Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ratios, calculations and tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA), including the Consolidated EBITDA to Consolidated Interest Expense Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated Total Debt to Consolidated EBITDA Ratio shall be calculated in the manner prescribed by this Section 1.11; provided that, notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating the Consolidated First Lien Debt to Consolidated EBITDA Ratio for purposes of (i) the definition of “Applicable Margin” and the “Commitment Fee Rate”, (ii) calculating the covenant in Section 10.10 and (iii) Section 5.2(a)(i) and Section 5.2(a)(ii), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ratio, calculation or test is to be calculated on a pro forma basis or requires pro forma compliance, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are internally available. (b) For purposes of calculating any financial ratio, calculation (including any minimum equity calculation) or test (including measurements of baskets and other calculations on the basis of Consolidated Total Assets or Consolidated EBITDA), Specified Transactions (with any Incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ratio, calculation or test (including measurements of baskets and other calculations on the basis of Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect or a determination of pro forma compliance is to be given to a Specified Transaction or a Specified Restructuring, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower and may include, for the avoidance of doubt, the amount of “run rate” cost savings, operating expense reductions and cost synergies and other synergies projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been taken, have been committed to be taken, with respect to which substantial steps have been taken or which are expected to be taken (in the good faith determination of the Borrower) (calculated on a pro forma basis as though such cost savings, operating expense reductions, cost synergies and other synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions, cost synergies and other synergies were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action taken, any action committed to be taken, any action with respect to which substantial steps have been taken or any action that is expected to be taken (including any savings expected to result from the elimination of Public Company Costs, if any) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable in the good faith judgment of the Borrower, (B) such actions are taken, such actions are committed to be taken, substantial steps with respect to such action have been taken or such actions are expected to be taken no later than eight fiscal quarters after the date of consummation of such Specified Transaction or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters) and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period. (d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any Indebtedness, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to Consolidated Interest Expense Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 2 contracts

Samples: Incremental Agreement (Grocery Outlet Holding Corp.), Incremental Agreement (Grocery Outlet Holding Corp.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Senior Secured First Lien Net Leverage Ratio, ~~Consolidated First Lien Debt to Consolidated EBITDA~~ the Senior Secured Net Leverage Ratio, ~~Consolidated Secured Debt to Consolidated EBITDA Ratio~~ the Total Net Leverage Ratio, and ~~Consolidated Total Debt to Consolidated EBITDA~~ the Fixed Charge Coverage Ratio shall be calculated in the manner prescribed by this Section ~~1.11~~1.08; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.08, when calculating the ~~Consolidated~~ Senior Secured Net Leverage Ratio and the Senior Secured First Lien ~~Debt to Consolidated EBITDA Ratio~~ Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, (ii) ~~calculating~~ the ~~covenant in Section 10.10~~ definition of “Applicable ECF Percentage” and (iii) Section ~~5.2(a)(i) and~~ 7.13 (other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(ii~~7.13), the events described in this Section ~~1.11~~ 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal Financial Statements~~ internal financial statements of the Parent Borrower are ~~internally available~~available (as determined in good faith by the Parent Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.13 (other than for purposes of Section 4.02(b)), if no Test Period with an applicable level cited in Section 7.13 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.13 with an indicated level). For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating the Senior Secured Net Leverage Ratio or the Senior Secured First Lien Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable Rate”, (ii) the definition of “Applicable ECF Percentage” and (iii) Section 7.13 (other than for the purpose of determining pro forma compliance with Section 7.13), each of which shall be based on the financial statements delivered pursuant to Section 6.01(a) or (b), as applicable, for the relevant Test Period. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.08) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the ~~applicable~~ Applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Parent Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.08, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.08. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Parent Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost~~ synergies ~~and other synergies projected by the Borrower in good faith to result~~ resulting from or relating to any Specified Transaction (including the ~~Transactions~~Transaction) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the Parent Borrower) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Parent Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ twelve (12) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) the aggregate amount of cost savings, synergies and operating expense reductions added pursuant to this clause (c) for any such period after the Closing Date, shall be limited to the extent provided in Section 1.08(f). (d) In the event that (w) the Parent Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and not replaced), (x) the Parent Borrower or any Restricted Subsidiary issues, repurchases or redeems Disqualified Equity Interests , (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock or (z) other than for the purposes of determining compliance with Section 7.13 (including pro forma compliance with Section 7.13), the Parent Borrower or any Restricted Subsidiary establishes or eliminates (or designates or undesignates) any Designated Revolving Commitments, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or Preferred Stock, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or Preferred Stock will be given effect, as if the same had occurred on the first day of the applicable Test Period~~); provided that~~) and for all purposes, other than for the purposes of determining compliance with ~~respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the~~ Section 7.13 (including pro forma ~~calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio~~compliance with Section 7.13), the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, such financial ratio or test shall be calculated giving pro forma effect ~~shall not be given~~ to ~~any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with~~ the ~~Incurrence~~ full amount of any undrawn Designated Revolving Commitments as if such full amount of Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facilitythereunder had been incurred thereunder throughout such period. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Parent Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) ~~Any such~~ Notwithstanding anything to the contrary herein, for purposes of calculating the Senior Secured First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio, the Total Net Leverage Ratio, and the Fixed Charge Coverage Ratio, the aggregate amount of adjustments to Consolidated EBITDA and Consolidated Net Income consisting of addbacks, pro forma ~~calculation may include~~adjustments and exclusions for cost savings, ~~without limitation, (1) all adjustments of the type described in~~ synergies and operating expense reductions and restructuring and similar charges pursuant to clause (~~a)(viii~~vii) of the definition of “Consolidated EBITDA” , clause (c) of this Section 1.08 and clause (a) of the definition of Consolidated Net Income, when taken together, shall not exceed 20% of Consolidated EBITDA for such Test Period (giving pro forma effect to the relevant Specified Transaction to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 required or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents permitted pursuant to ~~this~~ Section ~~1.11(h~~1.08 (other than any cost savings, synergies and operating expense reductions pursuant to Section 1.08(c)~~, a “Holdings Termination Event”), but only if, upon~~ ) determined prior to giving effect to ~~such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease~~ any adjustments pursuant to ~~have a direct or indirect Parent Entity that owns all~~ clause (vii) of the ~~Capital Stock~~ definition of Consolidated EBITDA, clause (c) of this Section 1.08 and clause (a) of the ~~Borrower~~definition of Consolidated Net Income; provided, ~~Holdings~~ that such 20% cap shall not apply to, and shall be ~~released~~ determined after giving effect to, any such adjustments resulting from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including actions taken or with respect to ~~all representations and warranties, covenants, and defaults related to~~ which substantial steps have been taken or ~~referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed~~ were committed to be ~~amended~~ taken prior to ~~eliminate~~ the Closing Date (notwithstanding that such actions may actually be taken after the Closing Date) to the extent relating to items identified to the Lead Arrangers prior to the Closing Date or ~~modify all references~~ cost savings assumed in any forecasts, projections or model delivered to ~~Holdings, as applicable~~the Lead Arrangers prior to the Closing Date.

Appears in 2 contracts

Samples: Credit Agreement (Par Pharmacuetical, Inc.), Credit Agreement (Par Pharmacuetical, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio, ~~Consolidated~~ the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, ~~Consolidated~~ the Senior Secured ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, the Total Net Leverage Ratio, the Fixed Charge Coverage Ratio and ~~Consolidated~~ the determination of any basket or covenant based on Total ~~Debt to Consolidated EBITDA Ratio~~ Assets shall be calculated in the manner prescribed by this Section ~~1.11~~1.08; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.08, when calculating the ~~Consolidated~~ Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio and the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, (ii) ~~calculating~~ the ~~covenant in Section 10.10~~ definition of “Applicable ECF Percentage” and (iii) Section ~~5.2(a)(i) and~~ 7.13 (other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(ii~~7.13), the events described in this Section ~~1.11~~ 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test or determination of Total Assets is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test or determination of Total Assets shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal Financial Statements~~ internal financial statements of the Parent Borrower are ~~internally available~~available (as determined in good faith by the Parent Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.13, if no Test Period with an applicable level cited in Section 7.13 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.13 with an indicated level). For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating the Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien Net Leverage Ratio or the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable Rate”, (ii) the definition of “Applicable ECF Percentage” and (iii) Section 7.13 (other than for the purpose of determining pro forma compliance with Section 7.13), each of which shall be based on the financial statements delivered pursuant to Section 6.01(a) or (b), as applicable, for the relevant Test Period. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.08) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio or test (or Total Assets) is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Parent Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.08, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.08. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Parent Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost~~ synergies ~~and other synergies projected by the Borrower in good faith to result~~ resulting from or relating to any Specified Transaction (including the Transactions) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the Parent Borrower) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (in the good faith determination of the Parent Borrower) (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Parent Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ twenty-four (24) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) the aggregate amount of cost savings, synergies and operating expense reductions added pursuant to this clause (c) and clause (a)(vii) of the definition of “Consolidated EBITDA” in any Test Period shall not exceed an amount equal to 20% of Consolidated EBITDA for such period (calculated prior to giving effect to any adjustments pursuant to this Section 1.08(c) and clause (a)(vii) of the definition of “Consolidated EBITDA”); provided that such 20% cap shall not apply to, and shall be determined after giving effect to, any such adjustments resulting from actions taken or with respect to which substantial steps have been taken or were committed to be taken prior to the Fourth Restatement Effective Date (notwithstanding that such actions may actually be taken after the Fourth Restatement Effective Date) to the extent relating to items identified to the Lead Arrangers prior to the Fourth Restatement Effective Date or cost savings assumed in any forecasts, projections or model delivered to the Lead Arrangers prior to the Fourth Restatement Effective Date. (d) In the event that (w) the Parent Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness, in each case included~~ Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility in the ~~calculations~~ ordinary course of business for working capital purposes), (x) the Parent Borrower or any ~~financial ratio~~ Restricted Subsidiary issues, repurchases or ~~test~~redeems Disqualified Equity Interests, (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock or (z) the Parent Borrower or any Restricted Subsidiary establishes (or designates) any Designated Commitments, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or Preferred Stock or such establishment of Designated Commitments, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio or the Fixed Charge Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or Preferred Stock will be given effect, as if the same had occurred on the first day of the applicable Test Period~~); provided that~~) and, with respect to the calculation of compliance with any ~~Incurrence of Indebtedness permitted~~ covenant determined by ~~the provisions of this Agreement in reliance~~ reference to a financial ratio or test on the ~~pro forma calculation~~ date of determination (other than compliance with Section 7.13) in connection with the ~~Consolidated First Lien Debt to Consolidated EBITDA Ratio~~incurrence of any Designated Commitments, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, such covenant shall be calculated giving pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the ~~extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility~~full amount of such Designated Commitments as if such full amount of Indebtedness thereunder had been incurred thereunder throughout such period. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Parent Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. For purposes of the computation above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed on the average daily balances of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency Rate interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) ~~Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described~~ Notwithstanding anything in ~~clause (a)(viii) of the definition of “Consolidated EBITDA”~~ this Agreement or any Loan Document to the ~~extent such adjustments~~contrary, ~~without duplication~~when (a) calculating any applicable ratio, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated Consolidated Net Income or Consolidated EBITDA in connection with the incurrence of Indebtedness, the issuance of Disqualified Equity Interests or Preferred Stock, the creation of Liens, the making of any ~~Permitted Change~~ Disposition, the making of ~~Control~~an Investment, ~~subject~~ the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, (b) determining compliance with any provision of this Agreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom, (c) determining compliance with any provision of this Agreement which requires compliance with any representations and warranties set forth herein or (d) determining the satisfaction of all other conditions precedent to the ~~Borrower’s corporate credit rating being in B3~~ incurrence of Indebtedness, the issuance of Disqualified Equity Interests or ~~better from Xxxxx’x and B-~~ Preferred Stock, the creation of Liens, the making of any Disposition, the making of an Investment, the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or ~~better from S&P (~~an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, in each ~~case,~~ case in connection with a ~~stable outlook)~~Limited Condition Transaction, ~~respectively~~the date of determination of such ratio or other provisions, at determination of whether any Default or Event of Default has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the ~~time~~ satisfaction of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPOany other conditions shall, at the option of the Parent Borrower (the ~~exercising of~~ Parent Borrower’s election to exercise such option ~~to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h)~~in connection with any Limited Condition Transaction, a an “~~Holdings Termination Event~~LCT Election”), ~~but only if~~be the LCT Test Date, ~~upon~~ and, if after giving ~~effect~~ Pro Forma Effect to ~~such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise,~~ the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement Limited Condition Transaction and the other ~~Credit Documents~~transactions to be entered into in connection therewith as if they had occurred at the beginning of the most recent Test Period ending prior to the LCT Test Date (or, ~~including~~ in the case of any incurrence or repayment of Indebtedness (except in the case of the Interest Coverage Ratio (or similar ratio)), as if incurred (or repaid, as applicable) on the last day of the applicable Test Period), the Parent Borrower could have consummated such Limited Condition Transaction on the relevant LCT Test Date in compliance with ~~respect to all representations and warranties~~such ratio or other provision, ~~covenants, and defaults related to~~ such ratio or ~~referencing Holdings. Following any such release, this Agreement and the~~ other ~~Credit Documents~~ provision shall be deemed to have been complied with. For the avoidance of doubt, (i) if, following the LCT Test Date, any of such ratios or other provisions are exceeded or breached as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA or other components of such ratio) or other provision at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be ~~amended~~ deemed to ~~eliminate~~ have been failed to have been satisfied or ~~modify all references to Holdings~~exceeded, respectively, as ~~applicable~~a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction and related transactions are permitted hereunder and (ii) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction, unless (x) on such date an Event of Default pursuant to Section 8.01(a) or, solely with respect to the Borrowers, Section 8.01(f) shall be continuing or (y) the Parent Borrower subsequently elects, in its sole discretion, to test such ratios and baskets on the date such Limited Condition Transaction and related transactions are consummated. If the Parent Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or other provision (other than testing actual compliance with the Financial Covenants) on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or other provision shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated until such time as the applicable Limited Condition Transaction has actually closed or the definitive agreement with respect thereto has been terminated or expired.

Appears in 2 contracts

Samples: Credit Agreement (Iqvia Holdings Inc.), Credit Agreement (Quintiles IMS Holdings, Inc.)

Pro Forma and Other Calculations. ~~(a)~~ Notwithstanding anything to the contrary herein, financial ratios, calculations and tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA), including the Consolidated EBITDA to Consolidated Interest Expense Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated Total Debt to Consolidated EBITDA Ratio shall be calculated in the manner prescribed by this Section 1.11; provided that, notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating the Consolidated First Lien Debt to Consolidated EBITDA Ratio for purposes of ~~(i)~~ determining compliance with the ~~definition~~ Financial Covenant or otherwise for purposes of ~~“Applicable Margin”~~ determining the Total Net Leverage Ratio, Senior Secured Net Leverage Ratio, First Lien Net Leverage Ratio and ~~the “Commitment Fee Rate”~~EBITDA, (iix) ~~calculating~~ such calculations shall be made on a pro forma basis with respect to any Permitted Acquisition or any sale, transfer or other disposition of any material assets outside the ~~covenant~~ ordinary course of business or the incurrence of Indebtedness to the extent any such event occurs during the applicable four- quarter period to which such calculation relates, or, other than in ~~Section 10.10 and (iii) Section 5.2(a)(i) and Section 5.2(a)(ii)~~the case of determining compliance with the Financial Covenant, ~~the events described in this Section 1.11 that occurred~~ subsequent to the end of such four-quarter period but not later than the date of such calculation and (y) in connection with the initial incurrence of any revolving Indebtedness incurred after the Effective Date, any such revolving Indebtedness shall be deemed to be drawn in full and the cash proceeds of such Indebtedness shall be excluded from netting in the applicable ~~Test Period shall not be given pro forma effect; provided~~calculation of the Total Net Leverage Ratio, ~~however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated~~ Senior Secured Net Leverage Ratio or First Lien ~~Debt shall be determined after giving pro forma effect~~ Net Leverage Ratio required in the determination of whether the initial incurrence of such revolving Indebtedness is permitted hereunder. For the avoidance of doubt, references to ~~(A) the aggregate principal amount~~ any calculations of ~~(1) Term Loans voluntarily prepaid pursuant to Section 5.1~~EBITDA, ~~(2) Second~~ Net Income, First Lien ~~Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement~~ Net Leverage Ratio, Senior Secured Net Leverage Ratio and Total Leverage Ratio (or, in ~~accordance with~~ each case, any component definition in the ~~corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect~~ calculation thereof) ~~and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid~~shall be deemed to be references of EBITDA, ~~repurchased~~Net Income, ~~defeased~~First Lien Net Leverage Ratio, ~~acquired~~ Senior Secured Net Leverage Ratio or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement Total Leverage Ratio (or, in ~~accordance with~~ each case, any component definition in the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect calculation thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, ~~after the end~~ of ~~the Borrower’s most recently ended full fiscal year~~ Holdings and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ratio, calculation or test is to be calculated on a pro forma basis or requires pro forma compliance, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are internally availableits Restricted Subsidiaries unless otherwise explicitly stated. (b) For purposes of calculating any financial ratio, calculation (including any minimum equity calculation) or test (including measurements of baskets and other calculations on the basis of Consolidated Total Assets or Consolidated EBITDA), Specified Transactions (with any Incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ratio, calculation or test (including measurements of baskets and other calculations on the basis of Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect or a determination of pro forma compliance is to be given to a Specified Transaction or a Specified Restructuring, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower and may include, for the avoidance of doubt, the amount of “run rate” cost savings, operating expense reductions and cost synergies and other synergies projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been taken, have been committed to be taken, with respect to which substantial steps have been taken or which are expected to be taken (in the good faith determination of the Borrower) (calculated on a pro forma basis as though such cost savings, operating expense reductions, cost synergies and other synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions, cost synergies and other synergies were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action taken, any action committed to be taken, any action with respect to which substantial steps have been taken or any action that is expected to be taken (including any savings expected to result from the elimination of Public Company Costs, if any) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable in the good faith judgment of the Borrower, (B) such actions are taken, such actions are committed to be taken, substantial steps with respect to such action have been taken or such actions are expected to be taken no later than eight fiscal quarters after the date of consummation of such Specified Transaction or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters) and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period. (d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any Indebtedness, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to Consolidated Interest Expense Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 2 contracts

Samples: Credit Agreement (Jamf Holding Corp.), Incremental Facility Amendment (Jamf Holding Corp.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the Consolidated ~~EBITDA to Consolidated Interest Expense~~ First Lien Net Leverage Ratio, the Consolidated ~~First Lien Debt to Consolidated EBITDA~~ Senior Secured Net Leverage Ratio, ~~Consolidated Secured Debt to Consolidated EBITDA~~ the Total Net Leverage Ratio and ~~Consolidated Total Debt to Consolidated EBITDA~~ the Interest Coverage Ratio shall be calculated in the manner prescribed by this Section 1.11; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating (i) the Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio for purposes of ~~(i)~~ the definition of “Applicable ~~Margin~~Rate” and ~~the “Commitment Fee Rate”,~~ (ii) ~~calculating~~ the ~~covenant in Section 10.10 and (iii) Section 5.2(a)(i)~~ Total Net Leverage Ratio for purposes of the definition of “Applicable Rate” and Section ~~5.2(a)(ii~~7.11 (other than for the purpose of determining pro forma compliance with Section 7.11), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal~~ financial statements of the Borrower have been delivered to the Lenders pursuant to Section 6.01(a) or (b) (it being 55738387_110 understood that for purposes of determining pro forma compliance with Section 7.11, if no Test Period with an applicable level cited in Section 7.11 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.11 with an indicated level). For purposes of determining pro forma compliance with the Financial ~~Statements are internally available~~Covenant at a time when no Term A Loans or Revolving Credit Exposure is outstanding and no Revolving Credit Commitment or Letter of Credit is in effect, such determination shall be made as though the Financial Covenant is in effect at the relevant time. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost synergies and other~~ synergies projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized ~~and for which the~~ as a result of specified actions ~~necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been~~ taken, ~~have been~~ committed to be ~~taken, with respect to which substantial steps have been~~ taken or ~~which are~~ expected to be taken ~~(in the good faith determination of the Borrower)~~ (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action with respect to which substantial steps have been~~ taken or ~~any action that is~~ expected to be taken (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected in good faith to be taken no later than ~~eight fiscal quarters~~ eighteen (18) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) any increase to Consolidated EBITDA as a result of cost savings, operating expense reductions and synergies pursuant to this Section 1.11(c) shall be subject to the limitation set forth in the further proviso of clause (xii) of the definition of “Consolidated EBITDA”. (d) In the event that (w) the Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness, in each case included~~ Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness (a) has been permanently repaid and not replaced or (b) the proceeds therefrom are used for other than working capital purposes or general corporate purposes in the ~~calculations~~ ordinary course of business), (x) the Borrower or any ~~financial ratio~~ Restricted Subsidiary issues, repurchases or ~~test~~redeems Disqualified Equity Interests or (y) any Restricted Subsidiary issues, repurchases or redeems preferred stock, (i) during the applicable Test 55738387_110 Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or preferred stock, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or preferred stock will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Credit Agreement (Bloomin' Brands, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, but subject to Section 1.10, financial ~~ratios, calculations~~ ratios and tests (including measurements ~~of baskets and other calculations calculated on the basis~~ of Consolidated Total Assets or Consolidated EBITDA), including the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio, Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Leverage Ratio, Consolidated Secured ~~Debt to Consolidated EBITDA~~ Leverage Ratio and Consolidated Total ~~Debt to Consolidated EBITDA Ratio~~ Leverage Ratio, shall be calculated in the manner prescribed by this Section 1.11; provided that, notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating the Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Leverage Ratio for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate,”, (ii) calculating the covenant in Section ~~10.10~~ 6.11 and (iii) the Excess Cash Flow step-downs under Section ~~5.2(a)(i) and Section 5.2(a)(ii~~2.11(c), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, ~~that,~~ that for purposes of any determination of the Consolidated First Lien Leverage Ratio for purposes of the Excess Cash Flow sweep levels under ~~the proviso to~~ Section ~~5.2(a)(ii~~2.11(c), Consolidated First Lien Debt shall be determined after giving pro forma effect to any (A) ~~the aggregate principal amount~~ voluntary prepayments of ~~(1)~~ Term Loans ~~voluntarily prepaid~~ made pursuant to Section ~~5.1~~2.11(a), (2B) ~~Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of~~ the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) Senior Secured Notes and ~~(3)~~ other secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness constituting First Lien Obligations, in each case voluntarily prepaid, repurchased, defeased, ~~acquired~~ acquired, redeemed or ~~redeemed~~similarly paid, (BC) the aggregate principal amount of Term Loans assigned to any Purchasing Borrower Party (or, if lower, the aggregate amount of cash consideration paid by any Purchasing Borrower ~~Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable~~Party) ~~to effect any assignment to it of (1) Term Loans~~ pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof9.04(g), but only to the extent that such Term Loans ~~or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable,~~ have been cancelled and (CD) the aggregate amount of all permanent reductions of Revolving ~~Credit~~ Commitments, Extended Revolving ~~Credit~~ Commitments, ~~Additional/Replacement~~ Incremental Revolving ~~Credit~~ Commitments pursuant to Section ~~4.2~~ 2.08(b) (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section ~~2.14(b~~2.20(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving ~~Credit~~ Commitments, ~~Additional/Replacement~~ Incremental Revolving ~~Credit~~ Commitments and/or Extended Revolving ~~Credit~~ Commitments), in each case, after the end of the Borrower’s 's most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section ~~5.2(a)(ii~~2.11(c) assuming such ~~voluntary~~ prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma basis or requires pro forma compliance, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are ~~internally~~ available. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total Assets or Consolidated EBITDA), Specified ~~Transactions~~ Events (with any Incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified ~~Transactions~~ Events (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified ~~Transaction~~Event) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and ~~cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Cash Equivalents, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified ~~Transaction~~ Event that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect or a determination of pro forma compliance (or words to similar effect) is to be given to a Specified ~~Transaction or a Specified Restructuring~~Event, the pro forma calculations shall be made in good faith by ~~an Authorized~~ a Responsible Officer of the Borrower and may include, for the avoidance of ~~doubt~~doubt and without duplication, the amount of “run rate” cost savings, operating expense reductions and cost synergies and other synergies projected by the Borrower in good faith to result from ~~or relating to~~ any Specified ~~Transaction~~ Event, in each case, as calculated in accordance with and permitted by, clause (~~including the Transactions~~2) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been taken, have been committed to be taken, with respect to which substantial steps have been taken or which are expected to be taken (in the good faith determination of the ~~Borrower) (calculated on a pro forma basis as though such cost savings, operating expense reductions, cost synergies and other synergies had been realized on the first day~~ definition of such period and as if such cost savings, operating expense reductions, cost synergies and other synergies were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action taken, any action committed to be taken, any action with respect to which substantial steps have been taken or any action that is expected to be taken (including any savings expected to result from the elimination of Public Company Costs, if any) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable in the good faith judgment of the Borrower, (B) such actions are taken, such actions are committed to be taken, substantial steps with respect to such action have been taken or such actions are expected to be taken no later than eight fiscal quarters after the date of consummation of such Specified Transaction or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters) and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated ~~EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period~~EBITDA. (d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than normal fluctuations in revolving Indebtedness Incurred for working capital purposes), in each case included in the calculations of any financial ratio or ~~test~~test that is to be calculated on a pro forma basis, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging~~ Swap Agreements applicable to such Indebtedness). To the extent interest expense generated by ~~Hedging~~ Swap Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without ~~limitation~~duplication, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such ~~adjustments, without duplication,~~ adjustments continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) ~~In connection with~~ For purposes of determining the permissibility of any ~~incurrence~~ action, change, transaction or event that requires a calculation of ~~Indebtedness to be consummated~~ any Fixed Amount, Incurrence-Based Amount or, except as described in ~~connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook~~Section 1.11(a), ~~respectively~~any other financial ratio, test, covenant, calculation or measurement (including, any Consolidated First Lien Leverage Ratio test, any Consolidated Secured Leverage Ratio test, any Consolidated Total Leverage Ratio test, any Consolidated Fixed Charge Coverage Ratio test, unrestricted cash and the amount of Consolidated EBITDA, Fixed Charges and/or Consolidated Total Assets), such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement shall be calculated at the time ~~of the incurrence thereof~~ such action is taken (subject to Section 1.10), such change is made, such transaction is consummated or ~~as of the LCT Test Date~~such event occurs, as ~~applicable~~the case may be, ~~all leverage ratios related thereto~~ and no Default or Event of Default shall be deemed to ~~be 0.50 to 1.00 times higher than~~ have occurred solely as a result of a change in such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement occurring after the ~~otherwise applicable incurrence test ratio set forth in this Agreement~~time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be. (h) ~~After an IPO~~Notwithstanding anything to the contrary herein, at with respect to any amounts Incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement (including any covenant or the ~~option~~ definition of Incremental Base Amount) that does not require compliance with a financial ratio or test (including any Consolidated First Lien Leverage Ratio test, any Consolidated Secured Leverage Ratio test, any Consolidated Total Leverage Ratio test and/or any Consolidated Fixed Charge Coverage Ratio test) (any such amounts, the ~~Borrower~~ “Fixed Amounts”) substantially concurrently, simultaneously or contemporaneously with any amounts Incurred or transactions entered into (~~the exercising~~ or consummated) in reliance on a provision of ~~such option to release Holdings from its obligations~~ this Agreement that requires compliance with a financial ratio or test (including, amounts Incurred under the ~~Credit Documents pursuant~~ Incremental Ratio Debt Amount) any Consolidated First Lien Debt to ~~this Section 1.11(h)~~Consolidated EBITDA Ratio test, a any Consolidated Secured Debt to Consolidated EBITDA Ratio test, any Consolidated Total Debt to Consolidated EBITDA Ratio test and/or any Consolidated EBITDA to Fixed Charges Ratio test) (any such amounts, the “~~Holdings Termination Event~~Incurrence-Based Amounts”), ~~but only if, upon giving effect to such IPO~~ it is understood and ~~through a series of mergers, consolidations, dissolutions, amalgamations or otherwise,~~ agreed that the ~~Borrower would cease to have a direct or indirect Parent Entity that owns all~~ Fixed Amounts (including amounts Incurred under the Incremental Base Amount) shall be disregarded in the calculation of the ~~Capital Stock of~~ financial ratio or test applicable to the ~~Borrower, Holdings shall be released from its Guarantee and all of its property~~ Incurrence-Based Amounts (including amounts Incurred under the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicableIncremental Ratio Debt Amount).

Appears in 1 contract

Samples: Credit Agreement (Ww International, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the Consolidated ~~EBITDA to Consolidated Interest Expense~~ First Lien Net Leverage Ratio, the Consolidated ~~First Lien Debt to Consolidated EBITDA~~ Senior Secured Net Leverage Ratio, ~~Consolidated Secured Debt to Consolidated EBITDA~~ the Total Net Leverage Ratio and ~~Consolidated Total Debt to Consolidated EBITDA~~ the Interest Coverage Ratio shall be calculated in the manner prescribed by this Section 1.11; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating (i) the Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio for purposes of ~~(i)~~ the definition of “Applicable ~~Margin~~Rate” and ~~the “Commitment Fee Rate”,~~ (ii) ~~calculating~~ the ~~covenant in~~ Total Net Leverage Ratio for purposes of Section ~~10.10 and~~ 7.11 (~~iii)~~ other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(i) and Section 5.2(a)(ii~~7.11), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal~~ financial statements of the Borrower have been delivered to the Lenders pursuant to Section 6.01(a) or (b) (it being understood that for purposes of determining pro forma compliance with Section 7.11, if no Test Period with an applicable level cited in Section 7.11 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.11 with an indicated level). For purposes of determining pro forma compliance with the Financial ~~Statements are internally available~~Covenant at a time when no Revolving Credit Exposure is outstanding and no Revolving Credit Commitment or Letter of Credit is in effect, such determination shall be made as though the Financial Covenant is in effect at the relevant time. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified NEWYORK 8648768 (2K) Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost synergies and other~~ synergies projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized ~~and for which the~~ as a result of specified actions ~~necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been~~ taken, ~~have been~~ committed to be ~~taken, with respect to which substantial steps have been~~ taken or ~~which are~~ expected to be taken ~~(in the good faith determination of the Borrower)~~ (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action with respect to which substantial steps have been~~ taken or ~~any action that is~~ expected to be taken (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected in good faith to be taken no later than ~~eight fiscal quarters~~ eighteen (18) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) any increase to Consolidated EBITDA as a result of cost savings, operating expense reductions and synergies pursuant to this Section 1.11(c) shall be subject to the limitation set forth in the further proviso of clause (xii) of the definition of “Consolidated EBITDA”. (d) In the event that (w) the Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness, in each case included~~ Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness (a) has been permanently repaid and not replaced or (b) the proceeds therefrom are used for other than working capital purposes or general corporate purposes in the ~~calculations~~ ordinary course of business), (x) the Borrower or any ~~financial ratio~~ Restricted Subsidiary issues, repurchases or ~~test~~redeems Disqualified Equity Interests or (y) any Restricted Subsidiary issues, repurchases or redeems preferred stock, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment NEWYORK 8648768 (2K) of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or preferred stock, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or preferred stock will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.ARTICLE II

Appears in 1 contract

Samples: Credit Agreement (Bloomin' Brands, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio, ~~Consolidated~~ the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, ~~Consolidated~~ the Senior Secured ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, the Total Net Leverage Ratio, the Fixed Charge Coverage Ratio and ~~Consolidated~~ the determination of any basket or covenant based on Total ~~Debt to Consolidated EBITDA Ratio~~ Assets shall be calculated in the manner prescribed by this Section ~~1.11~~1.08; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.08, when calculating the ~~Consolidated~~ Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio and the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, (ii) ~~calculating~~ the ~~covenant in Section 10.10~~ definition of “Applicable ECF Percentage” and (iii) Section ~~5.2(a)(i) and~~ 7.13 (other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(ii~~7.13), the events described in this Section ~~1.11~~ 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test or determination of Total Assets is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test or determination of Total Assets shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal Financial Statements~~ internal financial statements of the Parent Borrower are ~~internally available~~available (as determined in good faith by the Parent Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.13, if no Test Period with an applicable level cited in Section 7.13 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.13 with an indicated level). For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating the Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien Net Leverage Ratio or the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable Rate”, (ii) the definition of “Applicable ECF Percentage” and (iii) Section 7.13 (other than for the purpose of determining pro forma compliance with Section 7.13), each of which shall be based on the financial statements delivered pursuant to Section 6.01(a) or (b), as applicable, for the relevant Test Period. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.08) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio or test (or Total Assets) is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Parent Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.08, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.08. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Parent Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost~~ synergies ~~and other synergies projected by the Borrower in good faith to result~~ resulting from or relating to any Specified Transaction (including the Transactions) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the Parent Borrower) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (in the good faith determination of the Parent Borrower) (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Parent Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ eighteen (18) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) the aggregate amount of cost savings, synergies and operating expense reductions added pursuant to this clause (c) and clause (a)(vii) of the definition of “Consolidated EBITDA” in any Test Period shall not exceed an amount equal to 20% of Consolidated EBITDA for such period (calculated prior to giving effect to any adjustments pursuant to this Section 1.08(c) and clause (a)(vii) of the definition of “Consolidated EBITDA”); provided that such 20% cap shall not apply to, and shall be determined after giving effect to, any such adjustments resulting from actions taken or with respect to which substantial steps have been taken or were committed to be taken prior to the Fourth Restatement Effective Date (notwithstanding that such actions may actually be taken after the Fourth Restatement Effective Date) to the extent relating to items identified to the Lead Arrangers prior to the Fourth Restatement Effective Date or cost savings assumed in any forecasts, projections or model delivered to the Lead Arrangers prior to the Fourth Restatement Effective Date. (d) In the event that (w) the Parent Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness, in each case included~~ Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility in the ~~calculations~~ ordinary course of business for working capital purposes), (x) the Parent Borrower or any ~~financial ratio~~ Restricted Subsidiary issues, repurchases or ~~test~~redeems Disqualified Equity Interests, (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock or (z) the Parent Borrower or any Restricted Subsidiary establishes (or designates) any Designated Commitments, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or Preferred Stock or such establishment of Designated Commitments, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio or the Fixed Charge Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or Preferred Stock will be given effect, as if the same had occurred on the first day of the applicable Test Period~~); provided that~~) and, with respect to the calculation of compliance with any ~~Incurrence of Indebtedness permitted~~ covenant determined by ~~the provisions of this Agreement in reliance~~ reference to a financial ratio or test on the ~~pro forma calculation~~ date of determination (other than compliance with Section 7.13) in connection with the ~~Consolidated First Lien Debt to Consolidated EBITDA Ratio~~incurrence of any Designated Commitments, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, such covenant shall be calculated giving pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the ~~extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility~~full amount of such Designated Commitments as if such full amount of Indebtedness thereunder had been incurred thereunder throughout such period. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Parent Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. For purposes of the computation above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed on the average daily balances of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency Rate interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) ~~Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described~~ Notwithstanding anything in ~~clause (a)(viii) of the definition of “Consolidated EBITDA”~~ this Agreement or any Loan Document to the ~~extent such adjustments~~contrary, ~~without duplication~~when (a) calculating any applicable ratio, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated Consolidated Net Income or Consolidated EBITDA in connection with the incurrence of Indebtedness, the issuance of Disqualified Equity Interests or Preferred Stock, the creation of Liens, the making of any ~~Permitted Change~~ Disposition, the making of ~~Control~~an Investment, ~~subject~~ the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, (b) determining compliance with any provision of this Agreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom, (c) determining compliance with any provision of this Agreement which requires compliance with any representations and warranties set forth herein or (d) determining the satisfaction of all other conditions precedent to the ~~Borrower’s corporate credit rating being in B3~~ incurrence of Indebtedness, the issuance of Disqualified Equity Interests or ~~better from Xxxxx’x and B-~~ Preferred Stock, the creation of Liens, the making of any Disposition, the making of an Investment, the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or ~~better from S&P (~~an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, in each ~~case,~~ case in connection with a ~~stable outlook)~~Limited Condition Transaction, ~~respectively~~the date of determination of such ratio or other provisions, at determination of whether any Default or Event of Default has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the ~~time~~ satisfaction of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPOany other conditions shall, at the option of the Parent Borrower (the ~~exercising of~~ Parent Borrower’s election to exercise such option ~~to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h)~~in connection with any Limited Condition Transaction, a an “~~Holdings Termination Event~~LCT Election”), ~~but only if~~be the LCT Test Date, ~~upon~~ and, if after giving ~~effect~~ Pro Forma Effect to ~~such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise,~~ the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement Limited Condition Transaction and the other ~~Credit Documents~~transactions to be entered into in connection therewith as if they had occurred at the beginning of the most recent Test Period ending prior to the LCT Test Date (or, ~~including~~ in the case of any incurrence or repayment of Indebtedness (except in the case of the Interest Coverage Ratio (or similar ratio)), as if incurred (or repaid, as applicable) on the last day of the applicable Test Period), the Parent Borrower could have consummated such Limited Condition Transaction on the relevant LCT Test Date in compliance with ~~respect to all representations and warranties~~such ratio or other provision, ~~covenants, and defaults related to~~ such ratio or ~~referencing Holdings. Following any such release, this Agreement and the~~ other ~~Credit Documents~~ provision shall be deemed to have been complied with. For the avoidance of doubt, (i) if, following the LCT Test Date, any of such ratios or other provisions are exceeded or breached as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA or other components of such ratio) or other provision at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be ~~amended~~ deemed to ~~eliminate~~ have been failed to have been satisfied or ~~modify all references to Holdings~~exceeded, respectively, as ~~applicable~~a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction and related transactions are permitted hereunder and (ii) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction, unless (x) on such date an Event of Default pursuant to Section 8.01(a) or, solely with respect to the Borrowers, Section 8.01(f) shall be continuing or (y) the Parent Borrower subsequently elects, in its sole discretion, to test such ratios and baskets on the date such Limited Condition Transaction and related transactions are consummated. If the Parent Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or other provision (other than testing actual compliance with the Financial Covenants) on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or other provision shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated until such time as the applicable Limited Condition Transaction has actually closed or the definitive agreement with respect thereto has been terminated or expired.

Appears in 1 contract

Samples: Credit Agreement (Quintiles IMS Holdings, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the Consolidated ~~EBITDA to Consolidated Interest Expense~~ First Lien Net Leverage Ratio, Consolidated First ~~Lien Debt~~ Xxxx Xxxxx Leverage Ratio, the Consolidated Senior Secured Net Leverage Ratio, the Total Net Leverage Ratio, and Interest Coverage Ratio and compliance with covenants determined by reference to Consolidated EBITDA ~~Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated~~ or Total ~~Debt to Consolidated EBITDA Ratio~~ Assets shall be calculated in the manner prescribed by this Section 1.11; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), ) (d) or (e) of this Section 1.11, when calculating the Consolidated First Lien ~~Debt to~~ Net Leverage Ratio or Consolidated ~~EBITDA~~ First Xxxx Xxxxx Leverage Ratio for purposes of ~~(i)~~ the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, ~~(ii) calculating the covenant in~~ for purposes of Section ~~10.10 and (iii) Section 5.2(a)(i~~2.06(b)(i) and Section ~~5.2(a)(ii~~7.11 (other than for the purpose of determining pro forma compliance with Section 7.11), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal~~ internal financial statements of the Borrower are available (as determined in good faith by the Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.11, if (i) no Test Period with an applicable level cited in Section 7.11 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.11 with an indicated level and (ii) all Test Periods with an applicable level cited in Section 7.11 have passed, the applicable level shall be the level for the last Test Period cited in Section 7.11 with an indicated level). For purposes of determining pro forma compliance with the Financial ~~Statements are internally available~~Covenant at a time when a Compliance Event has not occurred or is continuing, such determination shall be made as though the Financial Covenant is in effect at the relevant time. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test ~~(including measurements of baskets and other calculations on the basis of~~ or compliance with any covenant determined by reference to Consolidated EBITDA or Total ~~Assets or Consolidated EBITDA)~~Assets, Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction, but excluding, for purposes of calculating Total Assets, any decrease in cash and Cash Equivalents as a result of any such Specified Transactions constituting a Restricted Payment or repayment of Indebtedness) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of the Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost synergies and other~~ synergies projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized ~~and for which the~~ as a result of specified actions ~~necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been~~ taken, ~~have been~~ committed to be ~~taken, with respect to which substantial steps have been~~ taken or ~~which are~~ expected to be taken ~~(in the good faith determination of the Borrower)~~ (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action with respect to which substantial steps have been~~ taken or ~~any action that is~~ expected to be taken (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests (and in respect of any subsequent pro forma calculations in which such Specified Transaction or cost savings, operating expense reductions and synergies are given pro forma effect) and during any applicable subsequent Test ~~Period in which the effects thereof are expected to be realized~~Period) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected in good faith to be taken no later than ~~eight fiscal quarters~~ eighteen (18) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period.~~ period and (~~d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment~~D) any Indebtedness, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to Consolidated Interest Expense Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt increase to Consolidated EBITDA ~~Ratio~~as a result of cost savings, operating expense reductions and synergies pursuant to this Section 1.11(c) shall be subject to the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” limitation set forth in ~~this Agreement, including~~ the ~~Incremental Base Amount, any “baskets” measured as a percentage~~ further proviso of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (~~a)(viii~~viii) of the definition of “Consolidated EBITDA~~” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act~~”. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Credit Agreement (Bright Horizons Family Solutions Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, but subject to Section 1.10, financial ~~ratios, calculations~~ ratios and tests (including measurements ~~of baskets and other calculations calculated on the basis~~ of Consolidated Total Assets or Consolidated EBITDA), including the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio, Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Leverage Ratio, Consolidated Secured ~~Debt to Consolidated EBITDA~~ Leverage Ratio and Consolidated Total ~~Debt to Consolidated EBITDA Ratio~~ Leverage Ratio, shall be calculated in the manner prescribed by this Section 1.11; provided that, notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.11, when calculating the Consolidated First Lien ~~Debt to Consolidated EBITDA~~ Leverage Ratio for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate,”, (ii) calculating the covenant in Section ~~10.10~~ 6.11 and (iii) the Excess Cash Flow step-downs under Section ~~5.2(a)(i) and Section 5.2(a)(ii~~2.11(c), the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, ~~that,~~ that for purposes of any determination of the Consolidated First Lien Leverage Ratio for purposes of the Excess Cash Flow sweep levels under ~~the proviso to~~ Section ~~5.2(a)(ii~~2.11(c), Consolidated First Lien Debt shall be determined after giving pro forma effect to any (A) ~~the aggregate principal amount~~ voluntary prepayments of ~~(1)~~ Term Loans ~~voluntarily prepaid~~ made pursuant to Section ~~5.1~~2.11(a), (2B) ~~Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of~~ the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) Senior Secured Notes and ~~(3)~~ other secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness constituting First Lien Obligations, in each case voluntarily prepaid, repurchased, defeased, ~~acquired~~ acquired, redeemed or ~~redeemed~~similarly paid, (BC) the aggregate principal amount of Term Loans assigned to any Purchasing Borrower Party (or, if lower, the aggregate amount of cash consideration paid by any Purchasing Borrower ~~Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable~~Party) ~~to effect any assignment to it of (1) Term Loans~~ pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof9.04(g), but only to the extent that such Term Loans ~~or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable,~~ have been cancelled and (CD) the aggregate amount of all permanent reductions of Revolving ~~Credit~~ Commitments, Extended Revolving ~~Credit~~ Commitments, ~~Additional/Replacement~~ Incremental Revolving ~~Credit~~ Commitments pursuant to Section ~~4.2~~ 2.08(b) (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section ~~2.14(b~~2.20(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving ~~Credit~~ Commitments, ~~Additional/Replacement~~ Incremental Revolving ~~Credit~~ Commitments and/or Extended Revolving ~~Credit~~ Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section ~~5.2(a)(ii~~2.11(c) assuming such ~~voluntary~~ prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma basis or requires pro forma compliance, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are ~~internally~~ available. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total Assets or Consolidated EBITDA), Specified ~~Transactions~~ Events (with any Incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified ~~Transactions~~ Events (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified ~~Transaction~~Event) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and ~~cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Cash Equivalents, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified ~~Transaction~~ Event that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect or a determination of pro forma compliance (or words to similar effect) is to be given to a Specified ~~Transaction or a Specified Restructuring~~Event, the pro forma calculations shall be made in good faith by ~~an Authorized~~ a Responsible Officer of the Borrower and may include, for the avoidance of ~~doubt~~doubt and without duplication, the amount of “run rate” cost savings, operating expense reductions and cost synergies and other synergies projected by the Borrower in good faith to result from ~~or relating to~~ any Specified ~~Transaction~~ Event, in each case, as calculated in accordance with and permitted by, clause (~~including the Transactions~~2) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions, cost synergies or other synergies have been taken, have been committed to be taken, with respect to which substantial steps have been taken or which are expected to be taken (in the good faith determination of the ~~Borrower) (calculated on a pro forma basis as though such cost savings, operating expense reductions, cost synergies and other synergies had been realized on the first day~~ definition of such period and as if such cost savings, operating expense reductions, cost synergies and other synergies were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action taken, any action committed to be taken, any action with respect to which substantial steps have been taken or any action that is expected to be taken (including any savings expected to result from the elimination of Public Company Costs, if any) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable in the good faith judgment of the Borrower, (B) such actions are taken, such actions are committed to be taken, substantial steps with respect to such action have been taken or such actions are expected to be taken no later than eight fiscal quarters after the date of consummation of such Specified Transaction or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters) and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated ~~EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period~~EBITDA. (d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than normal fluctuations in revolving Indebtedness Incurred for working capital purposes), in each case included in the calculations of any financial ratio or ~~test~~test that is to be calculated on a pro forma basis, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging~~ Swap Agreements applicable to such Indebtedness). To the extent interest expense generated by ~~Hedging~~ Swap Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated ~~EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without ~~limitation~~duplication, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such ~~adjustments, without duplication,~~ adjustments continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) ~~In connection~~ For purposes of determining the permissibility of any action, change, transaction or event that requires a calculation of any Fixed Amount, Incurrence-Based Amount or, except as described in Section 1.11(a), any other financial ratio, test, covenant, calculation or measurement (including, any Consolidated First Lien Leverage Ratio test, any Consolidated Secured Leverage Ratio test, any Consolidated Total Leverage Ratio test, any Consolidated Fixed Charge Coverage Ratio test, unrestricted cash and the amount of Consolidated EBITDA, Fixed Charges and/or Consolidated Total Assets), such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement shall be calculated at the time such action is taken (subject to Section 1.10), such change is made, such transaction is consummated or such event occurs, as the case may be, and no Default or Event of Default shall be deemed to have occurred solely as a result of a change in such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement occurring after the time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be. (h) Notwithstanding anything to the contrary herein, with respect to any amounts Incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement (including any covenant or the definition of Incremental Base Amount) that does not require compliance with a financial ratio or test (including any Consolidated First Lien Leverage Ratio test, any Consolidated Secured Leverage Ratio test, any Consolidated Total Leverage Ratio test and/or any Consolidated Fixed Charge Coverage Ratio test) (any such amounts, the “Fixed Amounts”) substantially concurrently, simultaneously or contemporaneously with any ~~incurrence~~ amounts Incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with a financial ratio or test (including, amounts Incurred under the Incremental Ratio Debt Amount) any Consolidated First Lien Debt to Consolidated EBITDA Ratio test, any Consolidated Secured Debt to Consolidated EBITDA Ratio test, any Consolidated Total Debt to Consolidated EBITDA Ratio test and/or any Consolidated EBITDA to Fixed Charges Ratio test) (any such amounts, the “Incurrence-Based Amounts”), it is understood and agreed that the Fixed Amounts (including amounts Incurred under the Incremental Base Amount) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence-Based Amounts (including amounts Incurred under the Incremental Ratio Debt Amount). (i) Notwithstanding anything to the contrary herein, except to the extent expressly required to be calculated otherwise in Section 2.20 or Section 6.01(o) for any Incremental Revolving Commitment Increases or Incremental Revolving Commitments, in the event an item of Indebtedness (or any portion thereof) is Incurred, any Lien is Incurred or other transaction is undertaken in reliance on an Incurrence-Based Amount, such Incurrence-Based Amount shall be calculated without regard to the Incurrence of any Indebtedness under any revolving facility or letter of credit facility immediately prior to, simultaneously or contemporaneously with, or in connection therewith. (j) Notwithstanding anything to the contrary herein, so long as an action was taken (or not taken) in reliance upon a basket, ratio or test under this Agreement that was calculated or determined in good faith by an Authorized Officer of the Borrower based upon financial information available to such officer at such time and such action (or inaction) was permitted under this Agreement at the time of such calculation or determination, any subsequent restatement, modification or adjustments made to such financial information (including any restatement, modification or adjustment that would have caused such basket, ratio or test to be ~~consummated~~ exceeded as a result of such action or inaction) shall not result in any Default or Event of Default under this Agreement. (k) For purposes of the calculation of the Consolidated First Lien Leverage Ratio, the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio and/or the Consolidated Fixed Charge Coverage Ratio in connection with the Incurrence of any ~~Permitted Change of Control, subject~~ Indebtedness under a revolving credit or other similar facility in connection with entering into a commitment letter or similar agreement with respect to the ~~Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P~~ Incurrence of any Indebtedness that would not be prohibited under Section 6.01 (and, in each case, ~~with a stable outlook~~any Lien securing such Indebtedness pursuant to Section 6.02), ~~respectively~~such Person may elect, ~~at the time~~ pursuant to a certificate of an Authorized Officer of the ~~incurrence thereof~~ Borrower delivered to the Administrative Agent, to treat all or any portion of the commitment (such amount elected until revoked as described below, the “Elected Amount”) under any such Indebtedness which is to be Incurred (or any commitment in respect thereof) or secured by such Lien (whether by the Borrower, its Restricted Subsidiaries or any third party), as the case may be, as being Incurred or secured, as the case may be, as of the ~~LCT Test Date~~date such certificate is delivered and (i) any subsequent Incurrence of such Indebtedness or such Lien under such commitment that was so treated (so long as the total amount under such Indebtedness does not exceed the Elected Amount) shall not be deemed, ~~as applicable~~for purposes of this calculation, to be an Incurrence of additional Indebtedness or an additional Lien at such subsequent time, (ii) such Person may revoke an election of an Elected Amount pursuant to a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent and (iii) at all ~~leverage ratios related thereto~~ times thereafter, for subsequent calculations of the Consolidated First Lien Leverage Ratio, the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio and/or the Consolidated Fixed Charge Coverage Ratio, the Elected Amount (if any) shall be deemed to be ~~0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement~~outstanding, whether or not such amount is actually outstanding. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Credit Agreement (Ww International, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the ~~Consolidated EBITDA to Consolidated Interest Expense~~ First Lien Net Leverage Ratio, ~~Consolidated First Lien Debt to Consolidated EBITDA~~ the Secured Net Leverage Ratio, the Consolidated ~~Secured Debt to Consolidated EBITDA~~ Net Leverage Ratio and ~~Consolidated Total Debt to Consolidated EBITDA~~ the Interest Coverage Ratio shall be calculated in the manner prescribed by this Section ~~1.11~~1.07; provided that, ~~notwithstanding~~ not-withstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.07, when calculating the ~~Consolidated~~ First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio for purposes of (i) the definition of “Applicable ~~Margin~~Rate,” ~~and the “Commitment Fee Rate”,~~ (ii) ~~calculating the covenant in~~ Section ~~10.10~~ 2.05(b)(i) and (iii) ~~Section 5.2(a)(i) and Section 5.2(a)(ii~~the Financial Covenant (other than for the purpose of determining pro forma compliance with the Financial Covenant), the events described in this Section ~~1.11~~ 1.07 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; ~~provided, however, that, for purposes~~ provided however that voluntary prepayments made pursuant to Section 2.05(a) during any fiscal year (without duplication of any ~~determination under~~ prepayments in such fiscal year that reduced the ~~proviso~~ amount of Excess Cash Flow required to be repaid pursuant to Section ~~5.2(a)(ii), Consolidated First Lien Debt~~ 2.05(b)(i) for any prior fiscal year) shall be ~~determined after giving~~ given pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that after such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the fiscal year-end ~~of the Borrower’s most recently ended full fiscal year~~ and prior to the ~~date of the applicable payment to be made~~ time such prepayment pursuant to ~~such~~ Section ~~5.2(a)(ii~~2.05(b)(i) ~~assuming such voluntary prepayments had been made on the last day of such fiscal year~~is due but shall not be given pro forma effect thereafter. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal~~ internal financial statements of Holdings are available (as determined in good faith by the Borrower Representative) (it being understood that for purposes of determining pro forma compliance with the Financial ~~Statements are internally available~~Covenant, if no Test Period with an applicable level cited in the Financial Covenant has passed, the applicable level shall be the level for the first Test Period cited in the Financial Covenant with an indicated level). (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.07) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in ~~Consolidated~~ EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into ~~the~~ Holdings, a Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.07, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.07. (c) For the purposes of calculating any financial ratio or test (or Total Assets) in connection with any Permitted Acquisition, Holdings may, at its option, make such calculation either at the time (i) of incurrence of any Indebtedness or Liens or the making of any Investments, Restricted Payments or Fundamental Changes, or the designation of any Unrestricted Subsidiaries in connection with such Permitted Acquisition or (ii) a definitive agreement is entered into with respect to such Permitted Acquisition on a pro forma basis assuming that such Permitted Acquisition had occurred; provided that if Holdings has made such an election pursuant to this clause (c)(ii), all calculations prior to the consummation or termination of a such definitive agreement related to such Permitted Acquisition (including the incurrence of any Indebtedness and Liens, the making of any such Investments, Restricted Payments and Fundamental Changes, and the designation of any Unrestricted Subsidiaries) must also be made on such a pro forma basis. (d) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized~~ a Financial Officer of the Borrower Representative and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost synergies and other~~ synergies projected by the Borrower Representative in good faith to result from or relating to any Specified Transaction (including the Transactions) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the ~~Borrower~~Borrower Representative) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the ~~Borrower~~Borrower Representative, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ twenty-four (24) months after the date of ~~consummation of~~ such Specified Transaction ~~or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters)~~ and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing ~~Consolidated~~ EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period. (de) In the event that ~~the~~ Holdings, a Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee)~~ guarantees), issues or ~~Refinances~~ repays (including by redemption, repurchase, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility or line of credit unless such Indebtedness has been permanently repaid and not replaced), in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to Consolidated Interest Expense Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility. (e) Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Syndicated Facility Agreement (DTZ Jersey Holdings LTD)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios~~ratios and tests, ~~calculations~~ including the Senior Secured First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio, the Total Net Leverage Ratio, and ~~tests (including measurements~~ the Fixed Charge Coverage Ratio and the determination of ~~baskets and other calculations calculated~~ any basket or covenant based on ~~the basis of Consolidated~~ Total Assets or Consolidated EBITDA), including the Consolidated EBITDA to Consolidated Interest Expense Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated Foreign Subsidiary Total ~~Debt to Consolidated EBITDA Ratio~~ Assets shall be calculated in the manner prescribed by this Section ~~1.11~~1.08; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.08, when calculating the ~~Consolidated~~ Senior Secured Net Leverage Ratio and the Senior Secured First Lien ~~Debt to Consolidated EBITDA Ratio~~ Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, (ii) ~~calculating~~ the ~~covenant in Section 10.10~~ definition of “Applicable ECF Percentage” and (iii) Section ~~5.2(a)(i) and~~ 7.13 (other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(ii~~7.13), the events described in this Section ~~1.11~~ 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal Financial Statements~~ internal financial statements of the Parent Borrower are ~~internally available~~available (as determined in good faith by the Parent Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.13 (other than for purposes of Section 4.02(b)), if no Test Period with an applicable level cited in Section 7.13 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.13 with an indicated level). For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating the Senior Secured Net Leverage Ratio or the Senior Secured First Lien Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable Rate”, (ii) the definition of “Applicable ECF Percentage” and (iii) Section 7.13 (other than for the purpose of determining pro forma compliance with Section 7.13), each of which shall be based on the financial statements delivered pursuant to Section 6.01(a) or (b), as applicable, for the relevant Test Period. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.08) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Parent Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.08, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.08. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Parent Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost~~ synergies ~~and other synergies projected by the Borrower in good faith to result~~ resulting from or relating to any Specified Transaction (including the ~~Transactions~~Transaction) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the Parent Borrower) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (in the good faith determination of the Parent Borrower) (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Parent Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ eighteen (18) months after the date of ~~consummation of~~ such Specified Transaction ~~or the date of initiation of such Specified Restructuring (or, with respect to the Transactions, twelve fiscal quarters)~~ and (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period. (d) In the event that (w) the Parent Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and not replaced), (x) the Parent Borrower or any Restricted Subsidiary issues, repurchases or redeems Disqualified Equity Interests , (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock or (z) other than for the purposes of determining compliance with Section 7.13 (including pro forma compliance with Section 7.13), the Parent Borrower or any Restricted Subsidiary establishes or eliminates (or designates or undesignates) any Designated Revolving Commitments, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or Preferred Stock, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement, discharge, defeasance or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or Preferred Stock will be given effect, as if the same had occurred on the first day of the applicable Test Period~~); provided that~~) and for all purposes, other than for the purposes of determining compliance with ~~respect to any Incurrence of Indebtedness permitted by the provisions of this Agreement in reliance on the~~ Section 7.13 (including pro forma ~~calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio~~compliance with Section 7.13), the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, such financial ratio or test shall be calculated giving pro forma effect ~~shall not be given~~ to ~~any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with~~ the ~~Incurrence~~ full amount of any undrawn Designated Revolving Commitments as if such full amount of Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facilitythereunder had been incurred thereunder throughout such period. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Parent Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Credit Agreement (Aptalis Holdings Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and ~~tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total Assets or Consolidated EBITDA)~~tests, including the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio, ~~Consolidated~~ the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, ~~Consolidated~~ the Senior Secured ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio, the Total Net Leverage Ratio, the Fixed Charge Coverage Ratio and ~~Consolidated~~ the determination of any basket or covenant based on Total ~~Debt to Consolidated EBITDA Ratio~~ Assets shall be calculated in the manner prescribed by this Section ~~1.11~~1.08; ~~provided that~~provided, that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.08, when calculating the ~~Consolidated~~ Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien ~~Debt to Consolidated EBITDA~~ Net Leverage Ratio and the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable ~~Margin” and the “Commitment Fee~~ Rate”, (ii) ~~calculating~~ the ~~covenant in Section 10.10~~ definition of “Applicable ECF Percentage” and (iii) Section ~~5.2(a)(i) and~~ 7.13 (other than for the purpose of determining pro forma compliance with Section ~~5.2(a)(ii~~7.13), the events described in this Section ~~1.11~~ 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such voluntary prepayments had been made on the last day of such fiscal year. In addition, whenever a financial ~~ratio, calculation~~ ratio or test or determination of Total Assets is to be calculated on a pro forma ~~basis or requires pro forma compliance~~basis, the reference to “Test Period” for purposes of calculating such financial ratio or test or determination of Total Assets shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which ~~Internal Financial Statements~~ internal financial statements of the Parent Borrower are ~~internally available~~available (as determined in good faith by the Parent Borrower) (it being understood that for purposes of determining pro forma compliance with Section 7.13, if no Test Period with an applicable level cited in Section 7.13 has passed, the applicable level shall be the level for the first Test Period cited in Section 7.13 with an indicated level). For the avoidance of doubt, the provisions of the foregoing sentence shall not apply for purposes of calculating the Interest Coverage Ratio, the Senior Secured Net Leverage Ratio, the Senior Secured First Lien Net Leverage Ratio or the Total Net Leverage Ratio, each as applicable, for purposes of (i) the definition of “Applicable Rate”, (ii) the definition of “Applicable ECF Percentage” and (iii) Section 7.13 (other than for the purpose of determining pro forma compliance with Section 7.13), each of which shall be based on the financial statements delivered pursuant to Section 6.01(a) or (b), as applicable, for the relevant Test Period. (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets or Consolidated EBITDA~~Assets), Specified Transactions (with any ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.08) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio or test (or Total Assets) is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of ~~Consolidated~~ Total ~~Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Assets, on the last day of the applicable Test Period). ~~If,~~ If since the beginning of any applicable Test ~~Period,~~ Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Parent Borrower or any of its Restricted ~~Subsidiary~~ Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section ~~1.11~~1.08, then such financial ~~ratio, calculation~~ ratio or test (~~including measurements of baskets and other calculations on the basis of Consolidated~~ or Total ~~Assets and Consolidated EBITDA~~Assets) shall be calculated to give pro forma effect thereto in accordance with this Section ~~1.11~~1.08. (c) Whenever pro forma effect ~~or a determination of pro forma compliance~~ is to be given to a Specified ~~Transaction or a Specified Restructuring~~Transaction, the pro forma calculations shall be made in good faith by ~~an Authorized Officer~~ a responsible financial or accounting officer of the Parent Borrower and may include, for the avoidance of doubt, the amount of “~~run~~ run-rate” cost savings, operating expense reductions and ~~cost~~ synergies ~~and other synergies projected by the Borrower in good faith to result~~ resulting from or relating to any Specified Transaction (including the Transactions) ~~or Specified Restructuring that~~ which is being given pro forma effect ~~or for which a determination of pro forma compliance is being made~~ that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense ~~reductions, cost~~ reductions and synergies ~~or other synergies have been~~ are taken, ~~have been~~ committed to be ~~taken,~~ taken or with respect to which substantial steps have been taken or ~~which~~ are expected to be taken (in the good faith determination of the Parent Borrower) (calculated on a pro forma basis as though such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies had been realized on the first day of such period and as if such cost savings, operating expense ~~reductions, cost synergies~~ reductions and ~~other~~ synergies were realized during the entirety of such period and “~~run~~ run-rate” means the full recurring benefit for a period that is associated with any action taken, ~~any action~~ committed to be ~~taken, any action~~ taken or with respect to which substantial steps have been taken or ~~any action that is~~ are expected to be taken (in the good faith determination of the Parent Borrower) (including any savings expected to result from the elimination of ~~Public Company Costs, if any~~a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified ~~Transaction or Specified~~ Transaction, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Parent Borrower, (B) such actions are taken, ~~such actions are~~ committed to be ~~taken, substantial steps~~ taken or with respect to ~~such action~~ which substantial steps have been taken or ~~such actions~~ are expected to be taken no later than ~~eight fiscal quarters~~ eighteentwenty-four (1824) months after the date of ~~consummation of~~ such Specified ~~Transaction or the date of initiation of such Specified Restructuring (or~~Transaction, ~~with respect to the Transactions, twelve fiscal quarters) and~~ (C) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (D) the aggregate amount of cost savings, synergies and operating expense reductions added pursuant to this clause (c) and clause (a)(vii) of the definition of “Consolidated EBITDA” in any Test Period shall not exceed an amount equal to 20% of Consolidated EBITDA for such period (calculated prior to giving effect to any adjustments pursuant to this Section 1.08(c) and clause (a)(vii) of the definition of “Consolidated EBITDA”); provided that such 20% cap shall not apply to, and shall be determined after giving effect to, any such adjustments resulting from actions taken or with respect to which substantial steps have been taken or were committed to be taken prior to the Fourth Restatement Effective Date (notwithstanding that such actions may actually be taken after the Fourth Restatement Effective Date) to the extent relating to items identified to the Lead Arrangers prior to the Fourth Restatement Effective Date or cost savings assumed in any forecasts, projections or model delivered to the Lead Arrangers prior to the Fourth Restatement Effective Date. (d) In the event that (w) the Parent Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or ~~guarantee~~guarantees) or ~~Refinances~~ repays (including by redemption~~, repurchase~~, repayment, retirement or extinguishment) any ~~Indebtedness, in each case included~~ Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility in the ~~calculations~~ ordinary course of business for working capital purposes), (x) the Parent Borrower or any ~~financial ratio~~ Restricted Subsidiary issues, repurchases or ~~test~~redeems Disqualified Equity Interests, (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock or (z) the Parent Borrower or any Restricted Subsidiary establishes (or designates) any Designated Commitments, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or ~~Refinancing~~ repayment of ~~Indebtedness (including pro forma effect to the application~~ Indebtedness, or such issuance or redemption of ~~the net proceeds therefrom)~~Disqualified Equity Interests or Preferred Stock or such establishment of Designated Commitments, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the ~~Consolidated EBITDA to Consolidated~~ Interest ~~Expense~~ Coverage Ratio or the Fixed Charge Coverage Ratio (or similar ratio), in which case such ~~Incurrence~~ incurrence, assumption, guarantee, redemption, repayment, retirement or ~~Refinancing~~ extinguishment of Indebtedness or such issuance, repurchase or redemption of Disqualified Equity Interests or Preferred Stock will be given effect, as if the same had occurred on the first day of the applicable Test Period~~); provided that~~) and, with respect to the calculation of compliance with any ~~Incurrence of Indebtedness permitted~~ covenant determined by ~~the provisions of this Agreement in reliance~~ reference to a financial ratio or test on the ~~pro forma calculation~~ date of determination (other than compliance with Section 7.13) in connection with the ~~Consolidated First Lien Debt to Consolidated EBITDA Ratio~~incurrence of any Designated Commitments, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, such covenant shall be calculated giving pro forma effect shall not be given to any Indebtedness being Incurred (or expected to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the ~~extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility~~full amount of such Designated Commitments as if such full amount of Indebtedness thereunder had been incurred thereunder throughout such period. (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the ~~Consolidated EBITDA to Consolidated Interest Expense~~ Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest ~~Hedging Agreements~~ hedging arrangements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a ~~Financing~~ Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by ~~an Authorized~~ a Responsible Officer of the Parent Borrower to be the rate of interest implicit in such ~~Financing~~ Capitalized Lease Obligation in accordance with GAAP. For purposes of the computation above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed on the average daily balances of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a ~~eurocurrency~~ Eurocurrency Rate interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Parent Borrower or ~~applicable~~ Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) ~~Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described~~ Notwithstanding anything in ~~clause (a)(viii) of the definition of “Consolidated EBITDA”~~ this Agreement or any Loan Document to the ~~extent such adjustments~~contrary, ~~without duplication~~when (a) calculating any applicable ratio, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated Consolidated Net Income or Consolidated EBITDA in connection with the incurrence of Indebtedness, the issuance of Disqualified Equity Interests or Preferred Stock, the creation of Liens, the making of any ~~Permitted Change~~ Disposition, the making of ~~Control~~an Investment, ~~subject~~ the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, (b) determining compliance with any provision of this Agreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom, (c) determining compliance with any provision of this Agreement which requires compliance with any representations and warranties set forth herein or (d) determining the satisfaction of all other conditions precedent to the ~~Borrower’s corporate credit rating being in B3~~ incurrence of Indebtedness, the issuance of Disqualified Equity Interests or ~~better from Xxxxx’x and B-~~ Preferred Stock, the creation of Liens, the making of any Disposition, the making of an Investment, the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary or ~~better from S&P (~~an Unrestricted Subsidiary or the repayment of Indebtedness, Disqualified Equity Interests or Preferred Stock, in each ~~case,~~ case in connection with a ~~stable outlook)~~Limited Condition Transaction, ~~respectively~~the date of determination of such ratio or other provisions, at determination of whether any Default or Event of Default has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the ~~time~~ satisfaction of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPOany other conditions shall, at the option of the Parent Borrower (the ~~exercising of~~ Parent Borrower’s election to exercise such option ~~to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h)~~in connection with any Limited Condition Transaction, a an “~~Holdings Termination Event~~LCT Election”), ~~but only if~~be the LCT Test Date, ~~upon~~ and, if after giving ~~effect~~ Pro Forma Effect to ~~such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise,~~ the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement Limited Condition Transaction and the other ~~Credit Documents~~transactions to be entered into in connection therewith as if they had occurred at the beginning of the most recent Test Period ending prior to the LCT Test Date (or, ~~including~~ in the case of any incurrence or repayment of Indebtedness (except in the case of the Interest Coverage Ratio (or similar ratio)), as if incurred (or repaid, as applicable) on the last day of the applicable Test Period), the Parent Borrower could have consummated such Limited Condition Transaction on the relevant LCT Test Date in compliance with ~~respect to all representations and warranties~~such ratio or other provision, ~~covenants, and defaults related to~~ such ratio or ~~referencing Holdings. Following any such release, this Agreement and the~~ other ~~Credit Documents~~ provision shall be deemed to have been complied with. For the avoidance of doubt, (i) if, following the LCT Test Date, any of such ratios or other provisions are exceeded or breached as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA or other components of such ratio) or other provision at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be ~~amended~~ deemed to ~~eliminate~~ have been failed to have been satisfied or ~~modify all references to Holdings~~exceeded, respectively, as ~~applicable~~a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction and related transactions are permitted hereunder and (ii) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction, unless (x) on such date an Event of Default pursuant to Section 8.01(a) or, solely with respect to the Borrowers, Section 8.01(f) shall be continuing or (y) the Parent Borrower subsequently elects, in its sole discretion, to test such ratios and baskets on the date such Limited Condition Transaction and related transactions are consummated. If the Parent Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or other provision (other than testing actual compliance with the Financial Covenants) on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or other provision shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated until such time as the applicable Limited Condition Transaction has actually closed or the definitive agreement with respect thereto has been terminated or expired.

Appears in 1 contract

Samples: Credit Agreement (Quintiles IMS Holdings, Inc.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, but subject to Section 1.11 and clauses (h) and (i) below, financial ratios, calculations and tests (including measurements of baskets and other calculations calculated on the basis of Consolidated Total ~~Assets or~~ Assets, Consolidated Net Income, Consolidated EBITDA, Fixed Charges and any Fixed Amount or Incurrence-Based Amount), including the Consolidated EBITDA to ~~Consolidated Interest Expense~~ Fixed Charges Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated Total Debt to Consolidated EBITDA Ratio shall be calculated in the manner prescribed by this Section ~~1.11~~1.12; provided that, notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section ~~1.11~~1.12, when calculating the Consolidated First Lien Debt to Consolidated EBITDA Ratio for purposes of (i) the definition of “Applicable Margin” and the “Commitment Fee Rate”, (ii) calculating the covenant in Section 10.10 and (iii) Section ~~5.2(a)(i) and Section~~ 5.2(a)(ii), the events described in this Section ~~1.11~~ 1.12 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, that, for purposes of any determination under the proviso to Section 5.2(a)(ii), Consolidated First Lien Debt shall be determined after giving pro forma effect to (A) the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) ~~Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien~~ secured Permitted Additional Debt, secured Credit Agreement Refinancing Indebtedness and secured Term Loan Exchange Notes (~~or, in accordance with the corresponding provisions of the documentation governing~~ and any ~~Indebtedness representing~~ secured Permitted Refinancing Indebtedness in respect of any thereof) ~~and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness~~ voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate principal amount of ~~cash consideration paid by~~ Term Loans assigned to any Purchasing Borrower Party pursuant to Section 13.6(g), secured Permitted Additional Debt, secured Credit Agreement Refinancing Indebtedness and secured Term Loan Exchange Notes (and any secured Permitted Refinancing Indebtedness in respect of any thereof), in each such case assigned to any Purchasing Borrower Party (or any similar term as defined in ~~this~~ the documentation governing such secured Permitted Additional Debt, secured Credit Agreement Refinancing Indebtedness or ~~in the Second Lien Credit Agreement, as applicable~~secured Term Loan Exchange Notes) ~~to effect any assignment to it of (1) Term Loans~~ pursuant to ~~Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of~~ the ~~Second Lien~~ documentation governing such secured Permitted Additional Debt, secured Credit Agreement Refinancing Indebtedness or secured Term Loan Exchange Notes (or, in each case, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term ~~Loans~~ Loans, such Permitted Additional Debt, such secured Credit Agreement Refinancing Indebtedness or such ~~Second Lien~~ secured Term ~~Loans~~ Loan Exchange Notes, (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each ~~case~~case of this clause (C), (x) except to the extent financed by the Incurrence of long term Indebtedness (including, for the avoidance of doubt, any such Indebtedness Incurred under a revolving credit facility Incurred as Permitted Additional Debt or otherwise Incurred under Section 2.14) by, or the issuance of Capital Stock by, or the making of capital contributions to, any member of the Restricted Group or using the proceeds of any Disposition outside the ordinary course of business and (y) after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) assuming such ~~voluntary prepayments~~ payment had been made on the last day of such fiscal year. In addition, whenever a financial ratio, calculation or test is to be calculated on a pro forma basis or requires pro forma compliance, the reference to “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are ~~internally available~~available and may be determined with reference to the financial statements of a Parent Entity of the Borrower instead, so long as such Parent Entity does not hold any material assets other than, directly or indirectly, the Capital Stock of the Borrower (as determined in good faith by the Board of Directors or senior management of the Borrower (or any Parent Entity)). (b) For purposes of calculating any financial ratio, calculation ~~(including any minimum equity calculation)~~ or test that is to be calculated on a pro forma basis (including measurements of baskets and other calculations on the basis of Consolidated Total ~~Assets~~ Assets, Consolidated Net Income or Consolidated EBITDA, Fixed Charges or any Fixed Amount or Incurrence-Based Amount), the Transactions, Specified Transactions and/or Specified Restructurings (with any Incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section ~~1.11~~1.12) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ratio, calculation or test (including measurements of baskets and other calculations on the basis of Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11.-100- #95203802v2296160609v3 #96160609v5 (c) Whenever pro forma effect or a determination of pro forma compliance is to be given to a Specified Transaction or a Specified Restructuring, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower and may include, for the avoidance of doubt, the amount of ~~“run rate” cost savings, operating expense reductions and cost synergies and other synergies~~ Run Rate Benefits related to Run Rate Initiatives projected by the Borrower in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such ~~cost savings, operating expense reductions, cost synergies or other synergies~~ Run Rate Benefits have been ~~taken~~taken or initiated, have been committed to be ~~taken~~taken or initiated, with respect to which substantial steps have been taken or initiated or which are expected to be taken or initiated (in the good faith determination of the Borrower) (calculated on a pro forma basis as though such ~~cost savings, operating expense reductions, cost synergies and other synergies~~ Run Rate Benefits had been realized on the first day of such period and as if such ~~cost savings, operating expense reductions, cost synergies and other synergies~~ Run Rate Benefits were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action ~~taken~~taken or initiated, any action committed to be ~~taken~~taken or initiated, any action with respect to which substantial steps have been taken or initiated or any action that is expected to be taken or initiated (including any savings expected to result from the elimination of Public Company Costs, if any) net of the amount of actual benefits realized during such period from such actions, and any such ~~adjustments~~ Run Rate Benefits shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified Transaction, and any such ~~adjustments~~ Run Rate Benefits included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (A) such ~~amounts~~ Run Rate Benefits are reasonably identifiable in the good faith judgment of the Borrower, (B) such actions are ~~taken~~taken or initiated, such actions are committed to be ~~taken~~taken or initiated, substantial steps with respect to such action have been taken or initiated or such actions are expected to be taken or initiated no later than ~~eight~~ twelve fiscal quarters after the date of consummation of the Transactions, such Specified Transaction or the date of initiation of such Specified Restructuring ~~(or, with respect to the Transactions, twelve fiscal quarters)~~ and (C) no ~~amounts~~ Run Rate Benefits shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period. (d) In the event that the Borrower or any Restricted Subsidiary Incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any ~~Indebtedness~~Indebtedness (other than normal fluctuations in revolving Indebtedness Incurred for working capital purposes), in each case included in the calculations of any financial ratio or ~~test~~test that is to be calculated on a pro forma basis, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such Incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to ~~Consolidated Interest Expense~~ Fixed Charges Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period)~~; provided that, with~~ . With respect to Indebtedness Incurred under a revolving credit facility, reborrowings of amounts previously repaid pursuant to “cash sweep” provisions or any ~~Incurrence of~~ similar provisions under such revolving credit facility that provide that Indebtedness permitted by the provisions of this Agreement in reliance on the pro forma calculation of the Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense Ratio and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable, pro forma effect shall not be given to any Indebtedness being Incurred (or expected is deemed to be Incurred) substantially simultaneously or contemporaneously with the Incurrence of any such Indebtedness in reliance on any “basket” set forth in this Agreement, including the Incremental Base Amount, any “baskets” measured as a percentage of Consolidated Total Assets or Consolidated EBITDA, any Credit Event under the Revolving Credit Facility or, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(u), any Additional/Replacement Revolving Credit Facility.repaid -101- #95203802v2296160609v3 #96160609v5 (e) ~~Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower.~~ If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to ~~Consolidated Interest Expense~~ Fixed Charges Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to ~~Consolidated Interest Expense~~ Fixed Charges Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to ~~Consolidated Interest Expense~~ Fixed Charges Ratio is being made, except as set forth in Section ~~1.11(d~~1.12(d). (f) For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock or Preferred Stock as if such Disqualified Capital Stock or Preferred Stock were purchased on any date on which Consolidated Total Debt shall be required to be determined pursuant to this Agreement, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Capital Stock or Preferred Stock, such Fair Market Value shall be determined in good faith by the Board of Directors or senior management of such Person. (g) Any such pro forma calculation may include, without limitation, (1) all adjustments of the type described in ~~clause~~ clauses (~~a)(viii~~I) through (III) of the proviso to the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (gh) ~~In connection~~ For purposes of determining the permissibility of any action, change, transaction or event that requires a calculation of any Fixed Amount, Incurrence-Based Amount or, except as described in Section 1.12(a), any other financial ratio, test, covenant, calculation or measurement (including, without limitation, any Consolidated First Lien Debt to Consolidated EBITDA Ratio test, any Consolidated Secured Debt to Consolidated EBITDA Ratio test, any Consolidated Total Debt to Consolidated EBITDA Ratio test, any Consolidated EBITDA to Fixed Charges Ratio test, unrestricted cash and cash equivalents and the amount of Consolidated EBITDA, Consolidated Net Income, Fixed Charges and/or Consolidated Total Assets), such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement shall be calculated at the time such action is taken (subject to Section 1.11), such change is made, such transaction is consummated or such event occurs, as the case may be, and no Default or Event of Default shall be deemed to have occurred solely as a result of a change in such Fixed Amount, Incurrence-Based Amount or other financial ratio, test, covenant, calculation or measurement occurring after the time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be. (i) Notwithstanding anything to the contrary herein, unless the Borrower otherwise notifies the Administrative Agent, (i) with respect to any ~~incurrence~~ amounts Incurred or transactions entered into (or consummated) in -102- #95203802v2296160609v3 #96160609v5 (j) Notwithstanding anything to the contrary herein, except to the extent expressly required to be calculated otherwise in Section 2.14 or Section 10.1(o), for any Additional /Replacement Revolving Credit Facility, in the event an item of Indebtedness (or any portion thereof) is Incurred, any Lien is Incurred or other transaction is undertaken in reliance on an Incurrence-Based Amount, such Incurrence-Based Amount shall be calculated without regard to the Incurrence of any Indebtedness under any revolving facility, delayed draw facility or letter of credit facility immediately prior to, simultaneously or contemporaneously with, or in connection therewith. (k) Whenever pro forma effect is to be ~~consummated~~ given to a pro forma event, the pro forma calculations shall be made in ~~connection with any Permitted Change~~ good faith by an Authorized Officer of ~~Control~~the Borrower and, ~~subject~~ notwithstanding anything to the ~~Borrower’s corporate credit rating being~~ contrary herein, so long as an action was taken (or not taken) in B3 reliance upon a basket, ratio or ~~better from Xxxxx’x~~ test under this Agreement that was calculated or determined in good faith by an Authorized Officer of the Borrower based upon financial information available to such officer at such time and B- such action (or ~~better from S&P (in each case, with a stable outlook), respectively,~~ inaction) was permitted under this Agreement at the time of ~~the incurrence thereof~~ such calculation or ~~as of the LCT Test Date~~determination, ~~as applicable~~any subsequent restatement, ~~all leverage ratios related thereto shall be deemed~~ modification or adjustments made to such financial information (including any restatement, modification or adjustment that would have caused such basket, ratio or test to be ~~0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth~~ exceeded as a result of such action or inaction) shall not result in any Default or Event of Default under this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.

Appears in 1 contract

Samples: Incremental Agreement to Credit Agreement (Snap One Holdings Corp.)

Pro Forma and Other Calculations. (a) Notwithstanding anything to the contrary herein, financial ~~ratios, calculations~~ ratios and tests (including measurements of ~~baskets and other calculations calculated on the basis of~~ Consolidated Total ~~Assets~~ Assets, Consolidated EBITDA, Consolidated Cash EBITDA, Liquidity or Consolidated ~~EBITDA~~EBITDA and the Total Net Leverage Ratio, the Total Net Cash Leverage Ratio, or the Contract Asset Balance Coverage Ratio or the LTV Ratio), including the Consolidated EBITDA to Consolidated Interest Expense Ratio, Consolidated First Lien Debt to Consolidated EBITDA Ratio, Consolidated Secured Debt to Consolidated EBITDA Ratio and Consolidated Total Debt to Consolidated EBITDA Ratio shall be calculated in the manner prescribed by this Section 1.11; provided that, notwithstanding anything to the contrary in clauses (bab), (c~~), (d~~) or (ed) of this Section 1.11, (i) when calculating the ~~Consolidated First Lien Debt to Consolidated EBITDA~~ Total Net Leverage Ratio for purposes of, as applicable, (A) [reserved], (B) [reserved] and (C) Section 6.13 and (ii) when calculating the Total Net Cash Leverage Ratio for purposes of (i) ~~the definition of “Applicable Margin” and the “Commitment Fee Rate”~~[Reserved], (ii) ~~calculating the covenant in~~ Section ~~10.10~~ 2.11(d) and (iii) Section ~~5.2(a)(i) and Section 5.2(a)(ii)~~6.13, in each case, the events described in this Section 1.11 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect; provided, however, ~~that,~~ that (i) for purposes of ~~any determination under~~ calculating the ~~proviso to Section 5.2(a)(ii)~~ECF Percentage, Consolidated ~~First Lien~~ Total Net Debt shall be determined after giving pro forma effect to ~~(A)~~ the aggregate principal amount of (1) Term Loans voluntarily prepaid pursuant to Section 5.1, (2) Second Lien Term Loans voluntarily prepaid pursuant to Section 5.1 of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof) and (3) secured Permitted Additional Debt and secured Credit Agreement Refinancing Indebtedness voluntarily prepaid, repurchased, defeased, acquired or redeemed, (B) the aggregate amount of cash consideration paid by any Purchasing Borrower Party (as defined in this Agreement or in the Second Lien Credit Agreement, as applicable) to effect any assignment to it of (1) Term Loans pursuant to Section 13.6(g) or (2) Second Lien Term Loans pursuant to Section 13.6(g) of the Second Lien Credit Agreement (or, in accordance with the corresponding provisions of the documentation governing any Indebtedness representing secured Permitted Refinancing Indebtedness in respect thereof), but only to the extent that such Term Loans or such Second Lien Term Loans (or such Permitted Refinancing Indebtedness in respect thereof), as applicable, have been cancelled and (C) the aggregate amount of all permanent reductions of Revolving Credit Commitments, Extended Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments pursuant to Section 4.2 (for the avoidance of doubt, excluding any such commitment reductions required by the proviso to Section 2.14(b) or in connection with the Incurrence of any Credit Agreement Refinancing Indebtedness Incurred to Refinance any Revolving Credit Commitments, Additional/Replacement Revolving Credit Commitments and/or Extended Revolving Credit Commitments), in each case, after the end of the Borrower’s most recently ended full fiscal year and prior to the date of the applicable payment to be made pursuant to such Section 5.2(a)(ii) ECF Recalculation Considerations assuming such ~~voluntary~~ prepayments had been made on the last day of such fiscal ~~year. In addition~~year and (ii) in connection with the calculation of the Total Net Cash Leverage Ratio pursuant to Section 6.13, ~~whenever a financial ratio~~(A) Consolidated Total Net Debt for the Test Period ending on March 31, ~~calculation or test is to~~ 2024 shall be calculated ~~on a pro forma basis or requires pro forma compliance, the reference~~ to ~~“Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference~~ give effect to~~, and shall be based on, the most recently ended Test Period for which Internal Financial Statements are internally available.~~ (b) For purposes of calculating any financial ~~ratio, calculation (including any minimum equity calculation)~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total ~~Assets or~~ Assets, Consolidated Cash EBITDA xxxxx Consolidated Cash EBITDA), Specified Transactions (with any ~~Incurrence~~ incurrence or Refinancing of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.11) that have been made (i) during the applicable Test Period or (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a pro forma basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA, Consolidated Cash EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets or “unrestricted” cash and ~~cash equivalents, or any new cash equity contribution and/or rollover and/or valuation of existing equity in connection with such Specified Transaction~~Cash Equivalents, on the last day of the applicable Test Period). If, since the beginning of any applicable Test Period, any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.11, then such financial ~~ratio, calculation~~ ratio or test (including ~~measurements of baskets and other calculations on the basis of~~ Consolidated Total Assets and Consolidated EBITDA) shall be calculated to give pro forma effect thereto in accordance with this Section 1.11. (c) Whenever pro forma effect or a determination of pro forma compliance is to be given to a Specified Transaction or a Specified Restructuring, the pro forma calculations shall be made in good faith by ~~an Authorized~~ a Responsible Officer of Holdings and, to the ~~Borrower and~~ extent provided in the definition of Consolidated EBITDA may include, for the avoidance of doubt, the amount of “run rate” cost savings, operating expense reductions and cost synergies and other synergies projected by ~~the Borrower~~ Holdings in good faith to result from or relating to any Specified Transaction (including the Transactions) or Specified Restructuring that is being given pro forma effect or for which a determination of pro forma compliance is being made that have been realized or are expected to be realized and for which the actions necessary to realize such cost savings, operating expense reductions, or cost synergies or other synergies have been ~~taken~~taken or initiated, have been committed to be ~~taken~~taken or initiated, with respect to which substantial steps have been taken or initiated or which are expected to be taken or initiated (in the good faith determination of the Borrower) (calculated on a pro forma basis as though such cost savings, operating expense reductions, and cost synergies and other synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions, and cost synergies and other synergies were realized during the entirety of such period and “run rate” means the full recurring benefit for a period that is associated with any action taken, any action committed to be taken, any action with respect to which substantial steps have been taken or initiated or any action that is expected to be taken (including any savings expected to result from the elimination of Public Company Costs~~, if any~~) net of the amount of actual benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent Test Period in which the effects thereof are expected to be realized) relating to such Specified Transaction or Specified ~~Transaction~~Restructuring, and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent Test Periods in which the effects thereof are expected to be realizable; provided that (AiA) such amounts are 106 #97964454v4 #97964454v11 reasonably identifiable and factually supportable in the good faith judgment of ~~the Borrower~~Holdings, (BiiB) such actions are taken, such actions are committed to be taken, substantial steps with respect to such action have been taken or initiated or such actions are expected to be taken no later than ~~eight~~ (I) during the Suspension Period, four fiscal quarters and (II) after the Suspension Period has ended, six fiscal quarters, in each case, after the date of consummation of such Specified Transaction or the date of initiation of such Specified ~~Restructuring (or, with respect to the Transactions, twelve fiscal quarters)~~ Restructuring,and (CiiiC) no amounts shall be added to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA or Consolidated Cash EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such ~~period~~period and (ivD) the aggregate amount of any such pro forma increase added to Consolidated EBITDA pursuant to this clause (ivD), when combined, without duplication, with amounts added to Consolidated EBITDA pursuant to clauses (a)(xv), (a)(xviviii) and (b)(1) of the definition of “Consolidated EBITDA” and amounts excluded pursuant to clause (a) of the definition of “Consolidated Net Income” shall not exceed, for purpose of any calculation of Consolidated EBITDA under this Agreement, an amount equal to 20.015.0% of Consolidated EBITDA for such Test Period (calculated prior to giving effect to such add-backs). (d) In the event that Holdings, the Borrower or any Restricted Subsidiary ~~Incurs~~ incurs (including by assumption or guarantee) or Refinances (including by redemption, repurchase, repayment, retirement or extinguishment) any Indebtedness, in each case included in the calculations of any financial ratio or test, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such ~~Incurrence~~ incurrence or Refinancing of Indebtedness (including pro forma effect to the application of the net proceeds therefrom), in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period (except in the case of the Consolidated EBITDA to Consolidated Interest Expense Ratio (or similar ratio), in which case such Incurrence or Refinancing of Indebtedness will be given effect, as if the same had occurred on the first day of the applicable Test Period); provided that, with respect to any ~~Incurrence~~ Iincurrence of Indebtedness ~~permitted by the provisions of this Agreement~~ pursuant to Section 6.01(a) in reliance on the pro forma calculation of the ~~Consolidated First Lien Debt to Consolidated EBITDA Ratio, the Consolidated Secured Debt to Consolidated EBITDA Ratio, the Consolidated EBITDA to Consolidated Interest Expense~~ Total Net Cash Leverage Ratio ~~and/or the Consolidated Total Debt to Consolidated EBITDA Ratio, as applicable,~~ (a “Ratio Incurrence”) such calculation shall not give pro forma effect ~~shall not be given~~ to any Indebtedness being ~~Incurred~~ incurred (or expected to be ~~Incurred~~incurred) substantially simultaneously or contemporaneously with ~~the~~ such Ratio Incurrence ~~of any such Indebtedness~~ in reliance on any “basket” set forth in ~~this Agreement,~~ Section 6.01(a) (including clause (a) of the definition of “Incremental ~~Base Amount,~~ Cap” and any “baskets” measured as a percentage of Consolidated Total ~~Assets~~ Assets, Consolidated Cash EBITDA or Consolidated ~~EBITDA,~~ Cash EBITDA and including any ~~Credit Event under the Revolving Credit Facility or~~issuance of any Letter of Credit, except to the extent expressly required to be calculated otherwise in Section ~~2.14~~ 2.20, Section 6.01(a)(xxiii) or ~~Section 10.1(u),~~ any ~~Additional/~~Replacement Revolving ~~Credit~~ Facility). (e) Whenever pro forma effect is to be given to a pro forma event, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is made had been the applicable rate for the entire period (taking into account any interest Hedging Agreements applicable to such Indebtedness). To the extent interest expense generated by Hedging Obligations that have been terminated is included in Consolidated Interest Expense prior to the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, Consolidated Interest Expense shall be adjusted to exclude such expense. Interest on a Financing Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by an Authorized Officer of the Borrower to be the rate of interest implicit in such Financing Lease Obligation in accordance with GAAP. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or applicable Restricted Subsidiary may designate. For purposes of making the computations referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period or, if lower, the maximum commitments under such revolving credit facility as of the date of the event for which the calculation of the Consolidated EBITDA to Consolidated Interest Expense Ratio is being made, except as set forth in Section 1.11(d). (f) Any such pro forma ~~calculation may~~ shall include, without limitation, ~~(1)~~ all adjustments of the type described in clause (a)(viii) of the definition of “Consolidated EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such Test Period, and (2) adjustments calculated in accordance with Regulation S-X under the Securities Act. (g) In connection with any incurrence of Indebtedness to be consummated in connection with any Permitted Change of Control, subject to the Borrower’s corporate credit rating being in B3 or better from Xxxxx’x and B- or better from S&P (in each case, with a stable outlook), respectively, at the time of the incurrence thereof or as of the LCT Test Date, as applicable, all leverage ratios related thereto shall be deemed to be 0.50 to 1.00 times higher than the otherwise applicable incurrence test ratio set forth in this Agreement. (h) After an IPO, at the option of the Borrower (the exercising of such option to release Holdings from its obligations under the Credit Documents pursuant to this Section 1.11(h), a “Holdings Termination Event”), but only if, upon giving effect to such IPO and through a series of mergers, consolidations, dissolutions, amalgamations or otherwise, the Borrower would cease to have a direct or indirect Parent Entity that owns all of the Capital Stock of the Borrower, Holdings shall be released from its Guarantee and all of its property (including the Capital Stock of the Borrower) released as Collateral automatically, and Holdings shall be released from all obligations under this Agreement and the other Credit Documents, including with respect to all representations and warranties, covenants, and defaults related to or referencing Holdings. ~~Following any such release, this Agreement and the other Credit Documents shall be deemed to be amended to eliminate or modify all references to Holdings, as applicable.~~ARTICLE 2II THE CREDITS SECTION

Appears in 1 contract

Samples: Credit Agreement (GoHealth, Inc.)

Common use of Pro Forma and Other Calculations Clause in Contracts