Common use of Calculation of Closing Net Working Capital Clause in Contracts

Calculation of Closing Net Working Capital. (a) As soon as practicable after the Closing Date, but in no event later than ninety (90) days following the Closing Date, Buyer shall prepare and deliver to Sellers an unaudited balance sheet containing a statement of the Net Assets of the Business determined as of the Closing Date (hereinafter the “Proposed Statement of Closing Net Assets”) together with a statement of the Net Working Capital of the Business which has been prepared using the Proposed Statement of Closing Net Assets (hereinafter the “Proposed Statement of Closing Net Working Capital”). (b) The Proposed Statement of Closing Net Working Capital shall be subject to verification and examination by Sellers and, in order to facilitate such verification and examination, Buyer shall, at such reasonable times and places as may be requested by Sellers, deliver copies of all supporting documents to Sellers and their representatives and provide to Sellers and their representatives the right to examine or take copies of any work papers (other than proprietary work papers) used by Buyer in the preparation of the Proposed Statement of Closing Net Working Capital. (c) Sellers shall have a period of sixty (60) days after delivery of the Proposed Statement of Closing Net Working Capital to Sellers, to present in writing to Buyer any objections Sellers may have to the accuracy of the Proposed Statement of Closing Net Working Capital, which objections shall be set forth in reasonable detail. If no objections are raised within such sixty (60) day period, the Proposed Statement of Closing Net Working Capital shall be deemed to be accepted and approved by Sellers, the amount of the Net Working Capital as contained in the Proposed Statement of Closing Net Working Capital shall be deemed to be the amount of the Closing Net Working Capital and any amounts required to be paid by Section 3.05 hereof shall be paid by Sellers or Buyer, as the case may be. (d) If Sellers disagree as to the accuracy of the amount of the Closing Net Working Capital as contained in the Proposed Statement of Closing Net Working Capital, Sellers shall present to Buyer written notice within the sixty (60) day period described in Section 3.03(c) above specifying such disagreement. Following receipt of such notice by Buyer, Sellers and Buyer shall use their best efforts to promptly resolve the matter or matters in disagreement. If Sellers and Buyer resolve the matter or matters in disagreement, the Sellers and the Buyer shall either confirm or revise the original Proposed Statement of Closing Net Working Capital and the amount of the Closing Net Working Capital, whereupon the amount of the Net Working Capital of the Business as contained in the confirmed or revised Proposed Statement of Closing Net Working Capital shall be deemed to be the amount of the Closing Net Working Capital, shall be final and binding upon the parties hereto and any amounts required to be paid as provided for in Section 3.05 hereof shall be paid by Sellers or Buyer as the case may be. (e) If Sellers and Buyer are unable to resolve the matter or matters in disagreement within thirty (30) days following Buyer’s receipt of written notice from Sellers of Sellers’ disagreement with the accuracy of the amount of the Closing Net Working Capital or the Proposed Statement of Closing Net Assets or the Proposed Statement of Closing Net Working Capital, then such disagreement or disagreements shall be referred for resolution to a nationally recognized firm of independent certified public accountants that is mutually agreeable to Buyer and Sellers (the “Independent Accountants”). The Independent Accountants shall be directed to furnish written notice to Sellers’ Representative and Buyer of their resolution of any such disagreements referred to them as soon as practicable but in no event later than forty-five (45) days following the referral of such dispute to the Independent Accountants. The Independent Accountants shall resolve only the matters that are in dispute, and shall not change matters on which the parties are in agreement. The amount of the Closing Net Working Capital and Closing Statement of Net Assets as determined by the Independent Accountants shall be final and binding upon the parties and any amounts required to be paid by Section 3.05 hereof shall be paid as provided in Section 3.05 by Sellers or Buyer, as the case may be. (f) Notwithstanding anything to the contrary in this Section 3.03 during the period that the determination of the Closing Net Working Capital shall remain in dispute, neither party shall be required to pay to the other party the amount that would otherwise be payable hereunder if no such disagreement were to exist. (g) During and with respect to the audit and reviews referred to in this Section 3.03, Sellers and Buyer shall: (i) fully cooperate with all reasonable requests of Sellers’ Representative, Buyer and the Independent Accountants, as the case be; (ii) upon reasonable request make available to Sellers’ Representative, Buyer and the Independent Accountants, all work papers, (excluding proprietary programs and information of Sellers and Buyer) supporting schedules, documents and other information (including access to all appropriate knowledgeable personnel of Sellers) upon which the Proposed Statement of Closing Net Working Capital was prepared and the Net Working Capital as of the Closing Date was determined; and (iii) promptly provide the Independent Accountants with such management representation letters (in customary form) executed by appropriate personnel of Sellers and Buyer as applicable, as may reasonably be requested with respect to the calculation of the Closing Net Working Capital and the preparation of the Closing Statement of Net Working Capital. (h) With the exception of the fees, expenses and disbursements of the Independent Accountants, all fees and expenses of Sellers relating to the matters described in this Section 3.03 shall be borne by Sellers and all fees and expenses of the Buyer relating to the matters described in this Section 3.03 shall be borne by Buyer. The fees, expenses and disbursements of the Independent Accountants shall be shared equally by the parties hereto.

Calculation of Closing Net Working Capital. (a) As soon as reasonably practicable after the Closing Date, but in no event later than ninety (90) days following the Closing DateEffective Time, Buyer and in any event within twenty (20) Business Days thereof, the Stockholder Representative shall prepare cause to be prepared and deliver delivered to Sellers an unaudited Parent (A) a balance sheet containing a statement of the Net Assets of the Business determined Company as of the Closing Date Effective Time (hereinafter the “Proposed Statement of Closing Net AssetsBalance Sheet”) together with and (B) a statement calculation of the Net Working Capital (as defined below) of the Business which has been prepared using Company as of the Proposed Statement of Effective Time as determined from the Closing Net Assets Balance Sheet (hereinafter the “Proposed Statement of Closing Net Working Capital”). (b) . The Proposed Statement date on which the Stockholder Representative delivers such Closing Balance Sheet and calculation of Closing Net Working Capital is referred to herein as the “Stockholder Representative Delivery Date.” The Closing Balance Sheet shall (1) be subject prepared in accordance with GAAP and (2) fairly present the financial position of the Company as of the Effective Time. Parent shall provide the Stockholder Representative and his accountants full access to verification the Company’s records and examination by Sellers and, in order personnel to facilitate such verification and examination, Buyer shall, at such reasonable times and places as may be requested by Sellers, deliver copies of all supporting documents the extent reasonably related to Sellers and their representatives and provide to Sellers and their representatives the right to examine or take copies of any work papers (other than proprietary work papers) used by Buyer in the preparation of the Proposed Statement Closing Balance Sheet and the calculation of Closing Net Working Capital. . For the purpose hereof, “Net Working Capital” as of any date shall, subject to the adjustments and conventions set forth in this Section 3.7.1, mean (cA) Sellers shall have a period of sixty (60) days after delivery the current assets of the Proposed Statement Company as of Closing Net Working Capital to Sellerssuch date minus (B) the current liabilities of the Company as of such date, to present in writing to Buyer each case determined under GAAP and as provided in Section 4.7.1 of the Company Disclosure Schedule. Notwithstanding any objections Sellers may have provision of this Agreement to the accuracy contrary, the following conventions shall apply to the preparation of the Proposed Statement Closing Balance Sheet for the purpose of the determination of Closing Net Working Capital, which objections : (1) all Inventory shall be set forth carried at the lower of cost or market on a basis consistent with past accounting practices of the Company; (2) all musical instruments, whether new or used on hand or on rent, shall be carried at the lower of cost or market on a basis consistent with past accounting practices of the Company and net of accumulated depreciation. The Company shall record depreciation through the Effective Time on a basis consistent with its past accounting practices; it being understood that all new and never rented new instruments shall have no depreciation expense calculated through the Effective Time, consistent with the Company’s past practices; (3) Parent may, if it elects, verify the Inventory count based on an actual physical count subject to inspection by Representatives of the Stockholder Representative and Representatives of the Parent; (4) current assets and current liabilities shall not attribute any value to deferred income tax assets and deferred income tax liabilities; (5) current liabilities shall include all deferred payments for goods acquired by the Company (including, without limitation, deferred payables to vendors for the purchase of Inventory), whether or not due within one year; (6) current liabilities shall exclude any obligation included in reasonable detailIndebtedness, other than the obligation related to the line of credit and deal notes payable, provided that such Indebtedness amount was included in the Debt Adjustment pursuant to Section 3.6; (7) the liability for current taxes payable shall be recorded on a basis consistent with the Company’s normal interim policy (i.e., 40% of the period income). If Any under-accrued liability or overpayment for the fiscal year ending January 31, 2005 shall be included in the Closing Balance Sheet. The liability for Taxes provided for in the Closing Balance Sheet (whether current or non-current) shall consist solely of Taxes accrued but not yet payable since the date of the most recent related Tax return or estimated tax payment and (A) in no objections are raised within such sixty event shall include any reserve or “cushion” for prior period Taxes and (60B) day period, shall disregard any effect of the Proposed Statement of Closing deductions related to the Carveout Plan Termination Payment; (8) current assets and current liabilities shall not attribute any value to the assets or liabilities to life insurance participants or deferred compensation plans; (9) Net Working Capital shall be deemed exclude any effect related to be accepted and approved by Sellers, the amount payment of the Net Working Capital as contained Management Bonuses, or Company Expenses included in the Proposed Statement of Closing Net Working Capital shall be deemed to be the amount of the Closing Net Working Capital and any amounts required to be paid by Section 3.05 hereof shall be paid by Sellers or Buyer3.1.3(D), as the case may be.including, without limitation, related Tax effects; and (d10) If Sellers disagree as to the accuracy of the amount of the Closing Net Working Capital as contained current assets will include all receivables due from MACBEN, LLC or ▇▇▇▇▇▇▇ ▇. ▇’▇▇▇▇▇, provided that such receivables are paid in the Proposed Statement of Closing Net Working Capital, Sellers shall present to Buyer written notice within the sixty (60) day period described in Section 3.03(c) above specifying such disagreement. Following receipt of such notice by Buyer, Sellers and Buyer shall use their best efforts to promptly resolve the matter or matters in disagreement. If Sellers and Buyer resolve the matter or matters in disagreement, the Sellers and the Buyer shall either confirm or revise the original Proposed Statement of Closing Net Working Capital and the amount of the Closing Net Working Capital, whereupon the amount of the Net Working Capital of the Business as contained in the confirmed or revised Proposed Statement of Closing Net Working Capital shall be deemed to be the amount of the Closing Net Working Capital, shall be final and binding upon the parties hereto and any amounts required to be paid as provided for in Section 3.05 hereof shall be paid by Sellers or Buyer as the case may be. (e) If Sellers and Buyer are unable to resolve the matter or matters in disagreement within thirty (30) days following Buyer’s receipt of written notice from Sellers of Sellers’ disagreement with the accuracy of the amount of the Closing Net Working Capital or the Proposed Statement of Closing Net Assets or the Proposed Statement of Closing Net Working Capital, then such disagreement or disagreements shall be referred for resolution to a nationally recognized firm of independent certified public accountants that is mutually agreeable to Buyer and Sellers (the “Independent Accountants”). The Independent Accountants shall be directed to furnish written notice to Sellers’ Representative and Buyer of their resolution of any such disagreements referred to them as soon as practicable but in cash no event later than forty-five (45) days following the referral of such dispute to the Independent Accountants. The Independent Accountants shall resolve only the matters that are in dispute, and shall not change matters on which the parties are in agreement. The amount of the Closing Net Working Capital and Closing Statement of Net Assets as determined by the Independent Accountants shall be final and binding upon the parties and any amounts required to be paid by Section 3.05 hereof shall be paid as provided in Section 3.05 by Sellers or Buyer, as the case may beEffective Time. (f) Notwithstanding anything to the contrary in this Section 3.03 during the period that the determination of the Closing Net Working Capital shall remain in dispute, neither party shall be required to pay to the other party the amount that would otherwise be payable hereunder if no such disagreement were to exist. (g) During and with respect to the audit and reviews referred to in this Section 3.03, Sellers and Buyer shall: (i) fully cooperate with all reasonable requests of Sellers’ Representative, Buyer and the Independent Accountants, as the case be; (ii) upon reasonable request make available to Sellers’ Representative, Buyer and the Independent Accountants, all work papers, (excluding proprietary programs and information of Sellers and Buyer) supporting schedules, documents and other information (including access to all appropriate knowledgeable personnel of Sellers) upon which the Proposed Statement of Closing Net Working Capital was prepared and the Net Working Capital as of the Closing Date was determined; and (iii) promptly provide the Independent Accountants with such management representation letters (in customary form) executed by appropriate personnel of Sellers and Buyer as applicable, as may reasonably be requested with respect to the calculation of the Closing Net Working Capital and the preparation of the Closing Statement of Net Working Capital. (h) With the exception of the fees, expenses and disbursements of the Independent Accountants, all fees and expenses of Sellers relating to the matters described in this Section 3.03 shall be borne by Sellers and all fees and expenses of the Buyer relating to the matters described in this Section 3.03 shall be borne by Buyer. The fees, expenses and disbursements of the Independent Accountants shall be shared equally by the parties hereto.