Prior Lien Indebtedness Clause Samples

Prior Lien Indebtedness. (a) The Company will not acquire any property which at the time of acquisition thereof shall be or become subject to any Prior Lien, other than liens securing the unpaid purchase price of net equipment or machinery, (i) if at the date of acquisition of such property the principal amount of indebtedness secured by such Prior Lien or Prior Liens shall exceed 60% of the Cost to the Company of the property so acquired, and (ii) if such property, prior to the acquisition thereof by the Company, was operated by another in a business similar to that carried on or to be carried on by the Company, unless the net earnings of such property, for a period of twelve consecutive calendar months within the fifteen calendar months immediately preceding the date of acquisition, computed (except with respect to depreciation or obsolescence) as nearly as may be in the manner set forth in Section 1.04 for the computation of the net earnings of the Company, but after deduction of actual charges or provisions for depreciation or obsolescence, shall have been at least twice the actual interest charges upon the Prior Lien Indebtedness to be secured by such Prior Lien or Prior Liens Outstanding immediately after the acquisition of such property by the Company. (b) The Company will not permit any increase in the aggregate principal amount of the Outstanding indebtedness secured by any Prior Lien to the extent such increase would cause the sum of the principal amount of all Outstanding Prior Lien Indebtedness plus all Outstanding Bonds to exceed 60% of the sum of (i) Available Cash and (ii) the lesser of the Cost or Fair Value of the Company’s Additional Property as of the date of such increase. (c) In case the Company shall, as hereinabove permitted, acquire any Bondable Property subject to any Prior Lien, the interest of the Company in all such property shall at all times be subject to the Lien of this Indenture and, if and when the title to such property shall vest in the Company free and clear of such Prior Lien, then such property shall forthwith be and become subject to the Lien of this Indenture as a first mortgage thereon, subject only to Permitted Encumbrances as herein defined.