restrictive covenant

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Related to Negative covenant: Negative pledge, Affirmative Covenants

restrictive covenant (ristrik´tiv kuv´ənənt),

n common clause found in a contract for the sale of a dental practice. The seller contracts that he or she will not practice dentistry within a certain time and area. A junior partner may be asked to sign such a covenant to guarantee that he or she will not compete with the partnership for a period after leaving the partnership. Also used in an employment situation.
References in periodicals archive ?
Our challenge is to determine the best way to exploit these opportunities as quickly as possible to add value for our shareholders recognizing the constraints of our cash flow, availability under our revolver and negative covenants of our credit agreement.
0 million, reduce the applicable margin under the first level of the pricing grid and modify certain negative covenants contained in the agreement.
The Amended Facility contains affirmative and negative covenants customary for a facility of this nature.
The new five-year Amended Revolving Credit Facility amends and restates the previous revolving credit facility dated June 26, 2009 to, among other things: (i) extend the maturity date from June 25, 2013 through January 4, 2017; (ii) reduce the borrowing rate and commitment fees; and, (iii) amend certain affirmative and negative covenants.
The credit facility contains customary affirmative and negative covenants, including limitations on debt, liens and restricted payments, as well as certain portfolio limitations and customary prepayment provisions, including a requirement to prepay loans or take certain other actions if certain asset value tests are not met.
However, the new agreement contains restrictions which have been enhanced from our previous agreement and includes increased limits on capital expenditures, operating leases, investments and other activities in negative covenants some of which are based on levels of undrawn availability.
The line of credit is secured by a first priority security interest in all of Somaxon's assets, excluding intellectual property, and contains affirmative and negative covenants, including financial covenants requiring Somaxon to maintain certain levels of cash and investments and a minimum liquidity ratio.