Adjustments to Guaranteed Amount. The parties hereto have agreed upon the Guaranteed Amount based upon the assumption that as of the Closing Date, Merchant shall have, on a Cost Value basis: (i) $75 million in front-end inventory ("Front-End Inventory") located in the Stores; (ii) $17.4 million of inventory (other than private label inventory) ("Non-Private Label Inventory") located in the Warehouse; (iii) $1.6 million of private label inventory ("Private Label Inventory") located in the Warehouse; and (iv) $13 million of pharmacy inventory ("Pharmacy Inventory," together with the Front-End Inventory, Non-Private Label Inventory, Private Label Inventory and Pharmacy Inventory, the "Merchandise") located in the Stores. In the event that the Cost Value of the Front-End Inventory is greater than or less than $75 million, the Guaranteed Amount shall be increased or decreased, as the case may be, by sixty cents ($0.60) for each dollar of such increase or decrease. In the event that the Cost Value of the Non-Private Label Inventory located in the Warehouse on the Closing Date is greater than or less than $17.4 million, the Guaranteed Amount shall be increased or decreased, as the case may be, by seventy-five cents ($0.75) for each dollar of such increase or decrease. In the event that the Cost Value of the Private Label Inventory located in the Warehouse on the Closing Date is greater than or less than $1.6 million, the Guaranteed Amount shall be increased or decreased, as the case may be, by sixty cents ($0.60) for each dollar of such increase or decrease. In the event that the Cost Value of the Pharmacy Inventory is greater than or less than $13 million on the Closing Date, the Guaranteed Amount shall be increased or decreased, as the case may be, by ninety-five cents ($0.95) for each dollar of such increase or decrease. For purposes of calculating such adjustments, the Cost Value of the Merchandise will be calculated, pursuant to Section 9 hereof, based upon (i) the final certified report of the Inventory Taking Service after verification and reconciliation by Merchant and Agent and (ii) Gross Rings. As further defined in Section 9 hereof, the Retail Price shall be converted to a cost value price for purposes of the adjustments calculated herein.
Adjustments to Guaranteed Amount. The parties hereto have agreed upon the Guaranteed Amount based upon the assumption that as of the Closing Date, Cost Value (defined in section 9.1 hereof) of the Merchant’s inventory (the “Inventory”) physically located at the Stores or the Warehouse or in transit to or from there (other than returns to vendor of Inventory in transit) that is salable in the ordinary course shall be no less than $60 million. In the event that the Cost Value of the Inventory is less than $60 million, then the Guaranteed Amount will be reduced by an amount equal to 64% of the difference between the Cost Value and $60 million. In the event that the Cost Value of the Inventory is greater than $60 million, then the Guaranteed Amount will be increased by an amount equal to 64% of the difference between the Cost Value and $60 million. Any adjustment to the Guaranteed Amount shall be paid in the manner described in Section 4.2 hereof. For purposes of calculating such adjustments, the Cost Value of the Inventory will be calculated, pursuant to Section 9 hereof, based upon the final certified report of the Inventory Taking Service less the amount of Gross Rings from the completion of Inventory Taking to the Closing Date at each Store plus the amount of Merchandise (valued in accordance with Section 9.3 of the Agreement) that is delivered to a Store or the Warehouse subsequent to the Inventory Taking but prior to the Closing Date, after verification and reconciliation by Merchant and Agent.
