Certain Changes in Accounting Principles Sample Clauses
The "Certain Changes in Accounting Principles" clause defines how modifications to accounting methods or standards are handled within an agreement. It typically specifies that if a party is required to adopt new accounting principles—such as changes mandated by regulatory bodies or standard-setting organizations—these changes must be consistently applied and disclosed to the other party. For example, if a company must switch from one revenue recognition method to another due to updated accounting rules, this clause outlines the process for reporting and adjusting financial statements accordingly. Its core function is to ensure transparency and consistency in financial reporting, preventing disputes or confusion that could arise from unexpected changes in accounting practices.
Certain Changes in Accounting Principles. In the event of a change after the date of this Credit Agreement in (a) GAAP (as defined in clause (b) of the definition of “GAAP” in Section 1.1) or (b) any regulation issued by the Securities and Exchange Commission (either such event being referred to herein as an “Accounting Change”), that results in a material change in the calculations as to compliance with any financial covenant contained in Section 8 or in the calculation of any item to be taken into account in the calculations as to compliance with any such covenant (the “Affected Computation”) in such a manner and to such an extent that, in the good faith judgment of the Chief Financial Officer of the Company or the Majority Banks, as evidenced by notice from such Majority Banks to the Company and the Administrative Agent (the “Accounting Notice”), the application of the Accounting Change to the Affected Computation would no longer reflect the intention of the parties to this Credit Agreement, then and in any such event:
(a) the Company shall, promptly after either a determination by its Chief Financial Officer as provided above or receipt of an Accounting Notice, give written notice thereof to the Administrative Agent and each Bank, which notice shall be accompanied by a copy of any Accounting Notice and a certificate of the Chief Financial Officer of the Company:
(i) describing the Accounting Change in question and the particular covenant or covenants that will be affected by such Accounting Change;
(ii) setting forth in reasonable detail (including detailed calculations) the manner and extent to which the covenant or covenants listed in such certificate are affected by such Accounting Change; and
(iii) setting forth in reasonable detail (including detailed calculations) the information required in order to establish that the Company would be in compliance with the requirements of the covenant or covenants listed in such certificate if such Accounting Change was not effective (or, if the Company would not be so in compliance, setting forth in reasonable detail calculations of the extent of such non-compliance);
(b) the Company and the Banks will enter into good faith negotiations with each other for an equitable amendment of such covenant or covenants, and the definition of GAAP set forth in Section 1.1, pursuant to Section 26 so as to place the parties, insofar as possible, in the same relative position as if such Accounting Change had not occurred;
(c) for the period from the date on which su...