note Guarantees issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged exchange for such Notes) and guarantees thereofthe Note Guarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (1) and (2) above, and after giving effect to the intended use of proceeds of the Notes);
(4) Indebtedness under Hedging Obligations; provided that (a) such Hedging Obligations are designed to protect against fluctuations in interest or currency rates or commodity prices and (b) in the case of any Hedging Obligations under clause (1) of the definition thereof, (i) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (ii) above)the notional principal amount of such Hedging Obligations at the time incurred does not exceed the amount of the Indebtedness to which such Hedging Obligations relate;
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, payment, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or and other similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of businessSubsidiary, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, payment, performance, appeal or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Indebtedness under Capitalized Lease Obligations, industrial revenue bonds or mortgage financing incurred by the Issuer or any Restricted Subsidiary for the purpose of financing all or any part of the purchase price or cost of development of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.55% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x)15) below;
(xi11) the guarantee by the Issuer or any Guarantor of Indebtedness of the Issuer or a Guarantor incurred pursuant to the Coverage Ratio Exception or another clause in this Section 4.06;
(A12) Acquired Indebtedness of the Issuer or any Restricted Subsidiary (including letters of credit) in order to provide security for workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance arrangements, reclamation, statutory obligations, surety and appeal bonds, government contracts, return-of-money bonds, or similar requirements of the Issuer or any Restricted Subsidiary in the ordinary course of business;
(13) customary indemnification, adjustment of purchase price or similar obligations, including title insurance, of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, (other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv14) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does in an aggregate amount not to exceed 5.00:1.00;$100.0 million at any time outstanding; and
(xv15) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at during any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Suspension Period. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii15) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifymay, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except . The maximum amount of Indebtedness that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor Restricted Subsidiary may incur pursuant to this Section 4.06 shall not be deemed to have been incurred under clause (i) abovebe exceeded solely as the result of fluctuations in the exchange rates of currencies. In addition, for purposes of determining any particular the amount of Indebtedness outstanding under this covenantone of the clauses above, guaranteesthe outstanding principal amount of any particular Indebtedness of any Person shall be counted only once and any obligation of such Person or any other Person arising under any guarantee, Liens or Lien, letter of credit obligations or similar instrument supporting such Indebtedness otherwise included in the determination of such particular amount shall not be included disregarded so long as it is permitted to be incurred by a the Person that could have incurred or Persons incurring such Indebtednessobligation.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Massey Energy Co)
Limitations on Additional Indebtedness. (a) The Issuer will Parent shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, that the Parent, the Company or any Subsidiary Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”)).
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Subsidiary Guarantor (and the Guarantee thereof by the Parent, the Company or any such Subsidiary Guarantor) of Indebtedness under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, not to exceed the extent a permanent repayment and/or commitment reduction is required thereunder as a result greater of such application, the aggregate amount $365,000,000 and 20% of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Tangible Assets;
(ii2) (a) Notes the Securities and Note the Security Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer Parent, the Company and the Restricted Subsidiaries Guarantors to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b) (i1) and (ii) above2));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Company owed to a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Parent or the Company’s obligations under this Indenture and the Securities and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Parent or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Parent or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Parent or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence50,000,000;
(viii8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, Section 4.03(b) (ii2), (iii), (xi3) or (xii) of this Section 6.08(b14) or this clause (xSection 4.03(b)(11);
(xi12) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred guarantee by the Issuer Parent or any Restricted Subsidiary of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8), (13) or (16) or, in contemplation of, or in connection with, or to provide all or any part the case of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired guarantee by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or that is not a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed byGuarantor, and effected in accordance with, Section 7.01(a) (except pursuant to the extent such Acquired Indebtedness was incurred in connection with Ratio Exception or in contemplation of such acquisitionSection 4.03(b)(1);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisitionthe Parent, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet or of the Issuer or any Restricted Subsidiary (e.g.Parent, the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) Company or another Restricted Subsidiary, in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemedSubsidiary, in each either case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03;
(xviii13) Contribution IndebtednessIndebtedness of any Restricted Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiary and their respective assets;
(xix14) The incurrence by (x) Indebtedness of the Issuer Parent, the Company or any Subsidiary Guarantor incurred to finance an acquisition or merger or (y) Acquired Indebtedness of the Parent, the Company or any Restricted Subsidiary; provided, however, that in either case, after giving effect to the transactions that result in the incurrence or issuance thereof, on a pro forma basis, (a) the Parent would have been able to incur at least $1.00 of additional Indebtedness pursuant to the Ratio Exception, (b) the Consolidated Fixed Charge Coverage Ratio of the Parent is greater than such ratio immediately prior to such acquisition or merger, or (c) the ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth of the Parent is less than such ratio immediately prior to such acquisition or merger;
(15) Indebtedness of the Parent, the Company or any Subsidiary of Indebtedness consisting of obligations to pay insurance premiums Guarantor in an aggregate amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess greater of $2.0 million 50,000,000 and 4% of Consolidated Tangible Assets at any time outstanding; and
(xxiii16) The incurrence (x) Guarantees by the Issuer Parent or any of its Restricted Subsidiary Subsidiaries in respect of additional Indebtedness incurred by Joint Ventures, and (y) GP Indebtedness of the Parent or the issuance by the Issuer its Restricted Subsidiaries in respect of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock Joint Ventures, in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to outstanding under this clause (xxiii)), Section 4.03(b)(16) not to exceed the greater of $5.0 million50,000,000 and 4% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (iSection 4.03(b)(1) through (xxiii16) aboveor is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyParent shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described. Accrual of interest, except that accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness, the reclassification of any obligation as Indebtedness incurred under due to a change in accounting principles following the Credit Agreement on incurrence of such obligation and the Original Issue Date by payment of dividends in the Issuer form of additional shares of preferred stock or any Guarantor Disqualified Equity Interests shall not be deemed to have been incurred under clause (i) above. In addition, be an incurrence of Indebtedness for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the IssuerSection 4.03. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the applicable currency exchange rate in effect on the date such Indebtedness is incurred. Notwithstanding any other provision of this Section 4.03, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.03 shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Samples: Indenture (William Lyon Homes)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greatest of the Issuer or such Guarantor(x) less$2,350.0 million, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied after the Issue Date to repayments under any Credit Facility (including any Credit Agreement) pursuant to Section 4.10(c), (y) the maximum aggregate principal amount of Indebtedness that would not result in the Consolidated Secured Leverage Ratio, after giving effect to the incurrence of such Indebtedness and the application of the proceeds therefrom, being greater than 4.75 to 1.00, less the aggregate amount of Net Available Proceeds applied after the Issue Date to repayments under any Credit Agreement Facility (including any Credit Agreement) pursuant to Section 4.10(c), and (z) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Initial Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofthe related Guarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit, self-insurance obligations letters of credit issued to landlords and bankers acceptancesother letters of credit, in each case in the ordinary course of business in an aggregate face amount not to exceed $26.25 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Alere San Diego, Inc. or any of its Restricted Subsidiaries in San Diego, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $200.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness describeddescribed in Section 4.07(a) or Section 4.07(b) in any manner that complies with this Section 4.07, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.07(b). Any item of Indebtedness entitled to be incurred pursuant to the Coverage Ratio Exception and classified by the Issuer within such type of Indebtedness shall retain such classification (and the amount thereof shall not be counted in the determination of the amount of Indebtedness under any of clauses (1) through (16) of Section 4.07(b)) notwithstanding that the Coverage Ratio Exception is not available at any later time. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.07 or any category of Permitted Indebtedness, guarantees, Liens or Liens, letter of credit obligations or other obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest (or in the form of Qualified Equity Interests) will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSection 4.07.
Appears in 1 contract
Samples: Supplemental Indenture (Alere Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that (i) the Issuer or any Restricted Subsidiary of the Issuer (other than CPI and any of its Restricted Subsidiaries) may incur additional Indebtedness if, after giving effect thereto, the Issuer’s Consolidated Leverage Ratio would not exceed 6.50 to 1.00 (the “Issuer Leverage Ratio Exception”) and (ii) CPI or any of its Restricted Subsidiaries may incur additional Indebtedness if, after giving effect thereto, CPI’s Consolidated Interest Coverage Ratio (calculated by replacing the references to the Issuer in the rele vant definitions with CPI and its Restricted Subsidiaries) would be at least 2.00 to 1.00 (the “CPI Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor of the Restricted Subsidiaries under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 90.0 million, less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13(d) plus the greater of (x) $40.0 million and (y) the sum of (i) 85% of the book value of the accounts receivable plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;
(ii2) (a) the Notes issued on the Issue Date, the Exchange Notes to be issued pursuant to the Registration Rights Agreement and Note Guarantees Additional Notes issued from time to time in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for payment of accrued interest on the Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculation; provided that if such Hedging Obligations relate to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencemillion;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(babove or (12) or this clause (x)below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated arising in connection with the Issuer sale, remediation or a Restricted Subsidiary of the Issuerrelocation work at San Cxxxxx not to exceed $20.0 million at any time outstanding; provided that such Indebtedness shall not exceed be extinguished upon the greater of $15.0 million or 10% consummation of the Consolidated Net Tangible Assets sale of San Cxxxxx;
(12) Indebtedness of Foreign Subsidiaries; provided that at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees incurrence of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)12) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, Consolidated Interest Coverage Ratio of the Total Leverage Ratio does not exceed 5.00:1.00;Foreign Subsidiaries (calculated by replacing the references to the Issuer in the relevant definitions to all Foreign Subsidiaries) is at least 2.00 to 1.00; and
(xv13) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 30.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveof Section 4.10(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.10(b) and may later reclassify any item of Indebtedness described in clauses (1) through (13) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Cpi Holdco Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds therefrom), the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters the greater of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $225.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) an amount of indebtedness at the time of Incurrence and guarantees thereofafter giving effect to the Incurrence of such Indebtedness and the application of the proceeds therefrom that does not cause the Secured Leverage Ratio of the Issuer to exceed 3.5 to 1.0;
(iii2) Indebtedness under (a) the Notes and the Note Guarantees initially issued on the Issue Date and (b) guarantees of the Notes initially issued on the Issue Date;
(a) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in other clauses (iof this Section 4.10(b) and (iib) above)the Issuer’s 10.25% Senior Notes due 2019 issued on the Issue Date pursuant to that certain Indenture, dated as of the Issue Date, among the Issuer, the guarantors named therein and U.S. Bank National Association, as trustee, and guarantees by the Guarantors of such Indebtedness;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, customs, stay, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course other obligations of business and workers’ compensation claims, self-insurance obligations and bankers acceptances a like nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, customs, stay, bid, performance, appeal or surety bonds and obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit issued in the ordinary course of business, including letters of credit in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptancesfor the account of the Issuer or any Restricted Subsidiary, as the case may be;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 100.0 million and 12.5(b) 7.5% of the Issuer’s Consolidated Net Tangible Assets determined at the time of incurrence on a pro forma basis to give effect to the incurrenceassets purchased;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x)10) or clause (15) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that, that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness in respect of insurance premium financing for insurance being acquired by the Issuer or a Restricted Subsidiary under customary terms and conditions;
(14) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 15.0% of the aggregate Consolidated Tangible Assets of all of the Foreign Restricted Subsidiaries, determined at the time of incurrence;
(15) Permitted Acquisition Indebtedness;
(16) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof the proceeds which are used to either (i) acquire Discovery Offshore or (ii) finance the acquisition by Discovery Offshore or any Restricted Subsidiary of one or more jackup rigs and related equipment and assets; and
(17) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause outstanding the greater of (xxiii)), not to exceed a) $5.0 million.
50.0 million and (cb) 3.0% of the Issuer’s Consolidated Tangible Assets as determined at the time of incurrence. For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii17) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by after giving effect to the Issuer or any Guarantor application of the proceeds from the issuance of the Notes shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (17) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not. For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and will not permit any Restricted Subsidiary to, directly or indirectly use such refinancing would cause the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended applicable U.S. dollar-denominated restriction to be used in, a Permitted Business, (2) substantially all of exceeded if calculated at the business operations relevant currency exchange rate in effect on the date of such Personrefinancing, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness U.S. dollar-denominated restriction shall be deemed not to constitute an indirect use have been exceeded so long as the principal amount of such proceeds Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to make such Investment or purchase such assets. All determinations under this paragraph refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be made by calculated based on the Issuer acting currency exchange rate applicable to the currencies in good faithwhich such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Notwithstanding any other provision of this Section 4.10, in no event shall the reclassification of any lease or other liability as indebtedness due to a change in accounting principles after the Issue Date be deemed to be an incurrence of Indebtedness.
Appears in 1 contract
Samples: Indenture (Hercules Offshore, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit neither the Company nor any of its Restricted Subsidiary toSubsidiaries may, directly or indirectly, incur Incur any Indebtedness.
(b) Notwithstanding Section 6.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
Indebtedness except (i) Non-Recourse Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds Incurred in the ordinary course of business; provided(ii) Indebtedness evidenced by Notes issued on the Issue Date; (iii) Indebtedness of the Company solely to any Restricted Subsidiary, howeveror Indebtedness of any Restricted Subsidiary solely to the Company or to any Restricted Subsidiary, PROVIDED that (x) neither the Company nor any Restricted Subsidiary shall become liable to any Person with respect to such Indebtedness other than the Company or a Restricted Subsidiary and (y) any such Indebtedness of the Company (other than to the Company's financial services segment Subsidiaries) is extinguished within five subordinate and junior in right of payment to the Notes; (5iv) Business Days Refinancing Indebtedness (A) of incurrence and any Indebtedness permitted to be Incurred pursuant to this clause (iv) or the immediate following paragraph (b) without duplication or (B) of clause any Indebtedness to the extent outstanding on the Issue Date (aother than under the Bank Credit Facility), Banking Services Obligations;
; (ixv) Indebtedness arising Incurred solely in connection with endorsement respect of instruments for deposit performance, completion, guaranty and similar bonds and similar purpose undertakings and Indebtedness under any xxxxxxx money notes, tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts, letters of credit, escrow agreements and other obligations of like nature and deposits made to secure performance of any of the foregoing, in each case in the ordinary course of business;; (vi) Indebtedness under the Bank Credit Facility in an aggregate principal amount not to exceed $175,000,000 at any time, and guaranties thereof; (vii)
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness which represents the assumption by the Company or a Restricted Subsidiary of Indebtedness of the Issuer or any a Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with represented by guaranties in respect of Indebtedness of another Restricted Subsidiary permitted to be Incurred pursuant to this Indenture and Indebtedness of the Issuer or Company represented by guaranties in respect of Indebtedness of a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed permitted to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary Incurred pursuant to this Indenture; (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)viii) and Capitalized Lease Obligations; (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xvix) Indebtedness under warehouse lines of the Issuer or any Restricted Subsidiary incurred credit, repurchase agreements and Indebtedness secured by mortgage loan servicing of mortgage lending Subsidiaries in the ordinary course of business under guarantees a mortgage lending business; (x) obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business; (xi) Indebtedness of suppliers, licensees, franchisees or customers secured by mortgages and mortgage-related assets and Indebtedness representing all mortgage-related liabilities in an aggregate amount, together with the aggregate amount of Investments under clause (12) ordinary course of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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 Issuermortgage lending and asset management business; and
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (MDC Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any of its Restricted Subsidiary Subsidiaries to, directly or indirectlyIncur any Indebtedness (including Acquired Indebtedness) if, incur any Indebtednessimmediately after giving effect to the Incurrence of such additional Indebtedness and the receipt and application of the proceeds therefrom, the aggregate principal amount of all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis determined in conformity with GAAP is greater than 60% of Adjusted Total Assets.
(b) Notwithstanding Section 6.08(a)The Issuer will not, and will not permit any of its Restricted Subsidiaries to, Incur any Subsidiary Debt or any Secured Indebtedness if, immediately after giving effect to the Incurrence of such additional Subsidiary Debt or Secured Indebtedness and the receipt and application of the proceeds therefrom, the Issuer aggregate principal amount of all outstanding Subsidiary Debt and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Secured Indebtedness of the Issuer and its Restricted Subsidiaries on a consolidated basis determined in conformity with GAAP is greater than 40% of Adjusted Total Assets.
(c) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes issued on the Closing Date and other Indebtedness existing on the Closing Date); provided, however, that the Issuer or any Guarantor of the Subsidiary Guarantors may Incur Indebtedness if, after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Interest Coverage Ratio of the Issuer and its Restricted Subsidiaries on a consolidated basis would be greater than 2.0 to 1.
(d) Notwithstanding paragraph (a), (b) or (c) above, the Issuer or any of its Restricted Subsidiaries (except as specified below) may Incur each and all of the following:
(1) Indebtedness outstanding under the ABL Facility Line of Credit at any time in an aggregate principal amount at any time outstanding not to exceed $102,500,000 200 million;
(with letters of credit being deemed to have a principal amount equal to the maximum potential liability of 2) Indebtedness owed to:
(i) the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;evidenced by an unsubordinated promissory note,
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness being owed to any Person (other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any other Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an issuance Incurrence of such preferred stock by such Restricted Subsidiary that was Indebtedness not permitted by this clause (xvi2)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii3) Contribution Indebtedness;
Indebtedness issued in exchange for, or the net proceeds of which are used to refinance or refund, outstanding Indebtedness (xixother than Indebtedness Incurred under clause (1), (2) The incurrence by the Issuer or (4) of this paragraph (d)) and any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums refinancings thereof in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
amount so refinanced or refunded (xx) Indebtedness related to unfunded pension fund plus premiums, accrued interest, fees and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (iexpenses); provided provided, however, that Indebtedness the amount proceeds of which are used to refinance or refund the Notes or Indebtedness that ranks equally with or subordinate in right of payment to, the Notes shall only be permitted to be incurred under this clause (xxi3) supported if:
(i) in case the Notes are refinanced in part or the Indebtedness to be refinanced ranks equally with the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such letter(s) new Indebtedness is outstanding, ranks equally with or is expressly made subordinate in right of credit shall not exceed payment to the amount of such letter(s) of creditremaining Notes;
(xxiiii) in case the Indebtedness issued to be refinanced is subordinated in right of payment to the Notes, such new Indebtedness, by its terms or by the Issuer terms of any agreement or any Guarantor instrument pursuant to current which such new Indebtedness is issued or former officersremains outstanding, directors and employees, their respective estates, spouses or former spouses is expressly made subordinate in right of payment to finance the purchase or redemption of Equity Interests of Notes at least to the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstandingextent that the Indebtedness to be refinanced is subordinated to the Notes; and
(xxiiiiii) The incurrence by such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded; provided further, however, that in no event may Indebtedness of the Issuer that ranks equally with or subordinate in right of payment to the Notes be refinanced by means of any Indebtedness of any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii3)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.;
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto, the Issuer and Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the Restricted Subsidiary “Coverage Ratio Exception”). Notwithstanding the above, each of the following, which shall be permitted to incur “Permitted Indebtedness”. Each of the following given independent effect in whole or in part, shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 100.0 million less, to the extent a permanent repayment and/or commitment reduction is required thereunder under a Credit Facility as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.09 and (y) the sum of (i) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case, calculated on a consolidated basis and in accordance with GAAP;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(via) Indebtedness in respect of bid, performance, completion, guarantee, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue and similar bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances assurances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, completion, guarantee or surety bonds obligations (in each case other than for an obligation for money borrowed); and (b) Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of (i) workers’ compensation claimsclaims or self-insurance, (ii) other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance obligations and bankers acceptancesor (iii) for regulatory or insurance purposes;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, Refinancing Indebtedness thereof and any subsequent Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication the Issuer or a Restricted Subsidiary, as the case may be, being notified of clause (a), Banking Services Obligationssuch overdraft;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or the acquisition, disposition, issuance or redemption of Equity Interests of the Issuer or a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included (or that would be required to be included) on the face Table of Contents -47- of the balance sheet of the Issuer or any Restricted Subsidiary at the time of closing of such acquisition, that disposition, issuance or redemption shall not be permitted under this clause (11) and (b) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds or value of the consideration actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Indebtedness of the Issuer or Foreign Subsidiaries in an aggregate amount not to exceed $20.0 million at any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00time outstanding;
(xv13) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 15.0 million at any time outstanding; and
(xxiii14) The incurrence by Bank Products Obligations incurred in the Issuer or any Restricted Subsidiary ordinary course of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) business. For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (14) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.06, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$1.75 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Agreements pursuant to Section 4.10(c), and (y) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Notes being issued on the Issue Date and the related Guarantees, and the Exchange Notes and Note the related Guarantees (or other guarantees) in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time, and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness describeddescribed in Section 4.07(a) or Section 4.07(b) in any manner that complies with this Section 4.07, except that Indebtedness incurred under the any Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.07(b). Any item of Indebtedness entitled to be incurred pursuant to the Coverage Ratio Exception and classified by the Issuer within such type of Indebtedness shall retain such classification (and the amount thereof shall not be counted in the determination of the amount of Indebtedness under any of clauses (1) through (16) of Section 4.07(b)) notwithstanding that the Coverage Ratio Exception is not available at any later time. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.07 or any category of Permitted Indebtedness, guarantees, Liens or Liens, letter of credit obligations or other obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest (or in the form of Qualified Equity Interests) will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSection 4.07.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the "Coverage Ratio Exception").
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “"Permitted Indebtedness”"):
(i1) Indebtedness of the Issuer or Issuers and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less70.0 million, less to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13(d) and (y) the sum of (i) 85% of the book value of the accounts receivable plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP; provided that any letter of credit referred to in clause (11) of this Section 4.10(b) that is undrawn shall be deemed to constitute Indebtedness for purposes of this clause (1);
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices; provided that if such Hedging Obligations are of the type described in clause (including Swap Obligations1) of the Issuer or any Restricted Subsidiary in definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi11) Indebtedness supported by one or more letters of credit issued under the ABL Facility Credit Facilities in accordance with clause (i1); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi11) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit; provided further that upon any reduction, cancellation or termination of such letter(s) of credit, there shall be deemed to be an incurrence of Indebtedness under this Indenture that must be otherwise permitted to be incurred under this Indenture equal to the excess of the amount of such Indebtedness outstanding immediately after such reduction, cancellation or termination over the remaining stated amount, if any, of such letter(s) of credit or the stated amount of any letter(s) of credit issued in a contemporaneous replacement of such letter(s) of credit;
(xxii12) Indebtedness issued by the Issuer or any Guarantor of Foreign Subsidiaries in an aggregate amount not to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of exceed $2.0 5.0 million at any one time outstanding; and;
(xxiii13) The incurrence Attributable Indebtedness incurred by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 millionmillion at any one time outstanding; and
(14) Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $15.0 million at any one time outstanding.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveof Section 4.10(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in each case in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.10(b). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Norcraft Companies Lp)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not cause or permit any of its Restricted Subsidiary toSubsidiaries, directly or indirectly, incur to, Incur any Indebtedness including Acquired Indebtedness; provided that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquired Indebtedness, if, after giving effect thereto and the application of the proceeds therefrom, either (i) the Company’s Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth is less than 7.5 to 1.
(b) Notwithstanding Section 6.08(a)the foregoing, the Issuer and the Restricted Subsidiary provisions of Section 4.10(a) shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):not prevent:
(i) the Company or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness or (B) Non-Recourse Indebtedness;
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on the Issue Date;
(iii) the Company or any Subsidiary Guarantor from Incurring Indebtedness under Credit Facilities not to exceed the greater of $300.0 million and 20% of Consolidated Tangible Assets;
(iv) any Subsidiary Guarantee of Indebtedness of the Issuer Company under the Notes;
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money);
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any other Subsidiary Guarantor, or the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred under this Indenture (other than Non-Recourse Indebtedness);
(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and (b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided that (I) such Indebtedness is subordinated to the Company’s obligations under the ABL Facility Notes and this Indenture, and (II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary;
(viii) the Company and any Restricted Subsidiary from Incurring Indebtedness under Capitalized Lease Obligations or purchase money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Restricted Subsidiary, as the case may be, in an aggregate amount at any time outstanding not to exceed $75.0 million;
(ix) the Company or any Restricted Subsidiary from Incurring obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business (as determined in good faith by the Company);
(x) the Company or any Restricted Subsidiary from incurring Indebtedness owed to a seller of entitled land, lots under development or finished lots under the terms of which the Company or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such land or lots; and
(xi) the Company or any Restricted Subsidiary from Incurring Indebtedness in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 150.0 million.
(c) The Company shall not, and shall not cause or permit any Subsidiary Guarantor that is a Restricted Subsidiary to, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Subsidiary Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, at least to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.
(d) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in the above clauses (i) through (xxiii) aboveof this Section 4.10, the Issuer shall classify and may reclassifyCompany, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this Section 4.10 and may divide, classify and from time to time reclassify such item of Indebtedness in more than one of any manner in which such item could be Incurred at the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination time of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessreclassification.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Beazer Homes Usa Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that (x) the Issuer may incur additional Indebtedness if, after giving effect thereto, the Issuer’s Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 and (y) Norcraft Companies, L.P. and any Subsidiary of Norcraft Companies, L.P. that is a Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto, Norcraft Companies, L.P.’s Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the tests set forth in clauses (x) and (y) each being referred to as a “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Issuers and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less70.0 million, less to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13(d) and (y) the sum of (i) 85% of the book value of the accounts receivable plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP; provided that any letter of credit referred to in clause (11) of this Section 4.10(b) that is undrawn shall be deemed to constitute Indebtedness for purposes of this clause (1);
(ii2) (a) the Notes issued on the Issue Date and the Exchange Notes to be issued pursuant to the Registration Rights Agreement and any Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) including the Existing Notes, the Existing Notes Guarantees and (ii) above)obligations under the Existing Notes Indenture;
(iv4) Indebtedness under Hedging Obligations that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices; provided that if such Hedging Obligations are of the type described in clause (including Swap Obligations1) of the Issuer or any Restricted Subsidiary in definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence10.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi11) Indebtedness supported by one or more letters of credit issued under the ABL Facility Credit Facilities in accordance with clause (i1); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi11) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit; provided further that upon any reduction, cancellation or termination of such letter(s) of credit, there shall be deemed to be an incurrence of Indebtedness under this Indenture that must be otherwise permitted to be incurred under this Indenture equal to the excess of the amount of such Indebtedness outstanding immediately after such reduction, cancellation or termination over the remaining stated amount, if any, of such letter(s) of credit or the stated amount of any letter(s) of credit issued in a contemporaneous replacement of such letter(s) of credit;
(xxii12) Indebtedness issued by the Issuer or any Guarantor of Foreign Subsidiaries in an aggregate amount not to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of exceed $2.0 5.0 million at any one time outstanding; and;
(xxiii13) The incurrence Attributable Indebtedness incurred by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 millionmillion at any one time outstanding; and
(14) Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $15.0 million at any one time outstanding.
(c) For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveof Section 4.10(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in each case in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.10(b). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Norcraft Capital Corp.)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) ; provided that, the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the Indebtedness to Tangible Net Worth Ratio would be no more than 3.00 to 1.00.
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the incurrence by the Issuer or any Restricted Guarantor (and the guarantee thereof by the Issuer or any such Restricted Subsidiary) of Indebtedness under the ABL Facility one or more Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantorand its Restricted Subsidiaries thereunder) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the in an aggregate amount outstanding at any time not to exceed the greater of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $400.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof27.5% of Consolidated Tangible Assets at the time of incurrence;
(iii2) the Securities and the Security Guarantees issued on the Issue Date and the Exchange Securities issued in exchange therefor (and any guarantee thereof);
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses Section 4.03(b)(1), (i) 2), (4), (5), (6), (9), (10), (12), (14), (15), (16), and (ii) above18));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in the ordinary course and not for the purpose of speculationSubsidiaries under Hedging Obligations;
(v5) Indebtedness of the Issuer owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer’s obligations under this Indenture and the Securities, (b) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture, the Securities or its Security Guarantee, as applicable, and (c) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations, bankers’ acceptances, letters of credit, performance bonds, completion bonds, bid bonds, surety bonds, appeal bonds, performance, completion and compliance guarantees or other similar obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business; provided, including guarantees however, that upon the drawing of letters of credit for reimbursement obligations, or obligations the incurrence of the Issuer or any Restricted Subsidiary other reimbursement-type Indebtedness with respect to letters of credit supporting the foregoing, such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptancesare reimbursed within 30 days following such drawing or incurrence;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount amount, together with any Refinancing Indebtedness incurred in respect thereof pursuant to Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $20.0 million and 12.5(b) 3.0% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iiSection 4.03(a) and Sections 4.03(b)(2), (iii3), (xi) or 7), (xii) of this Section 6.08(b13), (19) or this clause (x11);
(xi12) the guarantee by (Aa) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Guarantor of Indebtedness (B) other than Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of Sections 4.03(b)(8) or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii15) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.084.03; provided, that to the extent such Indebtedness is a subordinated obligation, the guarantee thereof by the Issuer or such Guarantor shall be subordinated in right of payment to the Securities or the applicable Security Guarantee, as the case may be and (b) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture;
(xviii13) Contribution Indebtedness;
Indebtedness (xixi) The incurrence by outstanding on the date on which a Person becomes a Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Issuer or any Restricted Subsidiary or (ii) incurred to provide all or a portion of Indebtedness consisting the funds utilized to consummate the transaction or series of obligations related transactions pursuant to pay insurance premiums which a Person became a Restricted Subsidiary or was otherwise acquired by (including pursuant to any acquisition of assets and assumption of related liabilities) the Issuer or a Restricted Subsidiary; provided, however, that, in an amount not to exceed each of clauses 4.03(b)(13)(i) and (ii), at the annual premiums in respect time of such insurance premiums acquisition or other transaction, either
(a) the Issuer would have been able to incur at any one time outstandingleast $1.00 of additional Indebtedness pursuant to Section 4.03(a) on a pro forma basis after giving effect to the incurrence of such Indebtedness pursuant to this Section 4.03(b)(13);
(xxb) on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio of the Issuer and the Restricted Subsidiaries is higher than such ratio immediately prior to such acquisition or merger; or
(c) on a pro forma basis, the Indebtedness related to unfunded pension fund Tangible Net Worth Ratio of the Issuer and other employee benefit plan obligations and liabilities the Restricted Subsidiaries is less than such ratio immediately prior to the extent they are permitted to remain unfunded under applicable lawsuch acquisition or merger;
(xxi14) Indebtedness supported by one or more letters incurred in connection with a Sale and Leaseback Transaction of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of creditModel Home Unit;
(xxii15) the incurrence of Indebtedness issued by the Issuer or any Guarantor a Restricted Subsidiary deemed to current or former officers, directors and employees, their respective estates, spouses or former spouses exist pursuant to finance the purchase or redemption terms of Equity Interests a joint venture agreement as a result of the Issuer or any failure of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary to make a required capital contribution therein; provided that the only recourse on such Indebtedness is limited to the Issuer’s or such Restricted Subsidiary’s equity interests in the related joint venture;
(16) obligations of additional the Issuer or any Restricted Subsidiary under an agreement with any governmental authority, adjoining (or common masterplan) landowner or seller of real property, in each case entered into in the ordinary course of business in connection with the acquisition of real property, to entitle, develop or construct infrastructure thereupon;
(17) Indebtedness or of any Mortgage Subsidiary under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such Mortgage Subsidiary, in each case incurred in the issuance ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage Subsidiaries and/or their respective assets;
(18) the incurrence of Indebtedness by the Issuer or a Restricted Subsidiary in respect of Disqualified Stock a PAPA; and
(19) Indebtedness of the Issuer or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted valueamount, as applicable) or liquidation value at together with any time outstanding, including all Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred in respect thereof pursuant to this clause (xxiii)Section 4.03(b)(11), not to exceed at any time outstanding the greater of (a) $5.0 million40.0 million and (b) 4.0% of Consolidated Tangible Assets at the time of incurrence.
(c) For purposes of determining compliance with this Section 6.084.03, (1) in the event that an item of Indebtedness meets the criteria of more than one of the categories types of Permitted Indebtedness described in clauses (iSection 4.03(b) through (xxiii) aboveor is permitted under Section 4.03(a), the Issuer shall classify and may reclassifyIssuer, in its sole discretion, shall classify such item of Permitted Indebtedness on the date of incurrence and may later reclassify such item of Indebtedness in any manner that then complies with this Section 4.03 and may divide, classify will be entitled to divide the amount and reclassify type of such Indebtedness in among more than one of such clauses under Sections 4.03(a) and (b); provided that all Indebtedness outstanding on the types of Indebtedness described, except that Indebtedness incurred Issue Date under the Credit Agreement on Facilities, after giving effect to the Original Issue Date by the Issuer or any Guarantor use of proceeds of this offering, shall be deemed to have been incurred under clause Section 4.03(b)(1) and not Section 4.03(a) or Section 4.03(b)(3) and may not later be reclassified, (i2) above. In addition, for purposes if obligations in respect of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter letters of credit are incurred pursuant to a revolving Credit Facility and relate to other Indebtedness, then such letters of credit shall be treated as incurred pursuant to Section 4.03(b)(1) and such other Indebtedness shall not be included, and (3) except as provided in Section 4.03(b)(2), Security Guarantees of, or obligations supporting in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of such a particular amount of Indebtedness shall not be included so long as incurred by a Person that could have incurred such Indebtednessincluded.
(d) The Issuer will notAccrual of interest, accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness, the reclassification of any obligation as Indebtedness due to a change in accounting principles and the payment of dividends in the form of additional shares of preferred stock or Disqualified Equity Interests will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments for purposes of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuerthis Section 4.03. For purposes of this paragraphdetermining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to constitute an indirect use be exceeded solely as a result of such proceeds of Indebtedness to make such Investment fluctuations in exchange rates or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithcurrency values.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (i) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (ii) the Indebtedness to Tangible Net Worth Ratio would be no more than 2.25 to 1.00 (either (i) or (ii), the “Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Guarantor (and the guarantee thereof by the Company or any such Guarantor) of Indebtedness under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the in an aggregate amount of Net Available Proceeds applied outstanding at any one time not to repayments under the Credit Agreement in accordance with Section 6.11exceed $260,000,000;
(ii2) (a) Notes the Securities and Note the Security Guarantees issued on the Issue Date and the Exchange Securities and Security Guarantees issued in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofexchange therefor;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses this Section 4.03(b)(1), (i2), (4), (5), (6), (8), (9), (10), (12), (14), (15), (16) and (ii) above17));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Company and the Restricted Subsidiaries under Hedging Obligations; provided that (A) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03 and (B) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Company owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer Company or any other Restricted Subsidiary; provided, however, that (aA) that any Indebtedness of the Company owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company’s obligations under this Indenture and the Securities, (B) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture and its Security Guarantee and (C) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations obligations, bankers’ acceptances, performance and bankers acceptances issued for the account surety bonds and supporting letters of the Issuer or any Restricted Subsidiary credit in the ordinary course of business, including deposits or guarantees made to secure performance of tenders, bids, leases, statutory obligations, progress payments, government contracts or other ordinary course obligations of (in each case, not constituting Indebtedness for borrowed money) customary in the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptanceshomebuilding industry;
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing any Indebtedness thereofof the Company or a Restricted Subsidiary which serves to refund or refinance any Indebtedness incurred pursuant to this Section 4.03(b)(7), in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 million 10,000,000 and 12.5(b) 2.0% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii8) Non-Recourse Indebtedness of the Company or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and, if secured, secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) ten Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (iithe Ratio Exception, Section 4.03(b)(2), (iii3), (xi) or (xii) of this Section 6.08(b13) or this clause (xSection 4.03(b)(11);
(xi12) the guarantee by (A) Acquired the Company or any Guarantor of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8) or Section 4.03(b)(16)) of the Issuer Company or any a Restricted SubsidiarySubsidiary that was permitted to be incurred by another provision of this Section 4.03; provided that to the extent such Indebtedness is a subordinated obligation, and the guarantee thereof by the Company or such Guarantor shall be subordinated in right of payment to the Securities or the applicable Security Guarantee, as the case may be, (B) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the Issuer provisions of this Indenture and (C) the Company or any Restricted Subsidiary in contemplation ofof any Non-Recourse Indebtedness of the Company or another Restricted Subsidiary to the extent the guarantee is limited to (x) environmental warranties or indemnities, (y) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received by the obligor from secured assets to be paid to the lender, waste and mechanics liens or (z) similar customary “bad-boy” guarantees, including bankruptcy and similar events;
(13) Indebtedness of Persons incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or in connection withmerged into, the Company or any Restricted Subsidiary (other than Indebtedness incurred (A) to provide all or any part portion of the funds or credit support utilized to consummate, consummate the transaction or series of related transactions pursuant to which such Person Restricted Subsidiary became a Restricted Subsidiary of or was otherwise acquired by the Issuer Company or a such Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xiiB) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired otherwise in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of of, such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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, thatthat at the time such Person is acquired, either:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (New Home Co Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer and "RATIO EXCEPTION"). Notwithstanding the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each above, each of the following shall be permitted (the “Permitted Indebtedness”"PERMITTED INDEBTEDNESS"):
(i1) Indebtedness of the Issuer, the Co-Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities incurred pursuant to this clause (1) in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 185.0 million or (with letters of credit being deemed to have a principal y) the amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to Borrowing Base as of the extent a permanent repayment and/or commitment reduction is required thereunder as a result date of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11incurrence;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1), (2) or (5), and (ii) aboveafter giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness of the Issuer and the Restricted Subsidiaries under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided, however, that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Issuer's Obligations, under the Notes and this Indenture and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of incurred by the Issuer or any Restricted Subsidiary in connection with letters of credit (including, without limitation, letters of credit in respect of workers' compensation claims or self insurance or supporting bid, performance or surety obligations), Indebtedness with respect to reimbursement type obligations regarding workers compensation claims, escrow agreements, bankers' acceptances and bid, surety and performance bonds (in each case other than for an obligation for borrowed money), in each case in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 10.0 million and 12.5or (b) 5.0% of Consolidated Net Total Tangible Assets at the time of the incurrenceAssets;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property or any infrastructure related thereto and secured by Liens only on such real property or related infrastructure;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part arising from agreements of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationproviding for indemnification, adjustment of purchase price, earn-out price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business business, assets or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock a Subsidiary for the purpose of financing any such acquisition; provided, however, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, Indebtedness is not reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the amount of such liability shall balance sheet will not be deemed to be zero if no amount is reflected on such balance sheetsheet for purposes of this clause (11)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition);
(xiv12) Any other Refinancing Indebtedness of with respect to Indebtedness incurred pursuant to the Issuer Ratio Exception, clause (2) or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00(3) above or this clause (12);
(xv13) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 15.0 million at any time outstanding;
(xvi) 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:
(1) 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
(214) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer Guarantor of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) 4.10. For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii14) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify or later reclassify, in whole or in part, such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness outstanding or incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. 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 reclassification of preferred equity as Indebtedness due to a change in accounting principles will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.10. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur Subordinated Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Issuer and Consolidated Interest Coverage Ratio would be at least 2.0 to 1.0 (the Restricted Subsidiary shall be permitted to incur “Permitted IndebtednessCoverage Ratio Exception”). Each Notwithstanding the above, each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 35.0 million and (with letters y) the sum of credit being deemed to have a principal amount equal to (i) 60% of the maximum potential liability net book value of accounts receivable of the Issuer or and the Restricted Subsidiaries at such Guarantortime and (ii) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11$20.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that if such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence7.5 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Issuer or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;; and
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv12) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 10.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (12) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Seitel Inc)
Limitations on Additional Indebtedness. Until the Notes receive an Investment Grade rating from both Rating Agencies (a) The after which time this Section 4.06 shall no longer be in effect), the Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
; provided, however, that the Issuer and any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) Notwithstanding Section 6.08(athe ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the Issuer “Ratio Exception”). Notwithstanding the above, so long as no Event of Default shall have occurred and be continuing at the Restricted Subsidiary shall be permitted to incur “Permitted time of or as a consequence of the incurrence of the following Indebtedness”. Each , each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less350.0 million, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied by the Issuer or any of its Restricted Subsidiaries since the Issue Date to repayments repay permanently any Indebtedness under the a Credit Agreement in accordance with Facility pursuant to Section 6.114.09;
(ii2) (a) the Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofissued on the Issue Date;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (including the 2012 Notes and the guarantees thereof, to the extent not acquired with the proceeds of the Notes, but other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any and the Restricted Subsidiary in Subsidiaries under Hedging Obligations; provided, however, that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the ordinary course and notional principal amount of such Hedging Obligations at the time incurred does not for exceed the purpose principal amount of speculationthe Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (a) that any Indebtedness of the Issuer owed to a Restricted Subsidiary is unsecured and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii8) Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception or clauses (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x);above; and
(xi12) (A) Acquired in addition to Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions allowed pursuant to which such Person became a Subsidiary the other clauses in this definition of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired “Permitted Indebtedness,” Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 40.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii12) aboveabove or is entitled to be incurred pursuant to the Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, classify divide and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (M I Homes Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$2.8 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under any Credit Facility (including any Credit Agreement) pursuant to Section 4.10(c), and (y) 85% of the Credit Agreement book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Initial Notes and Note the related Guarantees and the Exchange Notes and the related guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness describeddescribed in Section 4.07(a) or Section 4.07(b) in any manner that complies with this Section 4.07, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.07(b). Any item of Indebtedness entitled to be incurred pursuant to the Coverage Ratio Exception and classified by the Issuer within such type of Indebtedness shall retain such classification (and the amount thereof shall not be counted in the determination of the amount of Indebtedness under any of clauses (1) through (16) of Section 4.07(b)) notwithstanding that the Coverage Ratio Exception is not available at any later time. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.07 or any category of Permitted Indebtedness, guarantees, Liens or Liens, letter of credit obligations or other obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest (or in the form of Qualified Equity Interests) will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSection 4.07.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Partnership shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided that the Partnership or any other Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, (x) after giving effect thereto, the Consolidated Interest Coverage Ratio of the Partnership and the Restricted Subsidiaries would be at least 2.25 to 1.00, determined on a pro forma basis (including a pro forma application of proceeds) (the “Coverage Ratio Exception”) and (y) no Default shall have occurred and be continuing or would occur as a consequence of incurring the Indebtedness or transactions relating to such incurrence.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer Partnership or any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities (it being understood that the Credit Agreement as in effect on the Issue Date is a “Credit Facility” permitted to be incurred under this clause (1)) in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 100.0 million, less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such applicationapplication of Net Available Proceeds applied to repayment, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.12 or (ii) at the time of incurrence thereof, two times the Consolidated Cash Flow of the Partnership and its Restricted Subsidiaries for the four full fiscal quarters for which financial statements are available determined on a pro forma basis as set forth in the definition of Consolidated Interest Coverage Ratio;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer Partnership and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (including, without limitation, the Series B Notes and the Series C Notes) after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Partnership or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) (x) Indebtedness of the Issuer Partnership owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Partnership or any other Restricted SubsidiarySubsidiary and (y) Guarantees by the Partnership of any Indebtedness of a Restricted Subsidiary and Guarantees by any Restricted Subsidiary that is a Guarantor of any Indebtedness of the Partnership or any other Restricted Subsidiary that is a Guarantor; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Partnership or a Restricted Subsidiary, the Issuer Partnership or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Partnership or any Restricted Subsidiary in the ordinary course of business, including guarantees Guarantees or obligations of the Issuer Partnership or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Partnership or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 7.5 million and 12.51.0% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer arising or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition Guarantee of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary General Partner incurred to maintain its interest in the ordinary course Partnership upon the issuance of business under guarantees of Indebtedness of suppliersEquity Interests by the Partnership, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 2.0 million at any time outstanding;
(xvi12) The issuance by any Indebtedness of the Issuer’s Restricted Subsidiaries to the Issuer Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) 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 in an aggregate amount not to exceed at any time outstanding the greater of the Issuer$10.0 million and 2.00% of Consolidated Net Tangible Assets; and
(213) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of unsecured Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer Partnership or any if its Restricted Subsidiary of Indebtedness consisting of obligations Subsidiaries to pay insurance premiums Cemetery Non-Profits in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one connection with a Cemetery Management or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Operating Agreement. For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyPartnership shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above and the Series B Notes and Series C Notes outstanding on the Issue Date shall be deemed to have been incurred under clause (3) above, and may later reclassify any item of Indebtedness described in clauses (1) through (13) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guaranteesGuarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Stonemor Partners Lp)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$1.75 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Agreements pursuant to Section 4.10(c), and (y) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Initial Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21Section 4.07(a) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.or
Appears in 1 contract
Samples: First Supplemental Indenture (Inverness Medical Innovations Inc)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided, however, that the Issuer or any Restricted Subsidiary may incur additional Indebtedness, and the Issuer or any Restricted Subsidiary may incur Acquired Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.07(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted to be incurred (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor Restricted Subsidiary under any Credit Facility (including any Credit Agreement) (including the ABL Facility in an issuance or creation of letters of credit or bankers’ acceptances thereunder) so long as the aggregate principal amount of all Indebtedness of the Issuer and its Restricted Subsidiaries (without duplication) at any time outstanding not to exceed $102,500,000 under all Credit Facilities (with letters of credit being deemed to have a principal amount equal including all Credit Agreements) (excluding Hedging Obligations related to the maximum potential liability Indebtedness thereunder) does not exceed the greater of the Issuer or such Guarantor(x) less$1.75 billion, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, less the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Agreements pursuant to Section 4.10(c), and (y) 85% of the book value of the accounts receivable of the Issuer and the Restricted Subsidiaries plus 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, in each case calculated on a consolidated basis and in accordance with Section 6.11GAAP as of the last day of the last full fiscal quarter for which financial statements are available;
(ii2) (a) the Initial Notes and Note the Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary under Hedging Obligations (i) entered into for bona fide purposes of hedging against fluctuations in interest rates with respect to Indebtedness under any Credit Facility (including any Credit Agreement) or (ii) entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices, provided that if, in the case of either (i) or (ii), such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) provided that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vii) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and workers’ compensation claims(ii) Indebtedness of the Issuer or any Restricted Subsidiary consisting of reimbursement obligations with respect to commercial letters of credit and letters of credit issued to landlords, self-insurance obligations and bankers acceptancesin each case in the ordinary course of business in an aggregate face amount not to exceed $10.0 million at any time;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereofwith respect thereto, in an aggregate outstanding amount not to exceed $50.0 million at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencetime;
(viii) 8) Indebtedness of the Issuer or any Restricted Subsidiary arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, provided that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness of the Issuer or any Restricted Subsidiary arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) (i) Capitalized Lease Obligations arising under Sale and Leaseback Transactions with respect to any of the real property currently owned by Biosite Incorporated or any of its Restricted Subsidiaries in San Diego, California or San Clemente, California, and Refinancing Indebtedness with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (i) not to exceed $150.0 million at any time and (ii) Capitalized Lease Obligations arising under any other Sale and Leaseback Transactions, and Refinancing Indebtedness incurred pursuant to with respect thereto, in an aggregate outstanding amount for all such transactions under this clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x)not to exceed $50.0 million at any time;
(xi11) (A) Acquired guarantee Obligations of the Issuer or any of its Restricted Subsidiaries with respect to Indebtedness of the Issuer or any of its Restricted Subsidiary, and Subsidiaries;
(Bi) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide for the purpose of financing all or any part of the funds cost of, or credit support utilized in order to consummate, the transaction acquisition of (x) Equity Interests of another Person engaged in the Permitted Business that becomes a Restricted Subsidiary, (y) all or series substantially all of related transactions pursuant to which the assets of such a Person became or a Subsidiary line of business, division or was otherwise acquired business unit within the Permitted Business by the Issuer or a Restricted Subsidiary, or (z) any other Permitted Business assets by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
and (xiiii) Acquired Indebtedness of incurred by the Issuer or any Restricted Subsidiary assumed or acquired in connection with an acquisition by the Issuer or a Restricted Subsidiary; provided, however, that, in each of the foregoing cases, on the date of the incurrence of such Indebtedness or Acquired Indebtedness, after giving effect to the incurrence thereof and the use of any proceeds therefrom and otherwise determined on a pro forma basis for such transaction governed by, and effected in accordance with, Section 7.01(awith the provisions set forth in the definition of “Consolidated Interest Coverage Ratio,” either:
(A) (except the Issuer would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the extent such Acquired Indebtedness was incurred in connection with or in contemplation Coverage Ratio Exception, or
(B) the Consolidated Interest Coverage Ratio would be greater than the Consolidated Interest Coverage Ratio immediately prior to the incurrence of such acquisitionIndebtedness;
(13) guarantees by the Issuer or any of its Restricted Subsidiaries of the performance by any Restricted Subsidiary of its obligations under the P&G JV Agreements or the joint venture agreement or other related agreements, instruments or documents relating to any other joint venture entered into by the Issuer of any of its Restricted Subsidiaries in compliance with this Indenture (for the avoidance of doubt this clause shall not be read to allow guarantees of Indebtedness of any joint venture or joint venture partner or their Affiliates);
(xiii14) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, Refinancing Indebtedness incurred or assumed in connection with the acquisition or disposition of any business or assets of by the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of with respect to Indebtedness incurred by any Person acquiring all pursuant to the Coverage Ratio Exception or any portion of such businessclause (2), assets (3) or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under (12) or this clause (xiii) shall at no time exceed (a14) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheetthis Section 4.07(b)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv15) Any Indebtedness of any Foreign Subsidiary or of any Domestic Subsidiary that is not a Guarantor in an aggregate outstanding principal amount for all such Indebtedness at any time not to exceed $50.0 million; and
(16) any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate outstanding principal amount of Investments under clause (12) of the definition of “Permitted Investments,” for all such Indebtedness not to exceed $5.0 50.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 milliontime.
(c) For purposes of determining compliance with this Section 6.084.07, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii16) aboveof Section 4.07(b) or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify (and reclassify may later redivide and reclassify) such Indebtedness in more than one of the types of Indebtedness describeddescribed in Section 4.07(a) or Section 4.07(b) in any manner that complies with this Section 4.07, except that Indebtedness incurred under the any Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) aboveof Section 4.07(b). Any item of Indebtedness entitled to be incurred pursuant to the Coverage Ratio Exception and classified by the Issuer within such type of Indebtedness shall retain such classification (and the amount thereof shall not be counted in the determination of the amount of Indebtedness under any of clauses (1) through (16) of Section 4.07(b)) notwithstanding that the Coverage Ratio Exception is not available at any later time. In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.07 or any category of Permitted Indebtedness, guarantees, Liens or Liens, letter of credit obligations or other obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Equity Interests of the Issuer will not, and in the form of additional shares of the same class of Disqualified Equity Interest (or in the form of Qualified Equity Interests) will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds be deemed to be an incurrence of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSection 4.07.
Appears in 1 contract
Samples: First Supplemental Indenture (Inverness Medical Innovations Inc)
Limitations on Additional Indebtedness. (ai) The Issuer will Company shall not, and will shall not permit any of its Restricted Subsidiary Subsidiaries to, directly or indirectly, incur any Indebtedness (including without limitation Acquired Indebtedness.
(b) Notwithstanding Section 6.08(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each of the following shall be permitted (the “Permitted Indebtedness”):
(i) Indebtedness of the Issuer or any Guarantor under the ABL Facility in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i) and (ii) above);
the Company shall not permit any of its Restricted Subsidiaries (ivother than any Guarantor) Indebtedness under Hedging Obligations to issue (including Swap Obligations) except if issued to or owned beneficially and of record by the Issuer Company or any of its Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v); (bSubsidiaries) any such Indebtedness made by Capital Stock having a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment preference in liquidation or permitted by Section 6.09;
(vi) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters the payment of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from dividends; provided that (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Company and its Restricted Subsidiaries may incur Permitted Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) the Company or Xxxxxxx Fasteners may incur Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Company's Consolidated Fixed Charge Coverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of on the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not date thereof would be at least 2.0 to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets may be incurred through clause (b) of this covenant or by meeting the criteria of one or more than one of the categories types of Permitted Indebtedness described in clauses pursuant to clause (i) through (xxiii) abovea), the Issuer shall classify and may reclassifyCompany, in its sole discretion, (i) may classify such item of Indebtedness under and comply with either of such clauses (or any of such definitions), as applicable, (ii) may divide, classify and reclassify divide such item of Indebtedness in into more than one of the types of Indebtedness describedsuch clauses (or definitions), except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer as applicable, and (iii) may elect to comply with such clauses (or definitions), as applicable, in any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtednessorder.
(dB) The Issuer Company will not, and will not permit any Restricted Subsidiary of its Subsidiaries that are Guarantors to, directly or indirectly use the proceeds of incur any Indebtedness incurred under Permitted that is expressly subordinated to any other Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) Company or (22) of that definition or such Subsidiary unless such Indebtedness by its terms is also expressly made subordinated to purchase real property or other fixed assetsthe Notes, in each the case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Businessthe Company, or such fixed assets are useful inthe Subsidiary Guarantees, and are intended to be used in, a Permitted Business, (2) substantially all of in the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment case of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faithSubsidiary.
Appears in 1 contract
Samples: Indenture (Scovill Holdings Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds therefrom), the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters the greater of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $300.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) an amount of indebtedness at the time of Incurrence and guarantees thereofafter giving effect to the Incurrence of such Indebtedness and the application of the proceeds therefrom that does not cause the Secured Leverage Ratio of the Issuer to exceed 3.5 to 1.0;
(iii2) Indebtedness under (a) the Notes and the Note Guarantees initially issued on the Issue Date and (b) guarantees of the Additional Notes permitted to be issued under this Indenture;
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect in due course to the intended use of proceeds of the Notes (other than Indebtedness referred to in other clauses (i) and (ii) aboveof this Section 4.10(b);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, customs, stay, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course other obligations of business and workers’ compensation claims, self-insurance obligations and bankers acceptances a like nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, customs, stay, bid, performance, appeal or surety bonds and or other obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit issued in the ordinary course of business, including letters of credit in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptancesfor the account of the Issuer or any Restricted Subsidiary, as the case may be;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 175.0 million and 12.5(b) 7.5% of the Issuer’s Consolidated Net Tangible Assets determined at the time of incurrence on a pro forma basis to give effect to the incurrenceassets purchased;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x)10) or clause (15) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that, that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness in respect of insurance premium financing for insurance being acquired by the Issuer or a Restricted Subsidiary under customary terms and conditions;
(14) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 15.0% of the aggregate Consolidated Tangible Assets of all of the Foreign Restricted Subsidiaries, determined at the time of incurrence;
(15) Permitted Acquisition Indebtedness;
(16) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof the proceeds which are used to finance the acquisition by Discovery Offshore or any Restricted Subsidiary of one or more jackup rigs and related equipment and assets; and
(17) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause outstanding the greater of (xxiii)), not to exceed a) $5.0 million.
100.0 million and (cb) 5.0% of the Issuer’s Consolidated Tangible Assets as determined at the time of incurrence. For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii17) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by after giving effect to the Issuer or any Guarantor application of the proceeds from the issuance of the Notes shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (17) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not. For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and will not permit any Restricted Subsidiary to, directly or indirectly use such refinancing would cause the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended applicable U.S. dollar-denominated restriction to be used in, a Permitted Business, (2) substantially all of exceeded if calculated at the business operations relevant currency exchange rate in effect on the date of such Personrefinancing, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness U.S. dollar-denominated restriction shall be deemed not to constitute an indirect use have been exceeded so long as the principal amount of such proceeds Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to make such Investment or purchase such assets. All determinations under this paragraph refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be made by calculated based on the Issuer acting currency exchange rate applicable to the currencies in good faithwhich such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Notwithstanding any other provision of this Section 4.10, in no event shall the reclassification of any lease or other liability as indebtedness due to a change in accounting principles after the Issue Date be deemed to be an incurrence of Indebtedness.
Appears in 1 contract
Samples: Indenture (Hercules Offshore, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.
(b) Notwithstanding Section 6.08(a); provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Issuer and Consolidated Interest Coverage Ratio would be at least 2.25 to 1.00 (the Restricted Subsidiary shall be permitted to incur “Permitted IndebtednessCoverage Ratio Exception”). Each Notwithstanding the above, each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 40.0 million and (with letters y) the sum of credit being deemed to have a principal amount equal to (i) 85% of the maximum potential liability book value of the net accounts receivable of the Issuer or such Guarantorand the Restricted Subsidiaries plus (ii) less60% of the net book value of inventory of the Issuer and the Restricted Subsidiaries, to the extent in each case calculated on a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement consolidated basis and in accordance with Section 6.11GAAP;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.11, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances or bid, performance or surety bonds issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence5.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that (a) any amount of such obligations included on the face of the balance sheet of the Issuer or any Restricted Subsidiary shall not be permitted under this clause (11) and (b) in the case of a disposition, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any any guarantee by the Issuer or any Restricted Subsidiary of Indebtedness of the Issuer or any Restricted Subsidiary otherwise permitted under this Section 4.11; and
(13) other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 10.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.084.11, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (13) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.11, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11230.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) aboveabove or (5) below), after giving effect to the Transactions;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices;
(v5) (x) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted SubsidiarySubsidiary and (y) guarantees by the Issuer or any Restricted Subsidiary of any Indebtedness of the Issuer or any other Restricted Subsidiary that is permitted to be incurred by another provision of this covenant and could have been incurred (in compliance with this covenant) by the Person so guaranteeing such Indebtedness; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, bank guarantees or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds obligations (in each case other than for an obligation for money borrowed) and reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of workers’ compensation claims, self-insurance obligations and bankers acceptancesclaims or other similar obligations;
(vii7) Purchase Money Indebtedness and Capitalized Lease Obligations incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence25.0 million;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit or other commercial banking arrangements to manage cash balances, in each case, in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Coverage Ratio Exception or clauses (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (2111) or (2213) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.below;
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Samples: Indenture (CPI International, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds therefrom), the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters the greater of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $300.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) an amount of indebtedness at the time of Incurrence and guarantees thereofafter giving effect to the Incurrence of such Indebtedness and the application of the proceeds therefrom that does not cause the Secured Leverage Ratio of the Issuer to exceed 3.5 to 1.0;
(iii2) Indebtedness under (a) the Notes and the Note Guarantees initially issued on the Issue Date and (b) guarantees of the Additional Notes permitted to be issued under this Indenture;
(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect in due course to the intended use of proceeds of the Notes (other than Indebtedness referred to in other clauses (i) and (ii) aboveof this Section 4.10(b);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, customs, stay, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course other obligations of business and workers’ compensation claims, self-insurance obligations and bankers acceptances a like nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, customs, stay, bid, performance, appeal or surety bonds and obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit issued in the ordinary course of business, including letters of credit in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptancesfor the account of the Issuer or any Restricted Subsidiary, as the case may be;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 175.0 million and 12.5(b) 7.5% of the Issuer’s Consolidated Net Tangible Assets determined at the time of incurrence on a pro forma basis to give effect to the incurrenceassets purchased;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x)10) or clause (15) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that, that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness in respect of insurance premium financing for insurance being acquired by the Issuer or a Restricted Subsidiary under customary terms and conditions;
(14) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 15.0% of the aggregate Consolidated Tangible Assets of all of the Foreign Restricted Subsidiaries, determined at the time of incurrence;
(15) Permitted Acquisition Indebtedness;
(16) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof the proceeds which are used to either (i) acquire Discovery Offshore or (ii) finance the acquisition by Discovery Offshore or any Restricted Subsidiary of one or more jackup rigs and related equipment and assets; and
(17) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause outstanding the greater of (xxiii)), not to exceed a) $5.0 million.
100.0 million and (cb) 5.0% of the Issuer’s Consolidated Tangible Assets as determined at the time of incurrence. For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii17) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by after giving effect to the Issuer or any Guarantor application of the proceeds from the issuance of the Notes shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (17) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not. For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and will not permit any Restricted Subsidiary to, directly or indirectly use such refinancing would cause the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended applicable U.S. dollar-denominated restriction to be used in, a Permitted Business, (2) substantially all of exceeded if calculated at the business operations relevant currency exchange rate in effect on the date of such Personrefinancing, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness U.S. dollar-denominated restriction shall be deemed not to constitute an indirect use have been exceeded so long as the principal amount of such proceeds Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to make such Investment or purchase such assets. All determinations under this paragraph refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be made by calculated based on the Issuer acting currency exchange rate applicable to the currencies in good faithwhich such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Notwithstanding any other provision of this Section 4.10, in no event shall the reclassification of any lease or other liability as indebtedness due to a change in accounting principles after the Issue Date be deemed to be an incurrence of Indebtedness.
Appears in 1 contract
Samples: Indenture (Hercules Offshore, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will Partnership shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided that the Partnership, Cornerstone or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, (x) after giving effect thereto, the Consolidated Interest Coverage Ratio of the Partnership and the Restricted Subsidiaries would be at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of proceeds) (the “Coverage Ratio Exception”) and (y) no Default shall have occurred and be continuing or would occur as a consequence of incurring the Indebtedness or transactions relating to such incurrence.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer Partnership or any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities (it being understood that the Credit Agreement as in effect on the Issue Date is a “Credit Facility” permitted to be incurred under this clause (1)) in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $102,500,000 200.0 million, or (with letters ii) at the time of credit being deemed to have a principal amount equal to incurrence thereof, two times the maximum potential liability Consolidated Cash Flow of the Issuer or such Guarantor) less, to Partnership and its Restricted Subsidiaries for the extent four full fiscal quarters for which financial statements are publicly available determined on a permanent repayment and/or commitment reduction is required thereunder pro forma basis as a result set forth in the definition of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11Consolidated Interest Coverage Ratio;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and any Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to a Registration Rights Agreement;
(iii3) Indebtedness of the Issuer Partnership and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in clauses clause (i1), (2) and or (ii) above5));
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer Partnership or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10 and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) (x) Indebtedness of the Issuer Partnership owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Partnership or any other Restricted SubsidiarySubsidiary and (y) Guarantees by the Partnership of any Indebtedness of a Restricted Subsidiary and Guarantees by any Restricted Subsidiary that is a Guarantor of any Indebtedness of the Partnership or any other Restricted Subsidiary that is a Guarantor; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Partnership or a Restricted Subsidiary, the Issuer Partnership or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Partnership or any Restricted Subsidiary in the ordinary course of business, including guarantees Guarantees or obligations of the Issuer Partnership or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Partnership or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 12.5 million and 12.51.0% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) above or this clause (x10);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B11) Indebtedness incurred by the Issuer arising or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition guarantee of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary General Partner incurred to maintain its interest in the ordinary course Partnership upon the issuance of business under guarantees of Indebtedness of suppliersEquity Interests by the Partnership, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 3.0 million at any time outstanding;
(xvi12) The issuance by any Indebtedness of the Issuer’s Partnership or any Restricted Subsidiaries Subsidiary in an aggregate amount not to exceed at any time outstanding the Issuer greater of $25.0 million and 2.00% of Consolidated Net Tangible Assets; and
(13) unsecured Indebtedness of the Partnership or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
(1) any subsequent issuance to Cemetery Non-Profits in connection with a Cemetery Management 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) Operating Agreement. For purposes of determining compliance with this Section 6.084.10, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyPartnership shall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement Facilities on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (13) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenantSection 4.10, guaranteesGuarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Stonemor Partners Lp)
Limitations on Additional Indebtedness. (a) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the "COVERAGE RATIO EXCEPTION").
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”"PERMITTED INDEBTEDNESS"):
(i1) Indebtedness of the Issuer or Issuer, any Guarantor and/or the Canadian Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) 90.0 million, less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement Facilities in accordance with Section 6.114.13(d), plus the greater of (x) $40.0 million and (y) the sum of (i) 85% of the book value of the accounts receivable plus (ii) 65% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofto be issued pursuant to the Registration Rights Agreement;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the Transactions);
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary entered into in the ordinary course of business for bona fide hedging purposes and not for the purpose of speculationspeculation that are designed to protect against fluctuations in interest rates, foreign currency exchange rates and commodity prices; provided that if such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrencemillion;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) fifteen Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Coverage Ratio Exception or clauses (ii), (iii), (xi2) or (xii3) of this Section 6.08(babove or (12) or this clause (x)below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of arising in connection with the Issuersale, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer remediation or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount relocation work at San Xxxxxx not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 20.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event provided that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use extinguished upon the consummation of such proceeds the sale of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.San Xxxxxx;
Appears in 1 contract
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company or any Restricted Subsidiary may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto on a pro forma basis, either (i) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (ii) the Indebtedness to Tangible Net Worth Ratio would be no more than 2.25 to 1.00 (either (i) or (ii), the “Ratio Exception”); provided, further, that any Restricted Subsidiary that is not a Guarantor may not incur Indebtedness pursuant to the Ratio Exception in excess of an aggregate amount outstanding at any one time not to exceed the greater of (a) $15,000,000 and (b) 3.0% of Consolidated Tangible Assets at the time of incurrence.
(b) Notwithstanding Section 6.08(a4.03(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer incurrence by the Company or any Guarantor Restricted Subsidiary (and the guarantee thereof by the Company or any such Restricted Subsidiary) of Indebtedness under the ABL Facility Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed $102,500,000 under this Section 4.03(b)(1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such GuarantorCompany and its Restricted Subsidiaries thereunder) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the in an aggregate amount outstanding at any one time not to exceed the greater of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $100,000,000 and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof20.0% of Consolidated Tangible Assets;
(iii2) the Securities and the Security Guarantees issued on the Issue Date;
(3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding existing on the Original Issue Date (other than Indebtedness referred to in clauses (i1), (2), (4), (5), (6), (8), (9), (10), (12), (14), (15), (16) and (ii17) aboveof this Section 4.03(b));
(iv) Indebtedness under Hedging Obligations (including Swap Obligations) of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation;
(v4) Indebtedness of the Issuer Company and the Restricted Subsidiaries under Hedging Obligations; provided that (A) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.03 and (B) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(5) Indebtedness of the Company owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer Company or any other Restricted Subsidiary; provided, however, that (aA) that any Indebtedness of the Company owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company’s obligations under this Indenture and the Securities, (B) any Indebtedness of a Guarantor owed to a Non-Guarantor Subsidiary is unsecured and subordinated, pursuant to a written agreement, to such Guarantor’s obligations under this Indenture and its Security Guarantee and (C) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (vSection 4.03(b)(5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of bid, performance, surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations obligations, bankers’ acceptances, surety bonds and bankers acceptances issued for the account supporting letters of the Issuer or any Restricted Subsidiary credit in the ordinary course of business, including deposits or guarantees made to secure performance of tenders, bids, leases, statutory obligations, progress payments, government contracts or other ordinary course obligations of (in each case, not constituting Indebtedness for borrowed money) customary in the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptanceshomebuilding industry;
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing any Indebtedness thereofof the Company or a Restricted Subsidiary which serves to refund or refinance any Indebtedness incurred pursuant to this Section 4.03(b)(7), in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 million 15,000,000 and 12.5(b) 3.0% of Consolidated Net Tangible Assets at the time of the incurrenceAssets;
(viii8) Non-Recourse Indebtedness of the Company or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and, if secured, secured by Liens only on such real property and Directly Related Assets;
(9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) ten Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause the Ratio Exception, clauses (ii2), (iii), (xi3) or (xii13) of this Section 6.08(b4.03(b) or this clause (xSection 4.03(b)(11);
(xi12) the guarantee by (A) Acquired the Company or any Guarantor of Indebtedness (other than Indebtedness incurred pursuant to Section 4.03(b)(8) or Section 4.03(b)(16)) of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer Company or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence 4.03; provided that to the extent such Indebtedness is a subordinated obligation, the guarantee thereof by the Issuer Company or such Guarantor shall be subordinated in right of payment to the Securities or the applicable Security Guarantee, as the case may be, (B) Non-Guarantor Subsidiaries of Indebtedness incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture and (C) the Company or any Restricted Subsidiary of any Non-Recourse Indebtedness consisting of obligations the Company or another Restricted Subsidiary to pay the extent the guarantee is limited to (x) environmental warranties or indemnities, (y) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance premiums in an amount not and condemnation proceeds and other sums actually received by the obligor from secured assets to exceed be paid to the annual premiums in respect of such insurance premiums at any one time outstandinglender, waste and mechanics liens or (z) similar customary “bad-boy” guarantees, including bankruptcy and similar events;
(xx13) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to of (x) the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer Company or any Restricted Subsidiary of additional Indebtedness incurred to finance an acquisition or merger or (y) Persons incurred and outstanding on the issuance by date on which such Person became a Restricted Subsidiary or was acquired by, or merged into, the Issuer of Disqualified Stock Company or the issuance by any Restricted Subsidiary Subsidiary; provided, however, that in either case, after giving effect to the incurrence of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all such Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in and the event that an item of Indebtedness meets the criteria of more than one application of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) aboveproceeds therefrom, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.either:
Appears in 1 contract
Samples: Indenture (New Home Co Inc.)
Limitations on Additional Indebtedness. (a) The Issuer will Company shall not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness.; provided that the -------- Company, any Guarantor or any Accounts Receivable Entity may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.25 to 1.00 (the "Coverage Ratio Exception"). ------------------------
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “"Permitted Indebtedness”):"): ----------------------
(i1) Indebtedness of the Issuer Company or any Guarantor under the ABL Facility Credit Agreement, any synthetic lease financing and/or any Permitted Receivables Financings, including permitted refinancings thereof pursuant to clause (11) of this Section 4.10(b) in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, 175.0 million less the aggregate amount of Net Available Proceeds applied to repayments of term loans under the Credit Agreement in accordance with Section 6.114.15 or (y) 70% of the net book value of the accounts receivable of the Company and the Restricted Subsidiaries, including those receivables transferred, sold or assigned pursuant to a Permitted Receivables Financing;
(ii) (a) Notes and Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereof;
(iii2) Indebtedness of the Issuer Company, any Restricted Subsidiary or any Accounts Receivable Entity represented by Permitted Receivables Financings in an amount not to exceed the greater of (x) $100 million or (y) the net book value of the receivables of the Company, the Restricted Subsidiaries or Accounts Receivable Entities sold, transferred or securing such Indebtedness;
(3) the Notes and the Note Guarantees issued on the Issue Date;
(4) Indebtedness of the Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii3) above, and after giving effect to the intended use of proceeds of the Notes);
(iv5) Indebtedness under Hedging Obligations; provided that (A) such -------- Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant, and (including Swap ObligationsB) the notional principal amount of such Hedging Obligations at the time incurred does not exceed 105% of the Issuer or any Restricted Subsidiary in principal amount of the ordinary course and not for the purpose of speculationIndebtedness to which such Hedging Obligations relate;
(v6) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted -------- ------- Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v6); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi7) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of businessbusiness or any appeal bonds issued for the account of the Company or any Restricted Subsidiary, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performanceperformance or surety obligations (in each case other than for an obligation for money borrowed), surety bonds and Indebtedness evidenced by letters of credit issued in the ordinary course of business of the Company to secure workers’ ' compensation claims, self-and other insurance obligations and bankers acceptancescoverage;
(vii) 8) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence50.0 million;
(viii9) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such -------- ------- Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii1) (with respect to Permitted Receivable Financings and any synthetic lease financing only), (iii2), (xi3) or (xii4) of this Section 6.08(b) above or this clause (x11);
(xi12) any guarantee by the Company or any Guarantor of Indebtedness under any of the foregoing clauses (A1) Acquired through (11) above or (13) below;0 and
(13) other Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer Company or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 25.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii13) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretiondiscretion on the date of its incurrence and from time to time, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
Appears in 1 contract
Samples: Indenture (Us Oncology Inc)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, (1) if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”) and (2) if such additional Indebtedness or Acquired Indebtedness is in an aggregate principal amount in excess of $10,000,000, either:
(A) such Indebtedness is pari passu in right of payment with the Notes or such Guarantor’s Note Guarantee, as the case may be, and is expressly subordinated in right of payment to the Credit Agreement Obligations at least to the same extent as the Notes, or
(B) such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Note Guarantee, as the case may be, or
(C) at the Issuer’s option, either:
(i) the Issuer elects to redeem the Notes in whole, but not in part, at a purchase price equal to 100% of the principal amount thereof plus accrued but unpaid interest, if any, to, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); or
(ii) the Issuer elects to have Article 10 of this Indenture and paragraph 5 of the Notes cease to apply to all outstanding Notes.
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor Restricted Subsidiary under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11650.0 million;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses clause (i1), (2) or (5)), including the 7 3/8% Senior Notes and (ii) above)the guarantees related thereto;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculationspeculation and guarantees thereof by the Issuer or any Restricted Subsidiary; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;
(vii) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of $20.0 million and 12.5% of Consolidated Net Tangible Assets at the time of the incurrence;
(viii) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligations;
(ix) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to clause (ii), (iii), (xi) or (xii) of this Section 6.08(b) or this clause (x);
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) For purposes of determining compliance with this Section 6.08, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xxiii) above, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in other than for an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists obligation for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.money borrowed);
Appears in 1 contract
Samples: Indenture (American Greetings Corp)
Limitations on Additional Indebtedness. (a) The Issuer will shall not, and will shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted Subsidiary may incur additional Indebtedness if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds therefrom), the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a)the above, the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or and any Guarantor under the ABL Facility Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $102,500,000 (with letters the greater of credit being deemed to have a principal amount equal to the maximum potential liability of the Issuer or such Guarantor) less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement in accordance with Section 6.11;
(ii) (a) Notes and Note Guarantees in respect thereof $225.0 million and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) an amount of indebtedness at the time of Incurrence and guarantees thereofafter giving effect to the Incurrence of such Indebtedness and the application of the proceeds therefrom that does not cause the Secured Leverage Ratio of the Issuer to exceed 3.5 to 1.0;
(iii2) Indebtedness under (a) the Notes and the Note Guarantees initially issued on the Issue Date and (b) guarantees of the Notes initially issued on the Issue Date;
(a) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date after giving effect to the intended use of proceeds of the Notes (other than Indebtedness referred to in other clauses (iof this Section 4.10(b) and (iib) above)the Secured Notes originally issued on the Issue Date, and guarantees by the Guarantors of such Indebtedness;
(iv4) Indebtedness under Hedging Obligations (including Swap Obligations) entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.10, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(v5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of (a) self-insurance obligations or completion, customs, stay, bid, performance, appeal or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course other obligations of business and workers’ compensation claims, self-insurance obligations and bankers acceptances a like nature issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, customs, stay, bid, performance, appeal or surety bonds and obligations (in each case other than for an obligation for money borrowed) or (b) obligations represented by letters of credit issued in the ordinary course of business, including letters of credit in order to provide security for workers’ compensation claims, self-insurance obligations and bankers acceptancesfor the account of the Issuer or any Restricted Subsidiary, as the case may be;
(vii7) Purchase Money Indebtedness incurred by the Issuer or any Restricted SubsidiarySubsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed at any time outstanding the greater of (a) $20.0 100.0 million and 12.5(b) 7.5% of the Issuer’s Consolidated Net Tangible Assets determined at the time of incurrence on a pro forma basis to give effect to the incurrenceassets purchased;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or above, this clause (x)10) or clause (15) below;
(xi11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnificationindemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock Equity Interests for the purpose of financing or in contemplation of any such acquisition; providedprovided that, that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii11) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv12) Any other Contingent Obligations of the Issuer and the Guarantors in respect of Indebtedness otherwise permitted under this Section 4.10;
(13) Indebtedness in respect of insurance premium financing for insurance being acquired by the Issuer or a Restricted Subsidiary under customary terms and conditions;
(14) Indebtedness of Foreign Restricted Subsidiaries in an aggregate amount outstanding at any one time not to exceed 15.0% of the aggregate Consolidated Tangible Assets of all of the Foreign Restricted Subsidiaries, determined at the time of incurrence;
(15) Permitted Acquisition Indebtedness;
(16) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary after the Issue Date, and Refinancing Indebtedness in respect thereof the proceeds which are used to either (i) acquire Discovery Offshore or (ii) finance the acquisition by Discovery Offshore or any Restricted Subsidiary of one or more jackup rigs and related equipment and assets; and
(17) additional Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding;
(xvi) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii) The incurrence by the Issuer or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause outstanding the greater of (xxiii)), not to exceed a) $5.0 million.
50.0 million and (cb) 3.0% of the Issuer’s Consolidated Tangible Assets as determined at the time of incurrence. For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii17) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyshall, in its sole discretion, classify such item of Indebtedness and may divide, divide and classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred outstanding under the Credit Agreement on the Original Issue Date by after giving effect to the Issuer or any Guarantor application of the proceeds from the issuance of the Notes shall be deemed to have been incurred under clause (i1) above, and may later reclassify any item of Indebtedness described in clauses (1) through (17) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not. For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and will not permit any Restricted Subsidiary to, directly or indirectly use such refinancing would cause the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended applicable U.S. dollar-denominated restriction to be used in, a Permitted Business, (2) substantially all of exceeded if calculated at the business operations relevant currency exchange rate in effect on the date of such Personrefinancing, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness U.S. dollar-denominated restriction shall be deemed not to constitute an indirect use have been exceeded so long as the principal amount of such proceeds Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to make such Investment or purchase such assets. All determinations under this paragraph refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be made by calculated based on the Issuer acting currency exchange rate applicable to the currencies in good faithwhich such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Notwithstanding any other provision of this Section 4.10, in no event shall the reclassification of any lease or other liability as indebtedness due to a change in accounting principles after the Issue Date be deemed to be an incurrence of Indebtedness.
Appears in 1 contract
Samples: Indenture (Hercules Offshore, Inc.)
Limitations on Additional Indebtedness. (a) The Issuer Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Company or any Guarantor may incur additional Indebtedness if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.25 to 1.00 (the “Coverage Ratio Exception”).
(b) Notwithstanding Section 6.08(a4.10(a), the Issuer and the Restricted Subsidiary shall be permitted to incur “Permitted Indebtedness”. Each each of the following shall be permitted (the “Permitted Indebtedness”):
(i1) Indebtedness of the Issuer or Company and any Guarantor under the ABL Facility Credit Agreement incurred pursuant to this clause (1) in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $102,500,000 50.0 million and (with letters of credit being deemed to have a principal amount equal to the maximum potential liability y) 80% of the Issuer or such Guarantor) lessbook value of the accounts receivable plus 50% of the book value of inventory of the Company and the Restricted Subsidiaries, to the extent calculated on a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Agreement consolidated basis and in accordance with Section 6.11GAAP;
(ii2) (a) the Notes issued on the Issue Date and the Note Guarantees in respect thereof and (b) if unsecured, Convertible Notes (other than Convertible Notes exchanged for Notes) and guarantees thereofGuarantees;
(iii3) Indebtedness of the Issuer Company and the Restricted Subsidiaries to the extent outstanding on the Original Issue Date (other than Indebtedness referred to in clauses (i1) and (ii2) above, and after giving effect to the intended use of proceeds of the Notes);
(iv4) Indebtedness under Hedging Obligations; provided that such Hedging Obligations (including Swap Obligations) of are incurred by the Issuer Company or any Restricted Subsidiary in the ordinary course of business and not for the purpose of speculation;.
(v5) Indebtedness of the Issuer Company owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer Company or any other Restricted Subsidiary; provided, however, (a) that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer Company or a Restricted Subsidiary, the Issuer Company or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (v5); (b) any such Indebtedness made by a Note Party shall be evidenced by a promissory note pledged to the Noteholder Collateral Agent for the ratable benefit of the Noteholder Secured Parties pursuant to the Collateral Agreement; and (c) any such Indebtedness made by Note Parties to Subsidiaries that are not Guarantors is either a Permitted Investment or permitted by Section 6.09;
(vi6) Indebtedness in respect of bid, performance, performance or surety bonds, statutory, appeal, export or import, indemnities, customs or revenue bonds or similar instruments in the ordinary course of business and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer Company or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer Company or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, performance or surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances(in each case other than for an obligation for money borrowed);
(vii7) Purchase Money Indebtedness incurred by the Issuer Company or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $20.0 40.0 million and 12.5(b) 15% of Consolidated Net Tangible Assets at the time net book value of the incurrenceaircraft owned by the Company and the Restricted Subsidiaries;
(viii) 8) Indebtedness arising from (a) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence and (b) without duplication of clause (a), Banking Services Obligationsincurrence;
(ix9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(x10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (ii), (iii), (xi2) or (xii3) of this Section 6.08(b) or this clause (x)above;
(xi) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and (B) Indebtedness incurred by the Issuer or any Restricted Subsidiary in contemplation of, or in connection with, or to provide all or any part of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Subsidiary of or was otherwise acquired by the Issuer or a Restricted Subsidiary or was merged with or into or consolidated with the Issuer or a Restricted Subsidiary of the Issuer; provided that such Indebtedness shall not exceed the greater of $15.0 million or 10% of the Consolidated Net Tangible Assets at the time of incurrence;
(xii) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, Section 7.01(a) (except to the extent such Acquired Indebtedness was incurred in connection with or in contemplation of such acquisition);
(xiii) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided, that the maximum aggregate liability in respect of all such obligations outstanding under this clause (xiii) shall at no time exceed (a) in the case of an acquisition, $5.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;
(xiv) Any other Indebtedness of the Issuer or any Restricted Subsidiary if, after giving effect thereto, the Total Leverage Ratio does not exceed 5.00:1.00;
(xv11) Indebtedness of the Issuer or any Restricted Foreign Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate principal amount of Investments under clause (12) of the definition of “Permitted Investments,” not to exceed $5.0 10.0 million at any time outstanding;
(xvi“Foreign Indebtedness”) 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:
(1) 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
(2) any sale or other transfer of any such preferred stock to a Person that is not either 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 (xvi)
(xvii) The guarantee by the Issuer or any Restricted Subsidiary of the Issuer of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer, in each case, to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 6.08;
(xviii) Contribution Indebtedness;
(xix) The incurrence by the Issuer or any Restricted Subsidiary of Indebtedness consisting of obligations to pay insurance premiums in an amount not to exceed the annual premiums in respect of such insurance premiums at any one time outstanding;
(xx) Indebtedness related to unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law;
(xxi) Indebtedness supported by one or more letters of credit issued under the ABL Facility in accordance with clause (i); provided that the amount of Indebtedness permitted to be incurred under this clause (xxi) supported by any such letter(s) of credit shall not exceed the amount of such letter(s) of credit;
(xxii) Indebtedness issued by the Issuer or any Guarantor to current or former officers, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Issuer or any of its direct or indirect parent companies permitted by Section 6.09(b)(iv) hereof not in excess of $2.0 million at any time outstanding; and
(xxiii12) The incurrence by Indebtedness of the Issuer Company or any Restricted Subsidiary of additional Indebtedness or the issuance by the Issuer of Disqualified Stock or the issuance by any Restricted Subsidiary of preferred stock in an aggregate principal amount (or accreted value, as applicable) or liquidation value not to exceed $25.0 million at any time outstanding, including all Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness or liquidation value incurred pursuant to this clause (xxiii)), not to exceed $5.0 million.
(c) . For purposes of determining compliance with this Section 6.08covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i1) through (xxiii11) aboveabove or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassifyCompany shall, in its sole discretion, classify or later reclassify such item of Indebtedness and may divide, divide and classify and or later reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Agreement and outstanding on the Original Issue Date by the Issuer or any Guarantor shall be deemed to have been incurred under clause (i1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.
(d) The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly use the proceeds of Indebtedness incurred under Permitted Indebtedness clause (i) to make any Permitted Investments of the types described in clauses (1)(i)(b), (7), (16), (19), (21) or (22) of that definition or to purchase real property or other fixed assets, in each case in an Investment amount or purchase price in excess of $2,000,000 in any transaction or series of related transactions, unless (1) such Investment is made in a Person engaged in a Permitted Business, or such fixed assets are useful in, and are intended to be used in, a Permitted Business, (2) substantially all of the business operations of such Person, or substantially all of such assets, as applicable, are or will be located in California, Texas, Oklahoma, New York, New Jersey, Pennsylvania, Maryland, Virginia or the District of Columbia, and (3) a strategic rationale exists for such Investment or acquisition based on expected synergies or other benefits to the Issuer. For purposes of this paragraph, the repayment of a note or other obligation in respect of the deferred purchase price of an Investment or asset from the proceeds of Indebtedness shall be deemed to constitute an indirect use of such proceeds of Indebtedness to make such Investment or purchase such assets. All determinations under this paragraph shall be made by the Issuer acting in good faith.
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Samples: Indenture (Phi Inc)
