Common use of Incurrence Test Clause in Contracts

Incurrence Test. (a) The Incurrence Test is met if: (i) the Asset Cover Ratio is not less than 150 per cent.; (ii) the Interest Coverage Ratio exceeds 1.25; and (iii) no Event of Default is continuing or would occur upon the incurrence. (b) The calculation of the ratio of Asset Cover Ratio shall be made as per a testing date determined by the Issuer, falling no more than one month prior to the incurrence of the new Financial Indebtedness. The Adjusted Financial Indebtedness shall be measured on the relevant testing date so determined, but include the new Financial Indebtedness provided it is an interest bearing obligation (however, any cash balance resulting from the incurrence of the new Financial Indebtedness shall not reduce the Adjusted Financial Indebtedness). (c) When the Interest Coverage Ratio is measured under the Incurrence Test, as applicable, the calculation of the Interest Coverage Ratio shall be made for the Reference Period ending on the last day of the period covered by the most recent financial statements.