Measurements and Disclosures, the amortization of intangibles arising pursuant to FASB ASC 805, Business Combinations, non-cash interest expense resulting from the application of Accounting Standards Codification Topic 470-20 Debt—Debt with Conversion Options—Recognition, and any non-cash income tax expense that results from the inability to include deferred tax liabilities related to indefinite lived intangible assets as future reversals of temporary differences under FASB ASC 740-10-30-18, non-cash charges arising from the springing maturity feature of any Debt, and restructuring and related charges and acquisition and related integration charges.
“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of HRG who:
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(1) | was a member of such Board of Directors on the Issue Date or |
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(2) | was nominated for election or elected to such Board of Directors with the approval of the Permitted Holders or a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. |
“Contribution Debt” means Debt or Disqualified Equity Interests of HRG or any Guarantor with a Stated Maturity after the Stated Maturity of the notes in an aggregate principal amount or liquidation preference not greater than (i) half (in the case of Debt referred to in clause (1) below) and (ii) twice (in the case of unsecured Debt or Disqualified Equity Interests), the aggregate gross amount of cash proceeds received from the issuance and sale of Qualified Equity Interests of HRG or a capital contribution to the common equity of HRG; provided that:
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(1) | Contribution Debt may be secured by Liens on the Collateral (provided that no such Contribution Debt may be so secured unless, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application of the proceeds therefrom, (x) the aggregate principal amount of Debt outstanding and incurred under this clause (1), together with other Pari-Passu Obligations (including the notes) does not exceed $850.0 million and (y) HRG would be in compliance with the covenants set forth under “—Certain Covenants—Maintenance of Liquidity,” and “—Maintenance of Collateral Coverage” (calculated as if the Incurrence date was a date on which such covenant is required to be tested under “—Maintenance of Collateral Coverage”)); |
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(2) | such cash has not been used to make a Restricted Payment and shall thereafter be excluded from any calculation under paragraph (a)(3)(B) under “Limitation on Restricted Payments” (it being understood that if any such Debt or Disqualified Stock Incurred as Contribution Debt is redesignated as Incurred under any provision other than paragraph (b)(13) of the “Limitation on Debt” covenant, the related issuance of Equity Interests may be included in any calculation under paragraph (a)(3)(B) in the “Limitation on Restricted Payments” covenant); and |
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(3) | such Contribution Debt (a) is Incurred within 180 days after the making of such cash contributions and (b) is so designated as Contribution Debt pursuant to an officers’ certificate on the Incurrence date thereof. |
Any cash received from the issuance and sale of Qualified Equity Interests of HRG or a capital contribution to the common equity of HRG may only be applied to incur secured Debt pursuant to clause (i) of the first paragraph above or unsecured Debt or Disqualified Equity Interests pursuant to clause (ii) of such paragraph. For example, if HRG issues Qualified Equity Interests and receives $100.0 of cash proceeds, HRG may either incur $50.0 of secured Debt (subject to the conditions set forth in such clause (i)) or $200.0 of unsecured Debt or Disqualified Equity Interests, but may not incur $50.0 of secured Debt and $150.0 of unsecured Debt.
“Debt” means, with respect to any Person, without duplication,
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(1) | all indebtedness of such Person for borrowed money; |
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(2) | all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; |
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(3) | all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments, excluding obligations in respect of trade letters of credit or bankers’ acceptances issued in respect of trade payables; |
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(4) | all obligations of such Person to pay the deferred and unpaid purchase price of property or services which would have been recorded as liabilities under GAAP, excluding trade payables arising in the ordinary course of business; |
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(5) | all obligations of such Person as lessee under Capital Leases (other than the interest component thereof); |
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(6) | all Debt of other Persons Guaranteed by such Person to the extent so Guaranteed; |
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(7) | to the extent not otherwise included, all Debt of other Persons secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, provided that the amount of such Debt shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Debt; |
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(8) | all obligations of such Person under Hedging Agreements; and |
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(9) | all Disqualified Equity Interests of such Person; |
provided, however, that notwithstanding the foregoing, Debt shall be deemed not to include (1) deferred or prepaid revenues, (2) any liability for federal, state, local or other taxes owed or owing to any governmental entity or (3) contingent obligations incurred in the ordinary course of business and not in respect of borrowed money.
