Audiovox 2012 Annual Report Download - page 195

 
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity
with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the most recently delivered audited Consolidated financial statements of the
Company, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining
compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the
Company andits Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects
of the Financial Accounting Standards Board's Accounting Standards Codifications 825 and 470-20 on financial liabilities shall be
disregarded.
(i) all references herein to consolidated financial statements of the Company and its Subsidiaries shall, in each
case, be deemed to include each variable interest entity that the Company is required to consolidate pursuant to the
Financial Accounting Standards Board's Accounting Standards Codification 810 as if such variable interest entity were a
Subsidiary as defined herein. Notwithstanding the preceding sentence, the parties hereto specifically agree to exclude
any impact of the variable interest entities on the Company or its Subsidiaries' financial position or results of operations
in any calculation made under this Agreement (including, without limitation, the calculation of any component of the
financial covenant ratios required to be calculated under the terms of this Agreement); and
(ii) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts
and ratios referred to herein shall be made (A) without giving effect to any election under the Financial Accounting
Standards Board's Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or
Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the
Company or any Subsidiaryat “fair value”, as defined therein, (B) without giving effect to any treatment of
Indebtedness in respect of convertible debt instruments under the Financial Accounting Standards Board's Accounting
Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having
a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and
such Indebtedness shall at all times be valued at the full stated principal amount thereof and (C) in a manner such that
any obligations relating to a lease that was accounted for by a Person as an operating lease as of the Closing Date and any
operating lease entered into after the Closing Date by such Person shall be accounted for as obligations relating to an
operating lease and not as Capital Lease Obligations.
42