Common use of Financial testing Clause in Contracts

Financial testing. (a) The financial covenants set out in Clause 20.2 (Financial condition) shall be tested as of the last day of each Relevant Period (and for the first time for the Relevant Period ending on 31 March 2018) by reference to each of the financial statements of the Company delivered pursuant to paragraphs (a) and (d) of Clause 19.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 19.2 (Compliance Certificate). (b) For the avoidance of doubt, the financial covenants set out in Clause 20.2 (Financial condition) shall be tested based on the consolidated financial statements of the Company and include any Financial Subsidiary. (c) For the purposes of calculating Consolidated EBITDA and/or Consolidated Interest Expense for any Relevant Period: (i) if at any time during such Relevant Period the Company or any Financial Subsidiary shall have made any Material Disposal, the Consolidated EBITDA for such Relevant Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposal for such Relevant Period or increased by an amount equal to Consolidated EBITDA (if negative) attributable thereto for such Relevant Period; and (ii) if during such Relevant Period the Company or any Financial Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Relevant Period shall be calculated after giving effect thereto on a pro forma basis as if such Material Acquisition occurred on the first day of such Relevant Period; and (iii) Consolidated Interest Expense shall be determined for such period on a pro forma basis as if such acquisition or disposal, and any related incurrence or repayment of Indebtedness, had occurred at the beginning of such period. As used in this paragraph (c):

Financial testing. (a) The financial covenants set out in Clause 20.2 (Financial condition) shall be tested as of the last day of each Relevant Period (and for the first time for the Relevant Period ending on 31 March 201830 June 2022) by reference to each of the financial statements of the Company delivered pursuant to paragraphs (a) and (d) of Clause 19.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 19.2 (Compliance Certificate). (b) For the avoidance of doubt, the financial covenants set out in Clause 20.2 (Financial condition) shall be tested based on the consolidated financial statements of the Company and include any Financial Subsidiary. (c) For the purposes of calculating Consolidated EBITDA and/or Consolidated Interest Expense for any Relevant Period: (i) if at any time during such Relevant Period the Company or any Financial Subsidiary shall have made any Material Disposal, the Consolidated EBITDA for such Relevant Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposal for such Relevant Period or increased by an amount equal to Consolidated EBITDA (if negative) attributable thereto for such Relevant Period; and (ii) if during such Relevant Period the Company or any Financial Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Relevant Period shall be calculated after giving effect thereto on a pro forma basis as if such Material Acquisition occurred on the first day of such Relevant Period; and (iii) Consolidated Interest Expense shall be determined for such period on a pro forma basis as if such acquisition or disposal, and any related incurrence or repayment of Indebtedness, had occurred at the beginning of such period. As used in this paragraph (c):

Financial testing. (a) The financial covenants set out in Clause 20.2 (Financial condition) shall be tested as of the last day of each Relevant Period (and for the first time for the Relevant Period ending on 31 March 2018) by reference Subject to each of the financial statements of the Company delivered pursuant to paragraphs (a) and (d) of Clause 19.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 19.2 (Compliance Certificate). paragraph (b) For the avoidance of doubtbelow, the financial covenants set out in Clause 20.2 23.2 (Financial conditionconditions) shall be calculated in accordance with the Accounting Principles in respect of the Group Members as used in the preparation of the Base Case Model, as varied in accordance with paragraph (e) of this Clause 23.3 and tested based by reference to each set of Annual Financial Statements and/or each relevant Compliance Certificate delivered with those financial statements, provided that if the Company has not made the Election, any financial information for the HHH Group (to the extent included in such Annual Financial Statements) shall be excluded for the purposes of any calculations in connection with such financial testing. (b) The financial covenants contained in Clause 23 (Financial Covenants) and the definition of Adjusted EBITDA and Cashflow tested at any time for all purposes in this Agreement shall be calculated to give pro forma effect to (i) (to the extent the Company has not made the Election) the exclusion of the financial information of the HHH Group (to the extent included in any Annual Financial Statements or any other Relevant Financial Statements) and (ii) any acquisition of an Acquired Entity, any disposal of a Disposed Entity, joint venture, restructuring, reorganisation or cost saving initiative (any such matter or initiatives being Group Initiatives) for each applicable Relevant Period (including the portion thereof (or for the entire period) to the extent the Group Initiative occurs or has occurred in that Relevant Period) as set out below and by taking into account throughout (without double counting any synergies and cost savings actually achieved) reasonably identifiable and factually supportable synergies and cost savings the Company (acting reasonably and as certified in writing by a senior officer of the Group) believes to obtain in the 18 month period immediately following the completion of any such Group Initiative (to be included for the entire Relevant Period if realisable at any time within that Relevant Period but without double counting any which has been actually realised) (Relevant Synergy) and to give pro forma effect to any related incurrence, assumption or repayments of Financial Indebtedness of the Group Members and for the purposes of any calculation of: (i) Adjusted EBITDA and (other than for the purposes of calculating Excess Cashflow) Cashflow, the aggregate earnings before interest, tax, depreciation and amortisation (calculated on the consolidated financial statements same basis as EBITDA applying mutatis mutandis but on an unconsolidated basis (except to the extent that the entity or business acquired itself has Subsidiaries) and cashflow (calculated on the same basis as Cashflow but on an unconsolidated basis (except to the extent that the entity or business sold itself has Subsidiaries)) (Cashflow) of any Acquired Entity, business or material fixed assets from a person other than a Group Member (in the case of Adjusted EBITDA) that is acquired during a Relevant Period shall be included for the full Relevant Period and in the case of Cashflow, from the date on which it is contractually committed that the Cashflow of the Company relevant Acquired Entity, business or material fixed asset is acquired from a person other than a Group Member (as adjusted by any Relevant Synergy as set out above) and include shall exclude any Financial Subsidiarynon-recurring costs and other expenses related to such Group Initiative; and (ii) Adjusted EBITDA and (for the purposes of calculating Excess Cashflow) Cashflow, the aggregate earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA applying mutatis mutandis but on an unconsolidated basis (except to the extent that the entity or business disposed itself has Subsidiaries) and Cashflow of any Disposed Entity, business or material fixed asset that is sold to a person other than a Group Member (in the case of Adjusted EBITDA) during a Relevant Period shall be excluded, in the case of Adjusted EBITDA, for the full Relevant Period and in the case of Cashflow, from the date on which it is contractually committed that the Cashflow of the relevant Disposed Entity, business or material fixed asset is transferred to or held for the benefit of the buyer (including without limitation under any lock-box arrangements involving an economic transfer occurring prior to a legal transfer of the relevant entity, business or assets but except to the extent any Cashflow is retained by the Group) (in the case of Adjusted EBITDA, as adjusted by any Relevant Synergy as set out above) and shall exclude any non-recurring costs and other expenses related to such Group Initiative. (c) For To the purposes extent Leverage or any financial definition contained in this Clause 23 (Financial Covenants) is used as the basis (in whole or part) for permitting any transaction or making any determination under this Agreement (including on a pro-forma basis) at any time after a Test Date, Total Net Debt shall be reduced to take into account any repayment of calculating Consolidated EBITDA and/or Consolidated Interest Expense for Financial Indebtedness of any Relevant PeriodGroup Members made on or before the relevant date and shall be increased to take into account any incurrence or assumption of Financial Indebtedness of any Group Members made on or before the relevant date. (d) Where any pro forma synergies or cost savings are included in any calculations: (i) if at the aggregate amount of such pro forma synergies or cost savings taken into account in any time during applicable calculation are equal to or less than 15 per cent. of the consolidated EBITDA of the Group (before taking into account such pro forma synergies or cost savings), those pro forma synergies or cost savings shall be supported by calculations provided by a senior officer of the Company showing in reasonable detail how those synergies or cost savings were calculated; or (ii) if the aggregate amount of such pro forma synergies or cost savings taken into account in any applicable calculation are greater than 15 per cent. of the consolidated EBITDA of the Group (before taking into account such pro forma synergies or cost savings), those pro forma synergies or cost savings shall be supported by reporting or commentary by one of the “Big 4” accountancy firms or other independent reputable accountancy firm or industry specialist (or such other firm approved by the Majority Lenders) (which reporting or commentary may be provided in any accompanying accountants' or industry specialist's due diligence report). (e) For each Relevant Period ending before the first anniversary of the Closing Date: (i) Net Cash Interest Costs for that Relevant Period will be equal to Net Cash Interest Costs for the period from the Closing Date to the end of that Relevant Period multiplied by the fraction borne by 360 (as the numerator) to the number of days in the period from the Closing Date to the end of that Relevant Period (as the denominator); (ii) it will be assumed that any Borrowings incurred on or after Completion were outstanding on the first day of that Relevant Period; (iii) Net Cash Interest Costs for any period prior to the Closing Date and any Borrowings outstanding prior to Completion but repaid or refinanced on or after Completion shall be ignored; and (iv) for the purposes of calculation of EBITDA for that Relevant Period, the actual results of the Target Group for any part of that Relevant Period which elapsed before the Closing Date shall be included (even though Target Group Members were not Group Members during that period) and EBITDA shall be calculated as if the Closing Date had occurred at the commencement of that Relevant Period. (f) If, on any Test Date or in relation to any Relevant Period ending on a Test Date, the Company fails to comply with a requirement of Clause 23.2 (Financial conditions), but on a subsequent Test Date or any Financial Subsidiary shall have made any Material Disposalin relation to a Relevant Period ending on a subsequent Test Date, the Consolidated EBITDA for Company does comply with that requirement, any non-compliance with such requirement on such first-mentioned Test Date or in relation to such first-mentioned Relevant Period (and any resulting actual or potential Event of Default) shall be reduced by deemed to be waived and remedied for all purposes under the Finance Documents (and shall no longer constitute a Default) unless an amount equal Acceleration Event has occurred prior to such subsequent Test Date. (g) The headroom levels in respect of the financial undertakings in Clause 23.2 (Financial conditions) have been calculated using assumptions in relation to the Consolidated EBITDA (if positive) attributable capital structure and debt at Completion and reasonable assumptions in relation to the property interest rate environment. The headroom levels shall be preserved if adjustments to the Base Case Model are agreed prior to Completion and each Finance Party will agree to any amendment to a Finance Document necessary to reflect that is preservation. (h) If any operating lease is, from time to time, required to be treated as a Finance Lease, it shall be treated for the subject purposes of this Clause 23 in accordance with the Accounting Principles in respect of the Group Members as at the Signing Date. (i) For the purpose of this Clause 23, no item shall be included or excluded or otherwise taken into account more than once in any calculation. (j) Notwithstanding any other provision of this Agreement, for the purpose of calculating and testing the financial covenants set out in Clause 23.2 (Financial conditions), the Company may, at its sole discretion, by giving notice (the Election Notice) to the Agent no less than five Business Days prior to a Test Date, elect (the Election) that with effect from the next Test Date falling immediately after the date of the Election Notice (the Reset Test Date), all financial covenants contained in Clause 23 (Financial Covenants) shall be calculated and tested by reference to each set of Annual Financial Statements (which shall include financial information for the HHH Group) and/or each relevant Compliance Certificate delivered with those financial statements, and all financial definitions included in Clause 23.1 (Financial definitions) (including but not limited to the definitions of Adjusted EBITDA and Cashflow) shall for all purposes in this Agreement be calculated to include the financial information of the HHH Group such Material Disposal for that all references to Group and Group Member in Clause 23 (Financial Covenants) shall include the HHH Group and HHH Group Member respectively, mutatis mutandis. (k) To the extent the Company has made an Election, with effect from the Reset Test Date, the following Clauses and definitions shall also apply to the HHH Group mutatis mutandis such Relevant Period that any reference to Group, Group Member, Offshore Group Member, Onshore Group Member in these Clauses and definitions shall be construed mutatis mutandis to include the HHH Group and HHH Group Member respectively: (i) Clause 24.6 (Change of business), Clause 24.7 (Acquisitions), Clause 24.8 (Joint ventures), Clause 24.13 (Negative pledge), Clause 24.14 (Disposals), Clause 24.17 (No guarantees or increased by an amount equal to Consolidated EBITDA indemnities), Clause 24.18 (if negativeDividends, share redemption and other restricted payments), Clause 24.19 (Financial Indebtedness) attributable thereto for such Relevant Periodand Clause 24.20 (Share capital); and (ii) if during such Relevant Period definitions of Permitted Acquisition, Permitted Additional Debt, Permitted Disposal, Permitted Financial Indebtedness, Permitted Guarantee, Permitted Loan, Permitted Joint Venture Investment, Permitted Onshore Indebtedness, Permitted Payment, Permitted Receivables Financing, Permitted Reorganisation, Permitted Sale and Leaseback, Permitted Security, Permitted Share Issue and Permitted Transaction and all other definitions referred therein. (l) To the extent the Company or any Financial Subsidiary has made an Election, with effect from the Reset Test Date, Clause 24.28 (General Restrictions) and the definition of General Basket shall have made a Material Acquisition, Consolidated EBITDA cease to apply for such Relevant Period shall be calculated after giving effect thereto on a pro forma basis as if such Material Acquisition occurred on the first day of such Relevant Period; and (iii) Consolidated Interest Expense shall be determined for such period on a pro forma basis as if such acquisition or disposal, and any related incurrence or repayment of Indebtedness, had occurred at the beginning of such period. As used all purposes in this paragraph (c):Agreement.