Common use of Excess Inventory Clause in Contracts

Excess Inventory. (a) On or about the last day of each month (the "Last Day") after the first six months of the Term, BMG will determine from BMG's books and record(s) on a selection-by-selection basis and by each configuration thereof the amount of any excess inventory (i.e., more than a one (1) year supply, as determined in accordance with BMG's standard business practices) in BMG's possession or control as of each Last Day and will report such determination to Owner ("Excess Inventory"). Owner, at Owner's election, will either remove Excess Inventory for storage purposes only (at Owner's sole cost and expense of removal and storage) within thirty (30) days of BMG's report under this Paragraph, or promptly pay BMG for each month that any Excess Inventory is retained or controlled by BMG an amount equal to the number of units of Excess Inventory multiplied by Ten ($.10) Cents (the "Excess Inventory Charge"). Any Excess Inventory which is removed must be marked, drilled or otherwise modified by BMG (at Owner's sole cost and expense) beforehand to adequately distinguish it from all other Owner's Product(s). If Owner fails to remove any Excess Inventory or pay the Excess Inventory Charge on a timely basis, BMG, subject to the provisions embodied in Paragraph 11(a)(v)(8) and 14(g) hereof, will scrap the Excess Inventory at the applicable per unit price set forth in Exhibit A for scrapping. BMG will invoice Owner for such scrapping and any applicable Excess Inventory charges and Owner will pay such invoice in accordance with Paragraphs 14(b) and (c) hereof. (b) Owner will be afforded access once per each Contract Year and during regular business hours to BMG's catalog Warehouse in Duncan, South Carolina to conduct a physical stock count of the inventory of Owner's Product(s) in the Warehouse at the time that BMG conducts its annual physical inventory (currently, circa April/May of each calendar year) of all products including Owner's Product(s). (c) Notwithstanding anything to the contrary contained herein, with respect to any so-called "stock shrinkage" of Owner's Product(s) in the Warehouse, BMG will bear the manufacturing cost of replacing the missing stock of Owner's Product(s) in excess of one percent (1%) of the number of units of Owner's Product(s) manufactured by BMG and delivered to BMG's Warehouse, and one (1%) percent of the number of units of any graphics and components delivered to BMG's Warehouses, in a given Contract Year. (d) Upon Owner's written request from time to time during the Term, BMG will evidence to Owner (no more frequently than once per each calendar quarter of a given Contract Year and then only in connection with requests made, no sooner than thirty (30) days before (and no later than forty-five (45) days after) a scrapping occurrence and in the form of the so-called

Excess Inventory. Distributor shall have a period of 180 days after the expiration or termination of this Agreement (the “Sell-Off Period”) to sell any remaining inventory of Products. For the purposes of this Section, “inventory” shall mean finished goods inventory, raw materials, work-in-process or finished goods in transit to Distributor. During the Sell-Off Period, Distributor shall continue to comply with all of the provisions of this Agreement notwithstanding the Agreement’s expiration or termination. Distributor may not acquire any additional inventory of Products during the Sell-Off Period, except as required to complete orders placed prior to the date of termination. Within 15 days after the expiration of the Sell-Off Period, Distributor shall: (i) pay Licensor a royalty fee equal to [*]% of the Gross Sales generated during the Sell-Off Period; (ii) provide Licensor with a written report of Gross Sales covering the Sell-Off Period; and (iii) provide Licensor with a written report that includes: (a) On or about the last day a list of all of Distributor’s remaining inventory of unsold Products, including an itemized listing of each month such Products and Distributor’s direct cost to acquire each such Products (or if Distributor manufactures Products under a separate written agreement, Distributor’s direct cost to manufacture each such Products); and (b) a notation identifying any Products that are damaged. Licensor shall have the "Last Day") after right, but not the first six months obligation, to purchase all or any portion of Distributor’s remaining inventory listed in the Term, BMG will determine from BMG's books and record(s) on a selection-by-selection basis and by each configuration thereof the amount of any excess inventory (i.e., more than a one (1) year supply, as determined in accordance with BMG's standard business practices) in BMG's possession or control as of each Last Day and will report such determination to Owner ("Excess Inventory"). Owner, at Owner's election, will either remove Excess Inventory for storage purposes only (at Owner's sole cost and expense of removal and storage) within thirty (30) days of BMG's report under this Paragraph, or promptly pay BMG for each month that any Excess Inventory is retained or controlled by BMG an amount equal to Distributor’s direct costs to acquire, or if applicable, manufacture, the number inventory. Licensor shall notify Distributor within ten (l0) days after receipt of units the report whether it desires to purchase any or all of Excess Inventory multiplied by Ten ($.10) Cents (the "Excess Inventory Charge")Distributor’s remaining inventory. Any Excess Inventory which is removed must such purchase shall be markedcompleted within 30 days after Licensor notifies Distributor of its intent to purchase the inventory. Any remaining Products that are not sold during the Sell-Off Period or purchased by Licensor shall be destroyed or returned to Licensor. Licensor shall not be required to comply with any of its obligations under this Agreement during the Sell-Off Period other than any obligations that survive the termination or expiration of this Agreement. Notwithstanding the foregoing, drilled or otherwise modified by BMG (at Owner's sole cost and expense) beforehand Licensor shall be obligated to adequately distinguish it from all other Owner's Product(s). If Owner fails to remove any Excess Inventory or pay repurchase Distributor’s excess inventory remaining after the Excess Inventory Charge on a timely basis, BMG, subject to the provisions embodied in Paragraph 11(a)(v)(8) and 14(g) hereof, will scrap the Excess Inventory at the applicable per unit price set forth in Exhibit A for scrapping. BMG will invoice Owner for such scrapping and any applicable Excess Inventory charges and Owner will pay such invoice Sell-Off Period in accordance with Paragraphs 14(b) and (c) hereofthis Section if this Agreement is terminated by Distributor due to Licensor’s uncured material breach. (b) Owner will be afforded access once per each Contract Year and during regular business hours to BMG's catalog Warehouse in Duncan, South Carolina to conduct a physical stock count of the inventory of Owner's Product(s) in the Warehouse at the time that BMG conducts its annual physical inventory (currently, circa April/May of each calendar year) of all products including Owner's Product(s). (c) Notwithstanding anything to the contrary contained herein, with respect to any so-called "stock shrinkage" of Owner's Product(s) in the Warehouse, BMG will bear the manufacturing cost of replacing the missing stock of Owner's Product(s) in excess of one percent (1%) of the number of units of Owner's Product(s) manufactured by BMG and delivered to BMG's Warehouse, and one (1%) percent of the number of units of any graphics and components delivered to BMG's Warehouses, in a given Contract Year. (d) Upon Owner's written request from time to time during the Term, BMG will evidence to Owner (no more frequently than once per each calendar quarter of a given Contract Year and then only in connection with requests made, no sooner than thirty (30) days before (and no later than forty-five (45) days after) a scrapping occurrence and in the form of the so-called

Excess Inventory. (a) On If on or about the last day of each month (the "Last Daylast day") after the first six nine months of the Term, BMG will determine determines from BMG's books and record(s) on a selection-by-selection basis and by each configuration thereof the amount of any excess that BMG's inventory (i.e., more than a one (1) year supply, as determined in accordance with BMG's standard business practices) of Owner's Product(s) in BMG's possession or control as of each Last Day and will report such determination to Owner last day is in excess of a one (1) year supply ("Excess Inventory"), BMG will notify Owner to such effect, in writing. Thereafter, Owner, at Owner's election, will either remove such Excess Inventory for storage purposes only (at Owner's Owners sole cost and expense of removal and storage) within thirty (30) days of BMG's report under this Paragraph, or promptly pay BMG for each month that any Excess Inventory is retained or controlled by BMG beyond such thirty (30) day period an amount equal to the number of units of Excess Inventory multiplied by Ten Seven ($.10.07) Cents (the "Excess Inventory Charge"). Any Excess Inventory which is removed must be marked, drilled marked or otherwise modified by BMG (at Owner's sole cost and expense) beforehand to adequately distinguish it from all other Owner's Product(s). If Owner fails to remove any Excess Inventory or pay the Excess Inventory Charge on a timely basis, BMG, subject to the provisions embodied in Paragraph 11(a)(v)(811(a)(v)(B) and 14(g) hereof, will scrap the such Excess Inventory at the applicable per unit price set forth in Exhibit A for scrapping. BMG will invoice Owner for such scrapping and any applicable Excess Inventory charges Charges and Owner will pay such invoice in accordance with Paragraphs 14(b) and (c) hereof. (b) Owner will be afforded access once per each Contract Year and during regular business hours (on at least thirty (30) days prior written notice) to BMG's catalog Warehouse in Duncan, South Carolina to conduct a physical stock count of the inventory of Owner's Product(s) in the Warehouse. It's BMG's preference that Owner visit the Warehouse for physical stock counts at the time that BMG conducts its annual physical inventory (currently, circa April/May of each calendar yearContract Year) of all products including Owner's Product(s). (c) Notwithstanding anything to the contrary contained herein, with With respect to any so-called "stock shrinkage" of Owner's Product(s) in the Warehouse, BMG will bear the manufacturing cost of replacing the missing stock of Owner's Product(s) (including freight costs to the Warehouse) in excess of one percent (1%) of the number of units of Owner's Product(s) manufactured by BMG and delivered to BMG's Warehouse, and one (1%) percent of the number of units of any graphics and components delivered to BMG's Warehouses, Warehouses in a given Contract Year. (d) Upon Owner's written request from time to time during the Term, BMG will evidence to Owner (no more frequently than once per each calendar quarter of a given Contract Year and then only in connection with requests made, no sooner than thirty (30) days before (and no later than forty-five (45) days after) a scrapping occurrence and in the form of the so-called

Excess Inventory. Distributor shall have a period of 180 days after the expiration or termination of this Agreement (the “Sell-Off Period”) to sell any remaining inventory of Products. For the purposes of this Section, “inventory” shall mean finished goods inventory, raw materials, work-in-process or finished goods in transit to Distributor. During the Sell-Off Period, Distributor shall continue to comply with all of the provisions of this Agreement notwithstanding the Agreement’s expiration or termination. Distributor may not acquire any additional inventory of Products during the Sell-Off Period, except as required to complete orders placed prior to the date of termination. Within 15 days after the expiration of the Sell-Off Period, Distributor shall: (i) pay Licensor a royalty fee equal to [*]% of the Gross Sales generated during the Sell-Off Period; (ii) provide Licensor with a written report of Gross Sales covering the Sell-Off Period; and (iii) provide Licensor with a written report that includes: (a) On or about the last day a list of all of Distributor’s [*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. remaining inventory of unsold Products, including an itemized listing of each month such Products and Distributor’s direct cost to acquire each such Products (or if Distributor manufactures Products under a separate written agreement, Distributor’s direct cost to manufacture each such Products); and (b) a notation identifying any Products that are damaged. Licensor shall have the "Last Day") after right, but not the first six months obligation, to purchase all or any portion of Distributor’s remaining inventory listed in the Term, BMG will determine from BMG's books and record(s) on a selection-by-selection basis and by each configuration thereof the amount of any excess inventory (i.e., more than a one (1) year supply, as determined in accordance with BMG's standard business practices) in BMG's possession or control as of each Last Day and will report such determination to Owner ("Excess Inventory"). Owner, at Owner's election, will either remove Excess Inventory for storage purposes only (at Owner's sole cost and expense of removal and storage) within thirty (30) days of BMG's report under this Paragraph, or promptly pay BMG for each month that any Excess Inventory is retained or controlled by BMG an amount equal to Distributor’s direct costs to acquire, or if applicable, manufacture, the number inventory. Licensor shall notify Distributor within ten (l0) days after receipt of units the report whether it desires to purchase any or all of Excess Inventory multiplied by Ten ($.10) Cents (the "Excess Inventory Charge")Distributor’s remaining inventory. Any Excess Inventory which is removed must such purchase shall be markedcompleted within 30 days after Licensor notifies Distributor of its intent to purchase the inventory. Any remaining Products that are not sold during the Sell-Off Period or purchased by Licensor shall be destroyed or returned to Licensor. Licensor shall not be required to comply with any of its obligations under this Agreement during the Sell-Off Period other than any obligations that survive the termination or expiration of this Agreement. Notwithstanding the foregoing, drilled or otherwise modified by BMG (at Owner's sole cost and expense) beforehand Licensor shall be obligated to adequately distinguish it from all other Owner's Product(s). If Owner fails to remove any Excess Inventory or pay repurchase Distributor’s excess inventory remaining after the Excess Inventory Charge on a timely basis, BMG, subject to the provisions embodied in Paragraph 11(a)(v)(8) and 14(g) hereof, will scrap the Excess Inventory at the applicable per unit price set forth in Exhibit A for scrapping. BMG will invoice Owner for such scrapping and any applicable Excess Inventory charges and Owner will pay such invoice Sell-Off Period in accordance with Paragraphs 14(b) and (c) hereofthis Section if this Agreement is terminated by Distributor due to Licensor’s uncured material breach. (b) Owner will be afforded access once per each Contract Year and during regular business hours to BMG's catalog Warehouse in Duncan, South Carolina to conduct a physical stock count of the inventory of Owner's Product(s) in the Warehouse at the time that BMG conducts its annual physical inventory (currently, circa April/May of each calendar year) of all products including Owner's Product(s). (c) Notwithstanding anything to the contrary contained herein, with respect to any so-called "stock shrinkage" of Owner's Product(s) in the Warehouse, BMG will bear the manufacturing cost of replacing the missing stock of Owner's Product(s) in excess of one percent (1%) of the number of units of Owner's Product(s) manufactured by BMG and delivered to BMG's Warehouse, and one (1%) percent of the number of units of any graphics and components delivered to BMG's Warehouses, in a given Contract Year. (d) Upon Owner's written request from time to time during the Term, BMG will evidence to Owner (no more frequently than once per each calendar quarter of a given Contract Year and then only in connection with requests made, no sooner than thirty (30) days before (and no later than forty-five (45) days after) a scrapping occurrence and in the form of the so-called