# Covenant Compliance Certificate: [Borrower name] as at [Test date]

> Periodic compliance certificate that a borrower delivers to the agent
> (or directly to the lenders) under a loan or facility agreement that
> contains financial covenants: facility and test date details, the
> clause references for each financial definition, leverage, interest
> cover, debt service cover, minimum liquidity and capital expenditure
> calculations, the bridge from reported EBITDA to covenant EBITDA,
> headroom and trend, guarantor coverage, margin ratchet, confirmations
> and signatures. Written as original practice guidance for syndicated
> and bilateral facilities documented in the style of the Loan Market
> Association (LMA) or Loan Syndications and Trading Association (LSTA)
> forms, which are cited by name only; the facility agreement you signed
> always prevails over this template. Replace every `[bracketed]` value
> and every row marked *Example*. This is a document format, not
> financial, legal, tax or accounting advice.

<!--
Guidance: How to use this template
- A compliance certificate is a contractual deliverable. The facility
  agreement defines what it must contain, who must sign it, when it is
  due and which definitions apply. Read the "information undertakings"
  and "financial covenants" clauses of your own agreement first and map
  each requirement to a section below. Delete sections your agreement
  does not require; never add statements it does not ask for.
- Use the agreement's definitions, not management or IFRS definitions.
  Covenant EBITDA, Total Net Debt and Finance Charges are almost always
  different from the figures in the management accounts. Section 8
  bridges the two so the agent can follow every adjustment.
- Fill sections 2 and 3 once per facility and roll them forward. Then
  compute sections 4 to 7 from the signed-off period-end numbers, prepare
  section 8 and the supporting schedules, and only then sign section 14.
- The worked example uses the fictional Corvid Commerce Group (SaaS
  retailer, IFRS reporter, functional currency EUR, financial year =
  calendar year, parent Corvid Commerce Group plc with subsidiaries in
  Germany, the UK, the US and Vietnam) and its fictional EUR 50,000k
  club facilities (EUR 30,000k bullet term facility and EUR 20,000k
  revolving facility, originated 2025-06-30 for three years, maturing
  2028-06-30), with Fernhollow Bank as agent holding 60%. Amounts are EUR
  thousand unless stated. The FY2026 latest estimate in Annual Budget
  (`finance/annual-budget`) is the starting point.
- Related documents: Treasury Policy (`finance/treasury-policy`),
  Liquidity and Funding Plan (`finance/liquidity-funding-plan`),
  13-Week Cash Flow Forecast (`finance/13-week-cash-flow-forecast`),
  Monthly Management Report (`finance/monthly-management-report`),
  Capital Structure and Dividend Policy
  (`finance/capital-structure-dividend-policy`), Delegation of Authority
  Matrix (`finance/delegation-of-authority-matrix`) and Board Pack
  (`business/board-pack`). The lender's own monitoring of the same
  covenants is in Annual Credit Review (`finance/annual-credit-review`).
-->

## Document control

<!-- Guidance: One certificate per test date and facility. Keep the signed PDF delivered to the agent as the record; this Markdown file is the working copy and the audit trail behind it. Pitfall: editing a delivered certificate in place. If a figure changes after delivery, issue a corrected certificate with a new version and tell the agent in writing. -->

| Field | Value |
|---|---|
| Document ID | [CCC-YYYY-QN] *Example:* CCC-2026-Q4 |
| Facility agreement | [Name, amount and date] *Example:* EUR 50,000,000 senior facilities agreement dated 2025-06-30 |
| Borrower / Obligors' agent | [Legal entity] *Example:* Corvid Commerce Group plc (parent and obligors' agent) |
| Agent | [Agent bank] *Example:* Fernhollow Bank, agency desk |
| Test date | YYYY-MM-DD *Example:* 2026-12-31 |
| Relevant period | [12 months / quarter] ending on the test date *Example:* 2026-01-01 to 2026-12-31 |
| Accounts delivered with it | [Annual audited / quarterly unaudited consolidated accounts] |
| Delivery deadline | [Days after period end, clause ref] *Example:* 120 days after year end, clause [21.2] |
| Version | [1.0] |
| Status | [Draft / In review / Signed / Delivered / Superseded] |
| Owner | [@group-treasurer] |
| Prepared by | [@treasury-analyst] |
| Approvers/reviewers | [@cfo], [@financial-controller], [@general-counsel], [@ceo] (second signatory) |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential: lender information, subject to the confidentiality clause] |
| Currency and units | [EUR thousand], rates as defined in the agreement |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Group Treasurer (preparer) | [@name] | [Prepared] | YYYY-MM-DD |
| Financial Controller (numbers agree to accounts) | [@name] | [Reviewed] | YYYY-MM-DD |
| General Counsel (confirmations and default review) | [@name] | [Reviewed] | YYYY-MM-DD |
| Chief Financial Officer (authorised signatory 1) | [@name] | [Signed] | YYYY-MM-DD |
| Chief Executive Officer or director (authorised signatory 2) | [@name] | [Signed] | YYYY-MM-DD |
| Auditor report (annual test, if required) | [Audit firm] | [Report issued] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@treasury-analyst] | First draft from period-end trial balance |
| 0.2 | YYYY-MM-DD | [@financial-controller] | Agreed to audited accounts, adjustments reviewed |
| 1.0 | YYYY-MM-DD | [@cfo] | Signed and delivered to the agent |

## Contents

1. [Certificate summary](#1-certificate-summary)
2. [Facility and test date details](#2-facility-and-test-date-details)
3. [Financial definitions reference](#3-financial-definitions-reference)
4. [Leverage](#4-leverage)
5. [Interest cover](#5-interest-cover)
6. [Debt service cover](#6-debt-service-cover)
7. [Other financial covenants](#7-other-financial-covenants)
8. [EBITDA adjustments reconciliation](#8-ebitda-adjustments-reconciliation)
9. [Headroom analysis and trend](#9-headroom-analysis-and-trend)
10. [Guarantor coverage test](#10-guarantor-coverage-test)
11. [Margin ratchet](#11-margin-ratchet)
12. [Confirmations](#12-confirmations)
13. [Preparation and review workflow](#13-preparation-and-review-workflow)
14. [Signatories and auditor report](#14-signatories-and-auditor-report)
15. [Breach, cure and waiver procedure](#15-breach-cure-and-waiver-procedure)
16. [Glossary and references](#16-glossary-and-references)

## 1. Certificate summary

<!-- Guidance: This is the page the agent reads first. State each covenant, the required level, the actual level and the result in one table, then add a short paragraph on anything unusual. Pitfall: burying an adjustment the lenders might challenge. Put it in the summary, with a cross-reference to section 8. -->

To: [Agent name], as agent under the facility agreement referred to in section 2.

From: [Borrower name], for itself and on behalf of each obligor.

Date: YYYY-MM-DD

We refer to the facility agreement. This is a compliance certificate delivered under clause [clause number]. Terms defined in the facility agreement have the same meaning here unless this certificate states otherwise. We set out below the financial covenant calculations for the relevant period ending on the test date, together with the confirmations the agreement requires.

| ID | Covenant (clause) | Requirement | Actual | Result | Headroom |
|---|---|---|---|---|---|
| COV-001 *(Example)* | Leverage, clause [22.2(a)] | Not more than 3.00x | 0.62x | Met | EBITDA could fall 79.4% |
| COV-002 *(Example)* | Interest cover, clause [22.2(b)] | Not less than 4.00x | 13.69x | Met | EBITDA could fall 70.8% |
| COV-003 *(Example)* | Debt service cover, clause [22.2(c)] | Not less than 1.20x | 1.71x | Met | Cashflow could fall 30.0% |
| COV-004 *(Example)* | Minimum liquidity, clause [22.2(d)] | At least EUR 15,000k | EUR 47,000k | Met | EUR 32,000k |
| COV-005 *(Example)* | Capital expenditure, clause [22.2(e)] | Not more than EUR 14,000k | EUR 8,200k | Met | EUR 5,800k |
| COV-006 *(Example)* | Guarantor coverage, clause [23.30] | At least 80% of EBITDA and gross assets | 91.6% and 92.9% | Met | 11.6 pt and 12.9 pt |

*Example:* Corvid Commerce Group met every financial covenant for the twelve months to 2026-12-31. Covenant EBITDA of EUR 17,800k includes two add-backs permitted by the agreement (restructuring cost of EUR 900k for the Vietnam warehouse consolidation, within the 10% cap, and a non-cash share-based payment charge of EUR 500k) and excludes a EUR 400k gain on disposal of fixed assets. The leverage ratio places the margin in the lowest grid level from the next interest period (section 11). No default is continuing (section 12). Both facilities mature on 2028-06-30; the group has approved a refinancing to be signed by 2027-06-30, and the certificate for the test date 2027-06-30 will report its status.

## 2. Facility and test date details

<!-- Guidance: Record the contract facts that do not change from one test date to the next, plus the period-specific dates. Questions to answer: Which agreement, as amended by which letters? Which test dates apply and on what basis (rolling 12 months, year to date, annualised)? Which accounts must accompany the certificate? Pitfall: forgetting an amendment or waiver letter that changed a definition or a level. -->

### 2.1 Facility summary

| Item | Detail |
|---|---|
| Agreement and amendments | [Agreement date; amendment and waiver letters with dates] *Example:* agreement dated 2025-06-30, amendment letter 2026-03-15 (added the Vietnam entity as a permitted non-guarantor) |
| Facilities | [Type, amount, maturity] *Example:* club facilities of EUR 50,000k originated 2025-06-30 with a three-year tenor: Term Facility EUR 30,000k, bullet repayment 2028-06-30; Revolving Facility EUR 20,000k, final maturity 2028-06-30. Lenders: Fernhollow Bank (agent, 60%) and a second club bank (40%) |
| Drawn at test date | *Example:* Term Facility EUR 30,000k; Revolving Facility nil |
| Governing law | [Law] *Example:* English law |
| Accounting principles for covenants | [IFRS as at signing (frozen) / IFRS as amended from time to time] *Example:* IFRS as applied in the 2024 audited accounts, with a clause allowing a switch to current IFRS on lender consent |
| Test frequency | [Quarterly / semi-annual / annual] *Example:* quarterly, each 31 March, 30 June, 30 September and 31 December |
| Test basis | [Rolling 12 months / year to date / annualised] *Example:* rolling 12 months ending on the test date |
| Certificate timing | *Example:* with quarterly accounts within 60 days of quarter end; with annual audited accounts within 120 days of year end |
| Signatories required | *Example:* two directors of the parent, one of whom is the CFO |
| Auditor involvement | *Example:* annual certificate reported on by the auditors on an agreed-upon procedures basis |

### 2.2 Period and accounts used

| Item | Detail |
|---|---|
| Relevant period | *Example:* 2026-01-01 to 2026-12-31 |
| Accounts | *Example:* audited consolidated financial statements for FY2026, approved by the board on 2027-03-10 |
| Exchange rates | *Example:* average rates for income statement items and closing rates for balance sheet items, as the agreement requires |
| Acquisitions and disposals in the period | *Example:* none |
| Changes in accounting policy | *Example:* none; IFRS 18 applies from 2027-01-01 and will be addressed before the first 2027 test |

The certificate is prepared on the accounting basis that the agreement fixes. Where the agreement freezes accounting principles at signing, compute every figure on that basis and keep a reconciliation from the current accounts. IFRS 18 Presentation and Disclosure in Financial Statements applies to annual periods beginning on or after 2027-01-01; it changes subtotals and introduces management-defined performance measures. Agree with the agent before the first affected test date whether the covenant definitions need an amendment or whether the frozen-basis clause covers the change.

## 3. Financial definitions reference

<!-- Guidance: List every defined term used in the calculations with the clause number of YOUR agreement and a one-line summary in your own words of how it is applied. Do not paste the clause. Pitfall: using a definition from a template agreement or a previous facility. Lenders test against the signed document only. -->

| Term | Clause | How it is applied in this certificate |
|---|---|---|
| Consolidated EBITDA *(Example)* | [1.1] | Operating profit of the group before depreciation, amortisation and impairment, adjusted for the items in section 8 |
| Exceptional Items | [1.1] | One-off items that the agreement allows to be added back, subject to the cap in clause [22.3(b)] |
| Total Net Debt | [22.1] | Borrowings including lease liabilities, less cash and cash equivalent investments that are freely available |
| Finance Charges | [22.1] | Interest, commitment fees and the interest element of lease payments, less interest received |
| Cashflow | [22.1] | Covenant EBITDA less cash exceptional costs, increase in working capital, tax paid and capital expenditure |
| Debt Service | [22.1] | Finance Charges plus scheduled repayments of borrowings and lease principal |
| Liquidity | [22.1] | Freely available cash plus undrawn commitments under the Revolving Facility |
| Material Subsidiary | [1.1] | Any subsidiary with 5% or more of Consolidated EBITDA or gross assets |
| Guarantor | [1.1] | An obligor that has acceded as guarantor |
| Relevant Period | [22.1] | The 12 months ending on each test date |

Write each summary so that a lender's analyst can rebuild the figure from the schedules without reading the agreement. If a definition requires judgement (for example, whether a cost is exceptional), say so here and explain the judgement in section 8.

## 4. Leverage

<!-- Guidance: Show the formula, every component of Total Net Debt and the ratio to two decimals or the precision the agreement uses. Questions to answer: Which cash is excluded as restricted or trapped? Are lease liabilities in or out? Are guarantees or deferred consideration debt? Pitfall: netting cash that is pledged, held in escrow or not freely transferable. -->

$$
\text{Leverage} = \frac{\text{Total Net Debt at the test date}}{\text{Consolidated EBITDA for the Relevant Period}}
$$

| Component (EUR thousand) | Source | Amount |
|---|---|---|
| Term Facility outstanding *(Example)* | Loan statement | 30,000 |
| Revolving Facility outstanding | Loan statement | 0 |
| Lease liabilities (current and non-current) | Note [x] to the accounts | 8,000 |
| Other borrowings, guarantees, deferred consideration | Debt register | 0 |
| **Gross debt** | | **38,000** |
| Cash and cash equivalents per accounts | Balance sheet | (28,000) |
| Less cash not freely available (customer deposit account, Vietnam) | Bank confirmation | 1,000 |
| **Cash netted** | | **(27,000)** |
| **Total Net Debt** | | **11,000** |
| Consolidated EBITDA (section 8) | | 17,800 |

$$
\text{Leverage} = \frac{11{,}000}{17{,}800} = 0.62\text{x} \quad (\text{maximum } 3.00\text{x})
$$

*Example:* The management accounts show net debt excluding leases of EUR 2,000k (term loan EUR 30,000k less cash EUR 28,000k). The covenant figure is higher because the agreement includes lease liabilities of EUR 8,000k and excludes EUR 1,000k of cash held in a customer deposit account in Vietnam that cannot be swept to the group: 2,000 + 8,000 + 1,000 = 11,000. Check: 30,000 + 8,000 - 27,000 = 11,000; 11,000 / 17,800 = 0.618, shown as 0.62x.

Explain any currency translation of debt. If debt is in a currency other than the reporting currency, state the rate the agreement requires (often the closing rate, sometimes the rate at the date of drawing) and the source of the rate.

## 5. Interest cover

<!-- Guidance: Build Finance Charges from the interest schedules, not from the net finance cost line, which often includes items the agreement excludes (fair value movements on derivatives, unwinding of discounts, foreign exchange). Pitfall: including capitalised interest or interest income that the agreement says to ignore. -->

$$
\text{Interest cover} = \frac{\text{Consolidated EBITDA}}{\text{Finance Charges}}
$$

| Component (EUR thousand) | Source | Amount |
|---|---|---|
| Interest on Term Facility (4.00% all-in on EUR 30,000k) *(Example)* | Interest schedule | 1,200 |
| Commitment fee on undrawn Revolving Facility (0.35% on EUR 20,000k) | Fee schedule | 70 |
| Interest element of lease payments | Lease schedule | 310 |
| Interest received on deposits | Bank statements | (280) |
| Fair value movement on derivatives (excluded by clause [22.1]) | Hedge schedule | 0 |
| **Finance Charges** | | **1,300** |
| Consolidated EBITDA (section 8) | | 17,800 |

$$
\text{Interest cover} = \frac{17{,}800}{1{,}300} = 13.69\text{x} \quad (\text{minimum } 4.00\text{x})
$$

Check: 1,200 + 70 + 310 - 280 = 1,300, which agrees to the net finance cost of EUR 1,300k in the FY2026 latest estimate. When the two numbers differ, reconcile them in a footnote so the agent sees why.

## 6. Debt service cover

<!-- Guidance: Debt service cover compares cash generated with cash owed to lenders and lessors in the period. Questions to answer: Is capital expenditure deducted in full or only maintenance capex? Are exceptional costs deducted in cash even if added back to EBITDA? Pitfall: adding back a cash exceptional cost to EBITDA and forgetting to deduct it again in Cashflow. -->

$$
\text{DSCR} = \frac{\text{Cashflow}}{\text{Debt Service}}
$$

| Component (EUR thousand) | Source | Amount |
|---|---|---|
| Consolidated EBITDA (section 8) *(Example)* | | 17,800 |
| Cash exceptional items (restructuring paid) | Cash flow statement | (900) |
| Increase in working capital | Cash flow statement | (1,500) |
| Tax paid | Cash flow statement | (2,400) |
| Capital expenditure paid | Cash flow statement | (8,200) |
| **Cashflow** | | **4,800** |
| Finance Charges (section 5) | | 1,300 |
| Scheduled repayment of borrowings | Repayment schedule | 0 |
| Lease principal paid | Lease schedule | 1,500 |
| **Debt Service** | | **2,800** |

$$
\text{DSCR} = \frac{4{,}800}{2{,}800} = 1.71\text{x} \quad (\text{minimum } 1.20\text{x})
$$

Check: 17,800 - 900 - 1,500 - 2,400 - 8,200 = 4,800; 1,300 + 0 + 1,500 = 2,800. The term loan is a bullet repayment on 2028-06-30, so no scheduled principal falls in the period. In the 12 months before maturity this ratio would collapse if the final bullet counted as Debt Service; most agreements exclude it, but read your definition. The more immediate effect is on the accounts and on liquidity: at 2027-12-31 both facilities will have less than 12 months to run, so the term loan becomes a current liability and the undrawn revolving facility stops counting as headroom under the Treasury Policy (`finance/treasury-policy`). The refinancing is therefore targeted for signature by 2027-06-30 in the Liquidity and Funding Plan (`finance/liquidity-funding-plan`).

## 7. Other financial covenants

<!-- Guidance: Include every other financial test in the agreement: minimum liquidity, capex limits, loan to value, minimum net worth, maximum dividend. Show the requirement, the actual and the source. Pitfall: treating a "permitted payments" basket (for example a dividend basket) as outside the certificate when the agreement asks for a confirmation of it. -->

### 7.1 Minimum liquidity

| Component (EUR thousand) | Amount |
|---|---|
| Freely available cash (section 4) *(Example)* | 27,000 |
| Undrawn Revolving Facility available for drawing | 20,000 |
| **Liquidity** | **47,000** |
| Minimum required | 15,000 |
| **Headroom** | **32,000** |

Check: 27,000 + 20,000 = 47,000; 47,000 - 15,000 = 32,000. The EUR 15,000k is the contractual covenant floor. The group's own minimum is higher: the Treasury Policy sets a minimum liquidity headroom of EUR 35,000k, measured as unrestricted cash plus undrawn committed facilities with more than 12 months to maturity, and on that definition the position at 2026-12-31 is also EUR 47,000k. Report the covenant figure here and the policy figure in the treasury report, and label both, so that readers do not see two different "minimums" without explanation.

### 7.2 Capital expenditure

| Component (EUR thousand) | Amount |
|---|---|
| Permitted capital expenditure for the financial year *(Example)* | 14,000 |
| Carry-forward from prior year (up to 50% of unused amount, clause [22.2(e)]) | 0 |
| Capital expenditure incurred | 8,200 |
| **Unused amount** | **5,800** |
| Carry-forward available to FY2027 (50%) | 2,900 |

Check: 14,000 + 0 - 8,200 = 5,800; 50% x 5,800 = 2,900. Capital expenditure is the amount paid in the year per the audited cash flow statement (EUR 8,200k), not the latest estimate of EUR 9,500k shown in the FY2027 budget pack, which was a forecast made before year end. Use the agreement's measure (paid or incurred) consistently from year to year. The FY2027 budget plans capex of EUR 12,000k, within the FY2027 limit of 14,000 + 2,900 = EUR 16,900k if the limit is unchanged.

### 7.3 Loan to value and other tests

| Test | Requirement | Actual | Result |
|---|---|---|---|
| Loan to value (asset-backed facilities only) *(Example)* | Not applicable to this facility | n/a | n/a |
| Dividend basket, clause [23.12] | Dividends permitted while leverage is below 2.00x and no default is continuing | Leverage 0.62x | Permitted |
| [Other test] | [Requirement] | [Actual] | [Met / Not met] |

Where a covenant applies only at a certain date (for example a capex limit tested annually), say so, and state "not tested this period" rather than leaving a blank row.

## 8. EBITDA adjustments reconciliation

<!-- Guidance: This is the section lenders scrutinise most. Start from a figure in the published or management accounts, list every adjustment with the clause that permits it, the amount and the evidence, and test any cap. Pitfall: add-backs that are not permitted, or that exceed a cap, or "run-rate" synergies that the agreement does not allow. -->

| Line (EUR thousand) | Clause | Evidence | Amount |
|---|---|---|---|
| Operating profit per audited accounts *(Example)* | | Income statement | 8,600 |
| Depreciation and amortisation | [1.1] | Notes [x] and [y] | 5,600 |
| Impairment (Vietnam engineering services CGU) | [1.1] | Impairment note [z] | 2,600 |
| **EBITDA (management measure)** | | Monthly management report | **16,800** |
| Exceptional restructuring cost (Vietnam warehouse consolidation) | [22.3(b)] | Board paper, invoices | 900 |
| Non-cash share-based payment charge | [1.1(e)] | Share plan note | 500 |
| Gain on disposal of fixed assets | [1.1(g)] | Fixed asset register | (400) |
| Pro forma EBITDA of acquired or disposed entities | [22.3(c)] | Not applicable in the period | 0 |
| **Consolidated EBITDA (covenant)** | | | **17,800** |

Check: 8,600 + 5,600 + 2,600 = 16,800; 16,800 + 900 + 500 - 400 + 0 = 17,800.

### 8.1 Cap test on exceptional items

$$
\text{Cap} = 10\% \times \text{EBITDA before exceptional add-backs} = 0.10 \times 16{,}800 = 1{,}680
$$

The exceptional add-back of EUR 900k is below the cap of EUR 1,680k. Keep the board paper that approved the restructuring and the invoices as evidence; lenders often ask for them at the annual test.

### 8.2 Judgements

| ID | Judgement | Basis | Reviewed by |
|---|---|---|---|
| JDG-001 *(Example)* | Restructuring cost treated as exceptional | One-off closure of the Ho Chi Minh City warehouse, approved by the board on 2026-05-20, not expected to recur | [@financial-controller] |
| JDG-002 *(Example)* | Share-based payment charge added back | Non-cash and settled in shares; the definition lists it | [@general-counsel] |
| JDG-003 *(Example)* | Disposal gain deducted | The definition excludes gains on disposals outside the ordinary course | [@financial-controller] |

When reported EBITDA is a management-defined performance measure under IFRS 18 from 2027 onward, keep the covenant bridge separate from the MPM reconciliation in the accounts. They have different purposes and often different adjustments.

## 9. Headroom analysis and trend

<!-- Guidance: Show how far each driver could move before a covenant fails, and the trend over the last four or more test dates. Use the same headroom definition every quarter. Pitfall: quoting headroom only as a ratio difference, which hides how sensitive the ratio is to EBITDA. -->

For a maximum covenant such as leverage, EBITDA headroom is the fall in EBITDA that would take the ratio to its limit, with net debt unchanged:

$$
\text{EBITDA headroom} = 1 - \frac{\text{Net debt} / \text{Covenant level}}{\text{EBITDA}} = 1 - \frac{11{,}000 / 3.00}{17{,}800} = 1 - \frac{3{,}667}{17{,}800} = 79.4\%
$$

For a minimum covenant such as interest cover:

$$
\text{EBITDA headroom} = 1 - \frac{\text{Covenant level} \times \text{Finance Charges}}{\text{EBITDA}} = 1 - \frac{4.00 \times 1{,}300}{17{,}800} = 1 - \frac{5{,}200}{17{,}800} = 70.8\%
$$

For debt service cover, Cashflow headroom is one minus the minimum Cashflow (1.20 x 2,800 = 3,360) divided by actual Cashflow of 4,800, which is 30.0%.

| Test date | Leverage (max 3.00x) | Interest cover (min 4.00x) | DSCR (min 1.20x) | Liquidity (min EUR 15,000k) | RAG |
|---|---|---|---|---|---|
| 2026-03-31 *(Example)* | 0.79x | 12.10x | 1.58x | 44,500 | Green |
| 2026-06-30 *(Example)* | 0.73x | 12.60x | 1.63x | 45,200 | Green |
| 2026-09-30 *(Example)* | 0.67x | 13.10x | 1.66x | 46,100 | Green |
| 2026-12-31 *(Example)* | 0.62x | 13.69x | 1.71x | 47,000 | Green |
| 2027-03-31 forecast | [x] | [x] | [x] | [x] | [RAG] |

Define the colours in your treasury policy, for example green above 30% headroom, amber between 15% and 30%, red below 15%. Report amber or red to the CFO and the board immediately, not at the next certificate. The forward view comes from the rolling forecast and the 13-week cash flow forecast; show at least the next two test dates.

DSCR is the tightest covenant in the example even though leverage is low, because capital expenditure is deducted in full. A year of higher investment, as planned in the FY2027 budget (capex EUR 12,000k), would reduce Cashflow; model it before committing to the spend.

## 10. Guarantor coverage test

<!-- Guidance: Lenders require guarantors to represent a minimum share of group EBITDA and gross assets so that the guarantee package covers most of the business. Use unconsolidated entity figures on the basis the agreement states (often excluding intra-group items). Pitfall: forgetting that a new material subsidiary must accede as guarantor within a set period. -->

| Entity | Guarantor | EBITDA (EUR thousand) | Gross assets (EUR thousand) |
|---|---|---|---|
| Corvid Commerce Group plc (parent, holding costs) *(Example)* | Yes | (700) | 5,000 |
| Corvid Commerce GmbH (Germany) | Yes | 9,600 | 57,000 |
| Corvid Commerce Ltd (UK) | Yes | 4,100 | 24,000 |
| Corvid Commerce Inc (US) | Yes | 3,300 | 18,000 |
| Corvid Commerce Vietnam LLC | No (permitted non-guarantor) | 1,500 | 8,000 |
| **Group total** | | **17,800** | **112,000** |
| **Guarantors** | | **16,300** | **104,000** |
| **Coverage** | | **91.6%** | **92.9%** |

$$
\text{EBITDA coverage} = \frac{16{,}300}{17{,}800} = 91.6\% \qquad \text{Gross asset coverage} = \frac{104{,}000}{112{,}000} = 92.9\%
$$

Gross assets exclude investments in and receivables from other group companies. If the agreement says loss-making entities count as zero, recompute; in the example that would raise guarantor EBITDA to 17,000 and group EBITDA to 18,500, giving 91.9%. State which method your agreement uses.

| Material subsidiary check | Threshold | Entities above threshold | All guarantors? |
|---|---|---|---|
| 5% of Consolidated EBITDA or gross assets *(Example)* | EUR 890k EBITDA or EUR 5,600k gross assets | GmbH, Ltd, Inc, Vietnam LLC | No: Vietnam LLC exceeds both, but is a permitted non-guarantor under the 2026-03-15 amendment letter |

## 11. Margin ratchet

<!-- Guidance: Many facilities adjust the margin by reference to the leverage ratio in the latest certificate. State the grid, the level reached and the date from which the new margin applies. Pitfall: claiming a lower margin before the certificate is delivered, or not telling the agent that a higher margin applies. -->

| Leverage | Term Facility margin | Revolving Facility margin |
|---|---|---|
| 2.50x or more *(Example)* | 2.75% | 2.50% |
| 1.50x or more but below 2.50x | 2.25% | 2.00% |
| 1.00x or more but below 1.50x | 1.90% | 1.65% |
| Below 1.00x | 1.60% | 1.35% |

*Example:* Leverage of 0.62x puts the group in the lowest band. The new margin applies from the first day of the interest period starting after the agent receives this certificate. If any Event of Default is continuing, the agreement may require the highest margin regardless of the ratio; confirm in section 12.

If the facility also contains a sustainability-linked margin adjustment, report the key performance indicators and the verifier's report in a separate schedule; do not mix them into the financial covenant tables.

## 12. Confirmations

<!-- Guidance: Give only the confirmations the agreement asks for, in your own words, and make sure each one is true after due enquiry. Questions to answer: Is any default continuing, even a technical one such as a late filing? Has any information undertaking been missed? Pitfall: signing a blanket "no default" statement without asking legal, tax and the subsidiaries. -->

| ID | Confirmation | Basis of the confirmation | Status |
|---|---|---|---|
| CNF-001 *(Example)* | No Default is continuing at the date of this certificate | Default questionnaire completed by every obligor and the general counsel | Confirmed |
| CNF-002 *(Example)* | The guarantor coverage test is met and no subsidiary is required to accede | Section 10 | Confirmed |
| CNF-003 *(Example)* | Dividends paid in the period were within the permitted basket | Dividend of EUR 2,600k paid 2026-05-30, leverage below 2.00x at the time | Confirmed |
| CNF-004 *(Example)* | No disposals or acquisitions requiring notice took place | Legal entity register and board minutes | Confirmed |
| CNF-005 *(Example)* | Hedging is in line with the hedging covenant | Hedge register: pay-fixed swap of EUR 21,000k fixes 70% of Term Facility interest until 2028-06-30, the facility's maturity | Confirmed |
| CNF-006 | [Other confirmation required by clause] | [Evidence] | [Confirmed / Disclosed with detail] |

If a default is continuing, do not omit or soften it. Describe it, state the steps being taken to remedy it and refer to any waiver request (section 15). A false confirmation is usually itself an Event of Default (misrepresentation) and may expose the signatories personally.

### 12.1 Default questionnaire

Send a short questionnaire to each obligor's finance lead and to group legal before every certificate. Ask about litigation, tax disputes, security over assets, new borrowings, guarantees, cross-default in other agreements, insolvency events, changes in ownership, breaches of sanctions or anti-corruption undertakings, and late statutory filings. Keep the answers with the certificate file.

## 13. Preparation and review workflow

<!-- Guidance: Map who does what and by when, so the certificate is never late. Questions to answer: Which day after period end are the numbers final? Who reviews the definitions each time? Pitfall: preparing the certificate in the last week before the deadline, which leaves no time to seek a waiver if a covenant is close. -->

```mermaid
flowchart LR
  A["Period-end close complete"] --> B["Treasury builds covenant workbook"]
  B --> C["Controller agrees figures to accounts"]
  C --> D["Legal runs default questionnaire"]
  D --> E{"All covenants met?"}
  E -- "Yes" --> F["CFO and second signatory sign"]
  E -- "No or headroom below 15%" --> G["Escalate to CFO and board, prepare waiver request"]
  G --> F
  F --> H["Deliver to agent with accounts"]
  H --> I["File signed copy and workbook"]
```

| Step | Owner | Timing (business days after period end) | Output |
|---|---|---|---|
| Close and consolidation *(Example)* | [@financial-controller] | Day 10 | Consolidated trial balance |
| Covenant workbook | [@treasury-analyst] | Day 15 | Sections 4 to 10 |
| Review against definitions | [@group-treasurer] | Day 17 | Review notes |
| Default questionnaire | [@general-counsel] | Day 18 | Signed questionnaires |
| Signature | [@cfo], [@ceo] | Day 20 | Signed certificate |
| Delivery | [@group-treasurer] | Before the contractual deadline | Delivery email and agent acknowledgement |

### 13.1 Review checklist

- Every figure agrees to the accounts or to a schedule that agrees to the accounts.
- Every definition used is the one in the agreement as amended, with the clause reference.
- Every adjustment in section 8 has evidence and is within any cap.
- Cash netted in section 4 is freely available and not pledged or trapped.
- Exchange rates follow the agreement.
- Ratios are rounded as the agreement requires, and never rounded in the borrower's favour where the agreement is silent.
- The headroom trend and forecast were shown to the CFO before signing.
- The margin ratchet level and its effective date are stated.
- The signatories are authorised under the delegation of authority and the agreement.

### 13.2 Common errors and how to avoid them

The most frequent error is a definition drift: the workbook was built for the first certificate, the agreement was later amended, and nobody updated the formulas. Prevent it by keeping a definitions log that lists each amendment letter, the clause it changed and the workbook cell it affects, and by having legal sign that the log is complete before each annual certificate.

The second error is inconsistent period figures. Rolling 12-month EBITDA must be built from four quarters that each agree to a closed set of accounts; avoid mixing a forecast month into the period because the close is late. If a prior quarter was restated, state whether the agreement requires the restated figure and, where it does, show the effect on earlier certificates.

The third error is cash that is not really available. Cash in a country with exchange controls, cash collateralising a guarantee, customer deposits held on trust and cash in a joint venture usually do not count. Ask the treasury team for a list of every bank account with its restrictions at the test date, not only the consolidated balance.

The fourth error is presentation: ratios computed correctly but explained poorly, so the agent asks questions that delay the margin change or create doubt. Write the summary paragraph in section 1 as if the reader had never seen the group's accounts, and answer the obvious questions before they are asked.

Finally, keep the full working file (workbook, evidence, questionnaires, signed PDF and delivery email) for at least the life of the facility plus the limitation period that applies under the governing law. Lenders and auditors may ask for it years later, for example in a refinancing or a dispute.

## 14. Signatories and auditor report

<!-- Guidance: The agreement states who must sign (for example two directors, or the CFO and one director). Check the signatories against the board resolution and the Delegation of Authority Matrix. Pitfall: signing by someone who is not a director when the agreement requires directors. -->

Signed for and on behalf of [Borrower name] as obligors' agent:

| Signatory | Name | Title | Signature | Date |
|---|---|---|---|---|
| Signatory 1 | [Name] | [Chief Financial Officer and director] | [Signature] | YYYY-MM-DD |
| Signatory 2 | [Name] | [Chief Executive Officer and director] | [Signature] | YYYY-MM-DD |

### 14.1 Auditor report (annual certificate, if required)

Where the agreement requires the auditors to report on the annual certificate, agree the engagement terms early. Auditors usually perform agreed-upon procedures or a limited assurance engagement on the arithmetic and on the agreement of figures to the audited accounts; they do not usually opine on whether an add-back is permitted. Attach the report and record its date here.

| Item | Detail |
|---|---|
| Audit firm | [Name] |
| Nature of engagement | [Agreed-upon procedures / limited assurance] |
| Report date | YYYY-MM-DD |
| Findings | [None / list] |

## 15. Breach, cure and waiver procedure

<!-- Guidance: Plan the response before you need it. Questions to answer: Does the agreement allow an equity cure, and how many times? How long does a waiver take with this lender group? Pitfall: waiting for the test date to approach the lenders. Early, well-supported requests cost less. -->

| Step | Action | Owner | Timing |
|---|---|---|---|
| 1 *(Example)* | Forecast shows headroom below 15% at either of the next two test dates | [@group-treasurer] | As soon as the forecast shows it |
| 2 | Inform CFO and board, review options (cost actions, timing of capex, equity cure, waiver, reset) | [@cfo] | Within 5 business days |
| 3 | Take legal advice on the agreement and on directors' duties | [@general-counsel] | In parallel |
| 4 | Prepare a waiver or amendment request with a revised forecast and plan | [@group-treasurer] | At least [6] weeks before the test date |
| 5 | Agent circulates request; majority lenders respond | Agent | Per agreement |
| 6 | Sign waiver letter and record the change in section 2 of the next certificate | [@cfo] | On approval |

Equity cure clauses, where present, usually let shareholders inject new equity or subordinated debt that is then treated as reducing net debt or increasing EBITDA for the test. They are typically limited in number and cannot be used in consecutive periods. Read your clause carefully and record any use here with the amount and the test date it cured.

## 16. Glossary and references

<!-- Guidance: Define each abbreviation once. List the agreement and any amendment by date. Name market documentation by title only; do not copy its forms. -->

### 16.1 Glossary

| Term | Meaning |
|---|---|
| Agent | The bank that administers the facility for the lenders and receives the certificate |
| Covenant EBITDA | EBITDA computed on the agreement's definition, after permitted adjustments |
| DSCR | Debt service cover ratio: Cashflow divided by Debt Service |
| Equity cure | A right to fix a financial covenant shortfall with new shareholder funding |
| Frozen GAAP | A clause that fixes the accounting principles used for covenants at a stated date |
| Guarantor coverage | Share of group EBITDA and gross assets contributed by guarantors |
| Headroom | The amount by which a driver could move before a covenant fails |
| Leverage | Total Net Debt divided by Covenant EBITDA |
| Margin ratchet | Adjustment of the loan margin by reference to a financial ratio |
| Obligor | A borrower or guarantor under the agreement |
| RAG | Red, amber, green status |

### 16.2 References

| Reference | Version or date checked | Use |
|---|---|---|
| [Facility agreement and amendments] | [Dates] | Governing document; prevails over this template |
| Loan Market Association (LMA) recommended forms | Name only, checked 2026-10-25 | Market context; forms are members-only and not reproduced |
| Loan Syndications and Trading Association (LSTA) model credit agreement provisions | Name only | Market context for US facilities |
| Association of Corporate Treasurers, Borrower's Guide to the LMA leveraged facilities documentation | Name only | Commentary for borrowers |
| IFRS 16 Leases (IFRS Foundation) | Name only | Source of lease liabilities used in Total Net Debt |
| IFRS 18 Presentation and Disclosure in Financial Statements (IFRS Foundation) | Effective for annual periods beginning on or after 2027-01-01 | Name and effective date only |

## Standard and licence note

Structure aligned with common borrower practice for compliance
certificates under syndicated and bilateral facilities documented in the
style of the Loan Market Association and Loan Syndications and Trading
Association recommended forms. Those forms, the ACT borrower's guide and
IFRS 16 and IFRS 18 are cited by name (and, for IFRS 18, effective date)
only; no wording from any of them is reproduced or adapted. IFRS is a
trade mark of the IFRS Foundation; this template is not affiliated with
or endorsed by the IFRS Foundation, the LMA, the LSTA or the ACT. The
facility agreement you signed prevails over this template. Corvid
Commerce Group, Fernhollow Bank and every figure are fictional. This
template is original text written for this collection. Check the current
official versions of cited documents before use. Template licence: MIT.