Common use of Inventory Adjustment Clause in Contracts

Inventory Adjustment. (A) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on or prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amount.

Inventory Adjustment. (Aa) Following Within 90 days following the Closing Date, Buyer shall Acquiror will prepare and deliver to Seller a statement setting forth Acquiror’s calculation of the value of the Rochas Inventory, as determined pursuant to Section 1.09 of the Seller Disclosure Letter (the “Closing Statement”). The Closing Statement will be prepared in a manner and format consistent with the accounting policies, procedures and principles used to determine the estimated number Estimated Closing Statement as set forth in Section 1.09 of unitsthe Seller Disclosure Letter. Upon the request of Acquiror, for each Inventory CategorySeller will provide to Acquiror and its accountants access during normal business hours to the books and records, any other information, and any employees of Seller or any other member of the Seller Group, that Seller determines is reasonably necessary for Acquiror to prepare the Closing Statement, to respond to any Seller Objection and to prepare materials for presentation to the Accounting Firm contemplated by this Section 1.10, and Seller will otherwise cooperate with and assist Acquiror as Acquiror may reasonably request to carry out the purposes of this Section 1.10. (b) For a period of 30 days after delivery of the Closing Statement, Acquiror will provide Seller with reasonable access to all books, records, work papers, personnel and other materials and sources used by Acquiror to prepare the Closing Statement and not already in the possession or under the control of Seller to the extent reasonably related to the determinations contemplated by this Section 1.10. The Closing Statement will be binding and conclusive upon, and deemed accepted by, Seller unless Seller notifies Acquiror in writing within 30 days after delivery of the Closing Statement of any good faith objection thereto (the “Seller Objection”). Any Seller Objection will set forth a description in reasonable detail of the basis of the Seller Objection and the specific adjustments to the values reflected in the Closing Statement prepared by Acquiror which Seller believes should be made. Any items not disputed during the foregoing 30-day period will be deemed to have been accepted by Seller, without reservations, and will be final and binding on the Parties. In the event a Seller Objection is sent to Acquiror, Acquiror and Seller shall attempt to reach an Agreement on the specific adjustments raised by Seller. (c) If Seller and Acquiror are unable to resolve any of their disputes with respect to the Closing Statement within 30 days following Acquiror’s receipt of the Seller Objection pursuant to Section 1.10(b), the Parties agree to submit the dispute to administered expert proceedings in accordance with the Rules for the Administration of Expert Proceedings of the International Chamber of Commerce (“ICC Expert Rules”). The Parties agree that the findings of the expert shall be contractually binding upon them. In this respect, either party may refer the remaining disputed items to an independent accounting firm mutually selected by Seller and Acquiror (the “Accounting Firm”) who will act as an expert pursuant to the ICC Expert Rules or in the event that the Parties are unable to agree on an independent accounting firm within 14 days following a notice by one of the Parties proposing an Accounting Firm, the Accounting Firm shall be selected pursuant to the ICC Expert Rules. The Accounting Firm shall make a written determination as to each then-remaining disputed item, which written determination will be final, binding and not appealable by the Parties as to each such disputed item. The Accounting Firm will act as an expert and not an arbitrator and will address only those items that are in dispute. If the Accounting Firm does not accept its appointment or cannot or will not carry out its duties for any reason or is materially conflicted, the Parties shall promptly meet to agree on a replacement. With respect to any item or the Closing Statement for which a determination is to be made by the Accounting Firm, the Accounting Firm shall remain within the range of values assigned to each items in the Closing Statement and the Seller Objection respectively. The Accounting Firm will not have any contacts with any Party without providing the other with a reasonable opportunity to participate, and shall provide each Party with any written documents provided to it by the other. The Accounting Firm will make its determinations pursuant to this Agreement and the most current financial information reasonably available in the Ordinary Course of Rochas Business based on the materials submitted to it by the Parties subject to the terms of this Agreement. Each Party agrees to execute, if requested by the Accounting Firm, a reasonable engagement letter, including customary indemnification protections for the Accounting Firm. The Accounting Firm will comply with any arbitral decision rendered pursuant to Section 10.04 with respect to the interpretation or application of the present Agreement. (d) The Parties will use their reasonable best efforts to cause the Accounting Firm to (i) have been shipped and for which invoices have been issued on or prior to send to the Closing Date Parties a draft report setting out its preliminary conclusions within 20 Business Days from the appointment of the Accounting Firm, and to offer the Parties a reasonable opportunity to comment thereon and (ii) remain issue a report setting forth its final calculation of the inventory adjustment within 45 Business Days from the date of the appointment of the Accounting Firm. The costs of any dispute resolution pursuant to Section 1.10(e) and Section 1.10(d), including the fees and expenses of the Accounting Firm, will be borne by Seller and Acquiror in the possession proportion determined by Accounting Firm, which will base its decision upon the relative extent to which Seller’s and Acquiror’s relative positions regarding the inventory adjustment are upheld in the final report of distributors the Accounting Firm. (e) The Closing Statement will become final, binding and not appealable by the Parties except in the event of a mathematical error upon the earliest of (i) if no Seller Objection has been given, the expiration of the period within which Seller must make its objection pursuant to Section 1.10(b), (ii) the agreement in writing by Seller and Acquiror that the Closing Statement, together with any modifications thereto agreed by Seller and Acquiror, is final, binding and not appealable by the Parties, and (iii) the date on which the Accounting Firm issues its written determination with respect to any dispute relating to such Closing Statement pursuant to Section 1.10(b). The Closing Statement, as submitted by Acquiror if no timely Seller Objection has been given, as adjusted pursuant to any agreement between the Parties or retailers as finally determined pursuant to the decision of the Accounting Firm, when final, binding and have not been sold through appealable by the Parties and upon which a judgment may be entered by a court of competent jurisdiction, is herein referred to end users (such number being as the “Preliminary Final Closing Statement.” The value of the Rochas Inventory Level” for such Inventory Category). No later than forty-two (42) days after as set forth in the Final Closing Date, Buyer shall deliver to Seller a report (Statement is the “Preliminary Final Inventory Report”) showing Amount.” Notwithstanding anything to the Preliminary Inventory Level for each Inventory Category. Following delivery contrary herein, including by determination of the Preliminary Inventory ReportAccounting Firm, in no event will the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall Amount be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Reportmore than 6% greater than, nor more than 6% less than, the Final Estimated Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (Cf) If the The Closing Rochas Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration Payment payable pursuant to this Section 2(d)(v)(C)1.10(f) will be paid by wire transfer of immediately available funds to a bank account or accounts designated by Seller or Acquiror, as applicable. The “Closing Rochas Inventory Payment” will be equal to the Final Inventory Amount minus the Estimated Inventory Amount. If the Closing Rochas Inventory Adjustment Amount exceeds zeroPayment is positive, then Acquiror will pay, on a Dollar for Dollar basis, to Seller the Cash Consideration shall Closing Rochas Inventory Payment. If the Closing Rochas Inventory Payment is negative, then Seller will pay, on a Dollar for Dollar basis, to Acquiror the absolute value of the Closing Rochas Inventory Payment. (g) Any amounts owed under Section 1.10(f) by Seller or Acquiror (as applicable) will be reduced by an amount equal paid, together with interest on such amount, from the Closing Date to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal date of such payment, calculated on the basis of the EURIBOR 1-month lending rate on the Closing Date plus 2.0%, no later than 5 Business Days as from the date of the Accounting Firm’s final report in immediately available funds to the Inventory Adjustment Amountbank accounts designated by Acquiror or Seller (as applicable), and such payments will be made to Acquiror or to Seller (as applicable) without any setoff, deduction or counterclaim.

Inventory Adjustment. (Aa) Following At least one business day prior to the Closing, Seller shall deliver to Purchaser its good faith estimate of the net book value of the Transferred Inventory as of the Closing Date (the “Estimated Inventory Value”). Part 1.5(a) of the Disclosure Letter contains an example calculation of Estimated Inventory Value as of October 5, 2013. The Closing Payment will be adjusted upwards or downwards as follows: (i) if Estimated Inventory Value exceeds $9,000,000 (the “Inventory Value Target”), then the Closing Payment will be increased by such excess, and (ii) if the Estimated Inventory Value is less than the Inventory Value Target, then the Closing Payment will be reduced by the amount by which Estimated Inventory Value is less than the Inventory Value Target. (b) Any amount by which the net book value of the Transferred Inventory as of the Closing Date (the “Closing Date Inventory Value”) is less than the Inventory Value Target will reduce the Purchase Price, and any amount by which the Closing Date Inventory Value is greater than the Inventory Value Target will increase the Purchase Price. (c) Within 70 calendar days of the Closing Date, Buyer the Seller shall prepare and deliver to the Purchaser a statement setting forth the calculation of the Closing Date Inventory Value, including the components thereof. (d) The Purchaser will notify the Seller in writing of any objections to the Seller’s computation of Closing Date Inventory Value within 15 calendar days after the Purchaser receives the statement thereof. If the Purchaser does not notify the Seller of any such objections by the end of that 15-day period, then the Closing Date Inventory Value will be considered final at the end of the last day of that 15-day period. If the Purchaser does notify the Seller of any such objections by the end of that 15-day period and the Purchaser and the Seller are unable to resolve their differences within 15 calendar days thereafter, then the Purchaser and the Seller will instruct their respective accountants to use commercially reasonable efforts to resolve such disputed items to their mutual satisfaction and to deliver a final calculation of Closing Date Inventory Value to the Purchaser and the Seller as soon as reasonably possible. If the Purchaser’s accountants and the Seller’s accountants are unable to resolve any such disputed items within 15 calendar days after receiving such instructions, then the remaining disputed items and the value attributable to them by each of the Purchaser and the Seller will be submitted to a nationally recognized accounting firm mutually agreed by the Purchaser and the Seller (the “Accounting Arbiter”) for resolution, and the Accounting Arbiter will be instructed to determine the estimated number final Closing Date Inventory Value and deliver the same to the Purchaser and the Seller as soon as possible. The Accounting Arbiter will consider only those items and amounts in the Purchaser’s and the Seller’s respective calculations of unitsthe Closing Date Inventory Value that are identified as being items and amounts to which the Purchaser and the Seller have been unable to agree. In resolving any disputed item, the Accounting Arbiter may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Accounting Arbiter’s determination of the Closing Date Inventory Value will be based solely on the financial records of the Business consistent with the past practices of the Business (i.e., not on independent review) and on the definition of Closing Date Inventory Value included herein. The determination of the Accounting Arbiter will be final, conclusive and binding upon the parties hereto. Neither the Purchaser nor the Seller will have any right to, and will not, institute any Proceeding challenging such determination or with respect to the matters that are the subject of this Section 1.5, except that the foregoing will not preclude a Proceeding to enforce such determination. If the Accounting Arbiter’s determination of Closing Date Inventory Value is closer to the value initially asserted by the Purchaser to the Accounting Arbiter, then the Seller will pay the costs of the Accounting Arbiter. If the Accounting Arbiter’s determination of Closing Date Inventory Value is closer to the value initially asserted by the Seller to the Accounting Arbiter, then the Purchaser will pay the costs of the Accounting Arbiter. Each of the Seller and the Purchaser and their respective Affiliates will cooperate with and assist the Accounting Arbiter to determine the final Closing Date Inventory Value, including by making available and granting reasonable access to records and employees. The terms of engagement of the Accounting Arbiter for the purposes of this Section 1.5(c) shall be such reasonable commercial terms as shall be agreed between the Seller and the Purchaser consistently with the provisions of this Section 1.5. If the Seller and the Purchaser fail to agree on terms of engagement for the Accounting Arbiter within 5 calendar days, the Seller and the Purchaser agree that each of them will execute the standard form of the Accounting Arbiter’s terms of engagement as proposed by the Accounting Arbiter for its appointment. (e) Within five (5) business days after the final determination of the Closing Date Inventory Category, that Value in accordance with this Section 1.5: (i) have been shipped and for which invoices have been issued on or prior to if the Closing Date and Inventory Value is greater than the Estimated Inventory Value, the Purchaser will cause the amount by which the Closing Date Inventory Value exceeds the Estimated Inventory Value to be paid to the Seller by wire transfer of immediately available funds to an account designated by the Seller; and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after if the Closing Date, Buyer shall deliver to Seller a report (Date Inventory Value is less than the “Preliminary Estimated Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory ReportValue, the Final Seller shall cause the amount by which the Closing Date Inventory Report showing Value is less than the Final Estimated Inventory Level for each Inventory Category shall Value to be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made paid to the Cash Consideration pursuant Purchaser by wire transfer of immediately available funds to this Section 2(d)(v)(C). If an account designated by the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment AmountPurchaser.

Inventory Adjustment. (Ai) Following Before the Closing, Seller shall prepare and deliver to Buyer a statement (the “Perpetual Inventory Statement”) setting forth the type, value (net of a reserve of $850,000, which reserve shall be reflected thereon) and location, as of the close of business on the day immediately preceding the Closing Date, Buyer of the inventory of the Company and the Subsidiaries, which statement shall determine be derived from the estimated number of units, for each Inventory Category, that (i) have been shipped perpetual inventory records maintained by the Company and for which invoices have been issued on or prior to the Closing Date and (ii) remain Subsidiaries in the possession ordinary course of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category)business consistent with past practices. No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery The value of the Preliminary inventory on the Perpetual Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category Statement shall be determined in accordance with GAAP (as defined herein) on a basis consistent with the procedures audited Statement of Net Assets of the Company and the Subsidiaries Expected to be Sold as of March 2, 2002, including the notes thereto. Seller shall also prepare and deliver to Buyer a reconciliation between the perpetual inventory records maintained by the Company and the general ledger as of the date of the Perpetual Inventory Statement. (ii) Seller shall take, and Buyer shall have the right to observe, a physical count of the inventory of the Company and the Subsidiaries at each of 10 warehouses of the Company and the Subsidiaries selected by Buyer (the foregoing inventory being referred to as the “Sample Inventory”), which physical counts of the Sample Inventory shall be completed during the weekend preceding the Closing Date, if and to the extent practicable or, to the extent not completed during such weekend, during the first weekend immediately following the Closing Date (the date on which the last such physical count shall have been completed being referred to as the “Completion Date”). Such physical counts shall consist solely of a count by type of the inventory at each such warehouse, without regard to the quality, age, condition or any other criterion with respect to such inventory. Buyer shall select the warehouses referred to above by written notice to Seller no less than 10 business days prior to the date of each applicable physical count. On the date of each physical count with respect to each location referred to above, Seller (if such physical count occurs prior to Closing) or Buyer (if such physical count occurs after Closing), as applicable, shall prepare and deliver to the other party a statement (each, a “Reference Inventory Statement”) setting forth the type, count and value (determined in accordance with Section 2(c)(i)) of the applicable Sample Inventory at such location as of such date, which statement shall be based solely on the perpetual inventory records maintained by the Company and the Subsidiaries in the ordinary course of business consistent with past practices and shall not be adjusted to reflect the results of the physical inventories. From and after the Closing Date through the date on which the Physical Inventory Statement (as defined below) becomes final and binding pursuant to Section 2(c)(v) hereof, Buyer shall cause the Company and the Subsidiaries to maintain their perpetual inventory records in a manner consistent with their past practices in the ordinary course of business. Within seven days following the Completion Date, Seller shall prepare a statement (the “Physical Inventory Statement”) setting forth the type, count, value (determined in accordance with Section 2(c)(i)) and location of the Sample Inventory as of the dates of the physical counts thereof, which statement shall be derived from such physical counts and shall value the Sample Inventory at the same rates applied in the corresponding Reference Inventory Statements. Buyer shall provide Seller and its accountants, upon reasonable notice, such access to the books and records, to any other information, including working papers of Buyer’s accountants, and to any employees of Buyer and its affiliates, in each case as may be reasonably necessary for Seller to take such physical counts, prepare the Physical Inventory Statement, respond to the Buyer’s Inventory Objection (as defined in Section 2(c)(iii)) and prepare materials for presentation to the Arbitrator in connection with the matters contemplated by Section 2(c)(iv). Buyer shall also provide or cause to be provided to Seller and its designees such access as such persons may reasonably request to all facilities at which inventory of the Company and the Subsidiaries is located in order to conduct such physical counts. (iii) Buyer shall, within 10 days after the delivery by Seller of the Physical Inventory Statement, complete its review thereof. After delivery of the Physical Inventory Statement, Seller shall provide Buyer and its accountants, upon reasonable notice, such access to the books and records, to any other information, including working papers of Seller’s accountants, and to any employees of Seller and its affiliates, in each case used in the preparation of the Physical Inventory Statement or as may otherwise be reasonably necessary for Buyer to prepare the Buyer’s Inventory Objection and to prepare materials for presentation to the Arbitrator in connection with the matters contemplated by Section 2(c)(iv). The Physical Inventory Statement shall be binding and conclusive upon, and deemed accepted by, Buyer unless Buyer shall have notified Seller in writing within 10 days after delivery to Buyer of the Physical Inventory Statement of any objection thereto (the “Buyer’s Inventory Objection”). The Buyer’s Inventory Objection shall set forth a description of the basis of the Buyer’s Inventory Objection and the adjustments to the count of Sample Inventory reflected on the Physical Inventory Statement that Buyer believes should be made; provided, that the only permissible bases for a Buyer’s Inventory Objection shall be that the count reflected in the Physical Inventory Statement is inaccurate or that the Sample Inventory has not been valued at last cost in accordance with prior practices and GAAP. Any items not disputed during the foregoing 10-day period shall be deemed to have been accepted by Buyer. (iv) If Seller and Buyer are unable to resolve all of their disputes with respect to the Physical Inventory Statement within 30 days following Seller’s receipt of the Buyer’s Inventory Objection, they shall refer their remaining differences to the Arbitrator for decision, which decision shall be made consistent with the principles set forth in this Section 2(d)(vi2(c) belowwithin 30 days and shall be final and binding on the parties, provided that the Arbitrator’s determination as to any item set forth in the Buyer’s Inventory Objection shall not be more beneficial to Seller than the determination of that item by Seller in the Physical Inventory Statement or more beneficial to Buyer than the determination of that item in the Buyer’s Inventory Objection. Any expenses relating to the engagement of the Arbitrator shall be shared equally by Seller and Buyer. (Bv) Promptly after The Physical Inventory Statement shall become final and binding on the Resolution Date for parties upon the Final earliest of (i) if no Buyer’s Inventory ReportObjection has been given, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) expiration of the Disclosure Scheduleperiod within which Buyer must make its objection pursuant to Section 2(c)(iii) hereof, (ii) agreement in writing by Seller and Buyer that the Physical Inventory Statement, together with the Category Adjustment Amounts any modifications thereto agreed to by Seller and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zeroBuyer, no adjustment shall be made final and binding and (iii) the date on which the Arbitrator shall issue its written determination with respect to any dispute relating to such Physical Inventory Statement. The Physical Inventory Statement, as submitted by Seller if no timely Buyer’s Inventory Objection has been given or as adjusted pursuant to any agreement between the parties or as determined pursuant to the Cash Consideration decision of the Arbitrator, in each case pursuant to this Section 2(d)(v)(C2(c), is herein referred to as the “Final Physical Inventory Statement.” (vi) Within five business days following issuance of the Final Physical Inventory Statement, Seller or Buyer, as applicable, shall pay the net adjustment payment payable pursuant to this Section 2(c)(vi) (the “Adjustment Payment”) (if any) and interest thereon by wire transfer of immediately available funds to a bank account or bank accounts designated in writing by Seller or Buyer, as applicable. If the aggregate value of Sample Inventory Adjustment Amount reflected on the Final Physical Inventory Statement exceeds zerothe aggregate value of Sample Inventory reflected on the Reference Inventory Statements, the Cash Consideration Adjustment Payment shall be reduced made by an Buyer and shall equal the amount of such excess. If the aggregate value of Sample Inventory reflected on the Reference Inventory Statements exceeds the aggregate value of Sample Inventory reflected on the Final Physical Inventory Statement, the Adjustment Payment shall be made by Seller and shall equal the amount of such excess. The Adjustment Payment (if any) shall bear interest from the Closing Date to the Inventory date of payment at the prime commercial lending rate quoted as of the Closing Date by M▇▇▇▇▇ Guaranty Trust Company of New York, which interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed and such interest shall be paid on the same date and in the same manner as such Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment AmountPayment.

Inventory Adjustment. The cash portion of the Purchase Price shall also be increased by the amount of any Aggregate Inventory Surplus (Aas defined and determined below) Following or decreased by the Closing Dateamount of any Aggregate Inventory Deficiency (as defined and determined below). For each category of Inventory identified on Schedule 2.05 (each, Buyer an “Inventory Category”), the following amounts shall determine be calculated: (i) if (x) the estimated number of unitspounds or tons, as applicable, of inventory of such Inventory Category at Closing less (y) applicable reserves (expressed in pounds or tons, as applicable) established in accordance with the Accounting Principles (for each Inventory Category, that its “Closing Inventory Amount”) is greater than the “Target Closing Inventory Amount” identified for such Inventory Category on Schedule 2.05 (its “Target Closing Inventory Amount”), the cash portion of the Purchase Price shall be increased by an amount (such amount, if any, the “Inventory Surplus Value”) equal to (i) have been shipped the difference between the Closing Inventory Amount for such Inventory Category and the Target Closing Inventory Amount for which invoices have been issued on or such Inventory Category multiplied by (ii) the average Applicable Cost for such Inventory Category during the one hundred twenty (120) day period prior to the Closing Date and (for each Inventory Category, its “Pre-Closing Applicable Cost”); (ii) remain in if the possession of distributors or retailers and have not been sold through to end users (Closing Inventory Amount for such number being Inventory Category is less than the “Preliminary Target Closing Inventory Level” Amount for such Inventory Category, the cash portion of the Purchase Price shall be decreased by an amount (such amount, if any, the “Inventory Deficiency Value”) equal to (i) the difference between the Closing Inventory Amount for such Inventory Category and the Target Closing Inventory Amount for such Inventory Category multiplied by (ii) the Pre-Closing Applicable Cost for such Inventory Category; (iii) if the sum of all of the Inventory Surplus Values is greater than the sum of all of the Inventory Deficiency Values, then such excess shall be the “Aggregate Inventory Surplus”); and (iv) if the sum of all of the Inventory Deficiency Values is greater than the sum of all of the Inventory Surplus Values, then such excess shall be the “Aggregate Inventory Deficiency”). No later than forty-two (42) days after the Closing DateAs used herein, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery Applicable Cost” of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall mean cost of such item (on a per pound or ton, as applicable, basis) that would be determined reflected on a balance sheet prepared in accordance with the procedures set forth in Section 2(d)(vi) belowAccounting Principles. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amount.

Inventory Adjustment. (Aa) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on On or prior to the Closing Date, the SELLER and the BUYER shall jointly conduct a physical count of the Inventory as of the Closing Date and the BUYER shall make or cause to be made a calculation of the Inventory value as of the Closing Date (the (i) the Calculation shall be reduced by the value of (a) Inventory that is adulterated or is otherwise not of good and merchantable quality, and (b) all finished goods Inventory that has a shelf-life expiration date of less than twelve (12) months (or, in the case of BAN clear roll-on, six (6) months) from the Closing Date, in each case net of any reserves for such items included in the Calculation; and (ii) remain the Calculation shall be reduced by 50% of the value of any Inventory that exceeds a twelve (12) month supply (as measured on the basis of sales for the six (6) month period preceding the Closing Date, other than BAN Naturals, which shall be measured on the basis of projected sales for the period June 1, 2000 through November 30, 2000 as set forth on Schedule 2.2), to the extent of such excess, but in no event shall the possession Calculation include an amount greater than 50% of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” standard cost for such Inventory Category)excess items. No later than fortyFor purposes of the Calculation, all "twin-two pack" or similarly packaged items shall be treated as separate stock items. The BUYER shall also provide SELLER with copies of the Calculation and all work papers associated therewith within fifteen (4215) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (Bb) Promptly after SELLER shall have a period of thirty (30) days in which to review the Resolution Date for Calculation and the Final Inventory Reportwork papers associated therewith provided by the BUYER. If the SELLER disagrees with all or any part of the Calculation, the Final Inventory Values SELLER shall have the right to notify BUYER in writing of such disagreement and SELLER'S reasons for so disagreeing, in which case the SELLER and the BUYER shall attempt to resolve the disagreement. If within fifteen (15) days after receipt by BUYER of such notice, the SELLER and the BUYER are unable to resolve the differences, if any, arising as a result of the Calculation, they or either of them shall submit a statement of all unresolved differences together with copies of the Calculation to Ernst & Young LLP or such other independent accounting firm as shall be determined based on mutually agreed (the Final Inventory Levels shown on the Final Inventory Report "Accountants") for a binding and unit prices shown on Section 2(d)(v)(Bnonappealable determination to be rendered within thirty (30) days after such submission. All fees and expenses of the Disclosure Schedule, together with Accountants incurred in this capacity shall be billed to and shared equally by the Category Adjustment Amounts SELLER and the Inventory Adjustment AmountBUYER. (Cc) If the Calculation reflects an Inventory Adjustment Amount value that is zeroeither less than or in excess of $5,507,252, no adjustment shall the Purchase Price will be made reduced or increased dollar-for-dollar, as the case may be, by the amount of such difference, and the BUYER will pay the amount of any such increase to the Cash Consideration pursuant SELLER or the SELLER will pay the amount of any such decrease to this Section 2(d)(v)(C). If the BUYER, in immediately available funds, within five business days after the final determination of the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amountvalue.

Inventory Adjustment. (Aa) Following As soon as practicable after Closing, but in any event not later than thirty (30) days thereafter, the parties shall jointly conduct a physical count (or a cycle count if so agreed by the parties and acceptable to the Purchasers’ auditors) of the Brand Inventory. Based upon such physical count (or cycle count, as the case may be) and the Reserve Certification furnished by the Sellers at Closing pursuant to Section 7.4(m), the parties shall calculate the net book value of the Brand Inventory (the “Closing Inventory Value”). Each party shall make available to the other party upon request copies of the work papers used in its calculations. (b) In the event of any difference in the parties’ calculations of the Closing DateInventory Value, Buyer the parties shall determine attempt in good faith to reconcile such differences. If such differences remain unreconciled after ten (10) days, the estimated number parties shall submit a statement of unitsall unresolved differences together with copies of their respective calculations and work papers, to PricewaterhouseCoopers LLP (the “Accountants”) for each a binding and nonappealable determination of the Closing Inventory CategoryValue to be rendered within thirty (30) days after such submission. All fees of the Accountants incurred in this capacity shall be billed to and shared equally by the Sellers and the Purchasers. (c) For purposes of determining the Purchase Price, that if the Inventory Value differs by more than five percent (5%) from the Closing Inventory Value, the Base Price shall be (i) have been shipped and for which invoices have been issued on decreased, if the Inventory Value exceeds the Closing Inventory Value, by the full amount of such excess, or prior (ii) increased, if the Closing Inventory Value exceeds the Inventory Value, by the full amount of such excess. Any Base Price purchase price adjustment required under Section 3.3 shall be paid in cash to the appropriate recipient within ten (10) Business Days after the amount of the payment is determined. Such payment shall be accompanied by interest from the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined in accordance with the procedures set forth in Section 2(d)(vi) belowcalculated at 5 percent per annum. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amount.

Inventory Adjustment. (A) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on or prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zeroequal to the Estimated Inventory Adjustment Amount, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Estimated Inventory Adjustment Amount exceeds zerothe Inventory Adjustment Amount, the Cash Consideration shall be increased by the amount of such excess and Buyer shall pay to Seller an amount equal to such excess. If the Inventory Adjustment Amount exceeds the Estimated Inventory Adjustment Amount, the Cash Consideration shall be reduced by an the amount equal to the Inventory Adjustment Amount of such excess and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amountsuch excess.

Inventory Adjustment. (Aa) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on or prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) Within 15 days after the Closing Date, or at such other time as agreed between the Parties, Buyer shall deliver to and Seller will jointly conduct a report physical count and valuation of the Inventory as of the Closing Date (the “Preliminary Closing Date Inventory”), using the Inventory ReportValuation Principles. The Purchase Price shall be (i) increased, on a dollar-for dollar basis, in the event and to the extent that the value of the Closing Date Inventory as determined under this Section 3.04(a) (the “Closing Inventory Value”) showing is greater than the Preliminary Estimated Inventory Level Value, and (ii) decreased, on a dollar-for-dollar basis, in the event and to the extent that the Closing Inventory Value is less than the Estimated Inventory Value (the “Inventory Adjustment”). The Parties agree the Inventory Adjustment shall be paid in cash in the following manner: (i) if the Inventory Adjustment calls for each an increase in the Purchase Price, Buyer shall pay Seller the amount of any such increase in the Purchase Price in cash not later than five Business Days following the date on which the Inventory Category. Following delivery Adjustment is determined, and (ii) if the Inventory Adjustment calls for a decrease in the Purchase Price, Seller shall pay Buyer the amount of any such decrease in the Inventory Adjustment in cash not later than five Business Days following the date on which the Inventory Adjustment is determined; in either case in immediately available funds by wire transfer to an account designated by the receiving Party thereof. (b) If Seller and Buyer fail to reach an agreement with respect to the Closing Inventory Value, then such amount shall be submitted for resolution to an impartial regionally or nationally recognized firm of independent certified public accountants mutually appointed by Buyer and Seller (the “Independent Accountant”) within 15 days after performance of the Preliminary Closing Date Inventory. Each of Buyer and Seller shall submit to the Independent Accountant their estimation of the Closing Inventory ReportValue (the “Estimated Value”). The Independent Accountant, acting as experts and not arbitrators, shall inspect the Final Inventory Report showing and shall make a determination of the Final Closing Inventory Level for Value (the “Accountant Determined Value”), which must be within the range of Estimated Values submitted by each Inventory Category shall be determined of Buyer and Seller and in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values Valuation Principles. The Accountant Determined Value shall be determined based final and binding on the Final Inventory Levels shown on Parties, and the Final Inventory Report Purchase Price shall be adjusted and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and applicable Party shall pay the Inventory Adjustment Amount. (C) If as a result of such Accountant Determined Value within five Business Days of its determination. The fees and expenses of the Inventory Adjustment Amount is zero, no adjustment Independent Accountant shall be made paid by Seller, on the one hand, and by Buyer, on the other hand, in proportion to the Cash Consideration pursuant to this Section 2(d)(v)(C). If difference between the Inventory Adjustment Amount exceeds zero, Estimated Value submitted by such Party and the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment AmountAccountant Determined Value.

Inventory Adjustment. (A) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on or prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “"Preliminary Inventory Level” " for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “"Preliminary Inventory Report”") showing the Preliminary thePreliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zeroequal to the Estimated Inventory Adjustment Amount, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Estimated Inventory Adjustment Amount exceeds zerothe Inventory Adjustment Amount, the Cash Consideration shall be increased by the amount of such excess and Buyer shall pay to Seller an amount equal to such excess. If the Inventory Adjustment Amount exceeds the Estimated Inventory Adjustment Amount, the Cash Consideration shall be reduced by an the amount equal to the Inventory Adjustment Amount of such excess and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amountsuch excess.

Inventory Adjustment. (A) Following the Closing Date, Buyer shall determine the estimated number of units, for each Inventory Category, that (i) have been shipped and for which invoices have been issued on or prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery The Buyer’s calculation of the Preliminary Purchase Price pursuant to Section 2.1 above assumes that the actual aggregate book value of the Inventory ReportAssets and the Vendor Deposits as of the Closing, the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined calculated in accordance with the procedures set forth in Section 2(d)(vi) belowSeller’s past practices (the “Inventory Actual Closing Value”), will be at least equal to $227,000 (the “Inventory Target Closing Value”). (B) Promptly after 2.2.2.1 In the Resolution Date for event that the Final Inventory ReportActual Closing Value is less than the Inventory Target Closing Value at the Closing, the Final Inventory Values shall be determined based Buyer may reduce the Purchase Price on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced a dollar for dollar basis by an amount equal to (i) the Inventory Adjustment Amount and Seller Target Closing Value, minus (ii) the Inventory Actual Closing Value (an “Inventory Deduction”); provided, however, that the Buyer may not make any Inventory Deduction unless the amount of the anticipated Inventory Deduction is in excess of $3,000, in which case the Inventory Deduction may be made back to the first dollar. In the event that the Inventory Actual Closing Value is less than the Inventory Target Closing Value at Closing, the amount of any such Inventory Deduction shall be paid to the Buyer within ten (10) Business Days following the delivery of the certification contemplated by Section 2.2.1 above by check or wire transfer, according to written wire instructions provided by the Buyer to the Seller 2.2.2.2 In the event that the Inventory Actual Closing Value is greater than the Inventory Target Closing Value at the Closing, the Buyer shall pay to Buyer the Seller, on a dollar for dollar basis, an amount equal to (i) the Inventory Adjustment AmountActual Closing Value minus (ii) the Inventory Target Closing Value (an “Inventory Addition”); provided, however, that the Buyer shall not make an Inventory Addition unless the amount of the anticipated Inventory Addition is in excess of $3,000, in which case the Inventory Addition may be made back to the first dollar. The Buyer shall have six (6) months from the Closing Date (or until November 15, 2021) within which to make any Inventory Addition payment. For clarity, the Buyer may make any Inventory Addition payment in a single lump-sum payment or in multiple payments so long as the full amount of the Inventory Addition payment is paid in full on or before November 15, 2021. Any Inventory Addition payment shall not be treated as an adjustment to the Purchase Price.

Inventory Adjustment. (Aa) Following Purchaser shall have between the Closing Dateapplicable Cut-Over until the date that is two months after the date of the applicable Cut-Over to conduct a physical inventory count of the Inventory with respect to the applicable Product Line, Buyer consistent with Seller’s past practice, (with respect to each Product Line, the “Adjustment Review Period”) in order to dispute the quantity of the Inventory identified on Schedule 1.1(a)(ii). Purchaser and its duly authorized representatives shall determine have the estimated number right to conduct a physical inspection and count of unitsthe Honeywell Inventory with respect to the applicable Product Line that will be shipped to Purchaser post Cut-Over (as defined with respect to each Product Line in the applicable Transition Services Agreement), and shall have the right to visit, observe and inspect the Inventory in order for each Purchaser to verify the identify, count, and condition of the items included in the Inventory. (b) After the applicable Adjustment Review Period, Purchaser shall have fifteen (15) business days to dispute the Honeywell Inventory Categorywith respect to the applicable Product Line. If Purchaser has not given Seller written notice (a “Dispute Notice”) of Purchaser’s objection to the Honeywell Inventory quantities identified on Schedule 1.1(a)(ii) within such time period, that then the Inventory identified on Schedule 1.1(a)(ii) with respect to the applicable Product Line shall be considered final. (ic) have been shipped and for which invoices have been issued on or If Purchaser delivers a Dispute Notice to Seller prior to the Closing Date end of the applicable Adjustment Review Period, then Purchaser and Seller shall, during the thirty (ii30) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) calendar days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following following delivery of the Preliminary Inventory ReportDispute Notice (or such additional time as the Parties may mutually agree), the Final Inventory Report showing the Final Inventory Level for each Inventory Category shall be determined work together in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based good faith to reach agreement on the Final Inventory Levels shown disputed items to agree on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) value of the Disclosure Schedule, together Inventory with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made respect to the Cash Consideration applicable Product Line. “Final Inventory” means the Honeywell Inventory value with respect to the applicable Product Line (1) as shown in Schedule 1.1(a)(ii) with respect to the applicable Product Line if no Dispute Notice related to the Honeywell Inventory value is duly delivered pursuant to Section 1.5(b); or (2) if such a Dispute Notice is delivered, as agreed to by Purchaser and Seller pursuant to this Section 2(d)(v)(C1.5(c). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amount.

Inventory Adjustment. (Aa) Following Not more than twenty (20) days and not less than fifteen (15) days prior to the Closing Date, Buyer Sellers shall determine the estimated number of units, for each Inventory Category, that deliver to Purchaser (i) have been shipped a list of all services or products to be delivered to or used by the Business following the Closing pursuant to any Transferred Contract, including a copy of the corresponding invoice and (ii) an updated Signing Inventory List (the “Closing Inventory List”), setting forth the types and amounts of the Transferred Inventory that Sellers, reasonably and in good faith, expect to be the Transferred Inventory as of the Closing Date. Following Sellers delivery of the Closing Inventory List, at Purchaser’s option, Sellers shall help facilitate access for which invoices have been issued Purchaser or its Representatives to each site that stores such Transferred Inventory included on the Closing Inventory List. (b) In the event that either (i) the Closing Inventory List delivered by Sellers indicates or (ii) Purchaser, following its review of the Transferred Inventory pursuant to Section 2.02(a), reasonably determines that (a) more than three percent (3%) of the Transferred Inventory that is Product Compound API on the Closing Inventory List does not meet the Supply Quality Standard, the Purchase Price shall be reduced pro rata based on the noncompliant portion relative to the total value of the Product Compound API, or (b) less than 120,995 vials of the IV Product within the Transferred Inventory meet the Supply Quality Standard, the Purchase Price shall be reduced pro rata based on the noncompliant portion relative to the total value of the vials of IV Product within the Transferred Inventory (the Purchase Price as adjusted in accordance with (a) and (b), the “Pro Rata Purchase Price”). Sellers and Purchaser shall cooperate in good faith and endeavor to resolve any disputes regarding the Closing Inventory List or any Purchase Price reduction. (c) In the event that Sellers and Purchaser are unable to agree on the amount of any adjustment pursuant to Section 2.02(b) prior to the Closing Date and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after the Closing Date, Buyer shall deliver to Seller a report (the “Preliminary Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory Report, the Final Inventory Report showing the Final Inventory Level for each Inventory Category Purchaser and Sellers shall be determined required to consummate the Transactions at the Pro Rata Purchase Price; provided that such Pro Rata Purchase Price is not less than $450,000 and Sellers shall have the right to contest the Pro Rata Purchase Price post-Closing in accordance with the procedures set forth in Section 2(d)(vi) belowdispute resolution provisions of this Agreement. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment Amount.

Inventory Adjustment. (Aa) Following At least three business days prior to the Closing, Seller shall deliver to Purchaser its good faith estimate of the book value of the Transferred Inventory as of the Closing Date (the “Estimated Inventory Value”). The Closing Payment will be adjusted upwards or downwards as follows: (i) if Estimated Inventory Value exceeds $9,000,000 (the “Inventory Value Target”), then the Closing Payment will be increased by such excess, and (ii) if the Estimated Inventory Value is less than the Inventory Value Target, then the Closing Payment will be reduced by the amount by which Estimated Inventory Value is less than the Inventory Value Target. (b) Any amount by which the book value of the Transferred Inventory as of the Closing Date (the “Closing Date Inventory Value”) is less than the Inventory Value Target will reduce the Purchase Price, and any amount by which the Closing Date Inventory Value is greater than the Inventory Value Target will increase the Purchase Price. (c) Within 70 calendar days of the Closing Date, Buyer the Seller shall prepare and deliver to the Purchaser a statement setting forth the calculation of the Closing Date Inventory Value as of immediately before the Closing, including the components thereof. (d) The Purchaser will notify the Seller in writing of any objections to the Seller’s computation of Closing Date Inventory Value within 15 calendar days after the Purchaser receives the statement thereof. If the Purchaser does not notify the Seller of any such objections by the end of that 15-day period, then the Closing Date Inventory Value will be considered final at the end of the last day of that 15-day period. If the Purchaser does notify the Seller of any such objections by the end of that 15-day period and the Purchaser and the Seller are unable to resolve their differences within 15 calendar days thereafter, then the Purchaser and the Seller will instruct their respective accountants to use commercially reasonable efforts to resolve such disputed items to their mutual satisfaction and to deliver a final calculation of Closing Date Inventory Value to the Purchaser and the Seller as soon as reasonably possible. If the Purchaser’s accountants and the Seller’s accountants are unable to resolve any such disputed items within 15 calendar days after receiving such instructions, then the remaining disputed items and the value attributable to them by each of the Purchaser and the Seller will be submitted to a nationally recognized accounting firm mutually agreed by the Purchaser and the Seller (the “Accounting Arbiter”) for resolution, and the Accounting Arbiter will be instructed to determine the estimated number final Closing Date Inventory Value and deliver the same to the Purchaser and the Seller as soon as possible. The Accounting Arbiter will consider only those items and amounts in the Purchaser’s and the Seller’s respective calculations of unitsthe Closing Date Inventory Value that are identified as being items and amounts to which the Purchaser and the Seller have been unable to agree. In resolving any disputed item, the Accounting Arbiter may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Accounting Arbiter’s determination of the Closing Date Inventory Value will be based solely on the financial records of the Business consistent with the past practices of the Business (i.e., not on independent review) and on the definition of Closing Date Inventory Value included herein. The determination of the Accounting Arbiter will be final, conclusive and binding upon the parties hereto. Neither the Purchaser nor the Seller will have any right to, and will not, institute any Proceeding challenging such determination or with respect to the matters that are the subject of this Section 1.5, except that the foregoing will not preclude a Proceeding to enforce such determination. If the Accounting Arbiter’s determination of Closing Date Inventory Value is closer to the value initially asserted by the Purchaser to the Accounting Arbiter, then the Seller will pay the costs of the Accounting Arbiter. If the Accounting Arbiter’s determination of Closing Date Inventory Value is closer to the value initially asserted by the Seller to the Accounting Arbiter, then the Purchaser will pay the costs of the Accounting Arbiter. Each of the Seller and the Purchaser and their respective Affiliates will cooperate with and assist the Accounting Arbiter to determine the final Closing Date Inventory Value, including by making available and granting reasonable access to records and employees. The terms of engagement of the Accounting Arbiter for the purposes of this Section 1.5(c) shall be such reasonable commercial terms as shall be agreed between the Seller and the Purchaser consistently with the provisions of this Section 1.5. If the Seller and the Purchaser fail to agree on terms of engagement for the Accounting Arbiter within 5 calendar days, the Seller and the Purchaser agree that each of them will execute the standard form of the Accounting Arbiter’s terms of engagement as proposed by the Accounting Arbiter for its appointment. (e) Within five (5) business days after the final determination of the Closing Date Inventory Category, that Value in accordance with this Section 1.5:] (i) have been shipped and for which invoices have been issued on or prior to if the Closing Date and Inventory Value is greater than the Estimated Inventory Value, the Purchaser will cause the amount by which the Closing Date Inventory Value exceeds the Estimated Inventory Value to be paid to the Seller by wire transfer of immediately available funds to an account designated by the Seller; and (ii) remain in the possession of distributors or retailers and have not been sold through to end users (such number being the “Preliminary Inventory Level” for such Inventory Category). No later than forty-two (42) days after if the Closing Date, Buyer shall deliver to Seller a report (Date Inventory Value is less than the “Preliminary Estimated Inventory Report”) showing the Preliminary Inventory Level for each Inventory Category. Following delivery of the Preliminary Inventory ReportValue, the Final Seller shall cause the amount by which the Closing Date Inventory Report showing Value is less than the Final Estimated Inventory Level for each Inventory Category shall Value to be determined in accordance with the procedures set forth in Section 2(d)(vi) below. (B) Promptly after the Resolution Date for the Final Inventory Report, the Final Inventory Values shall be determined based on the Final Inventory Levels shown on the Final Inventory Report and unit prices shown on Section 2(d)(v)(B) of the Disclosure Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is zero, no adjustment shall be made paid to the Cash Consideration pursuant Purchaser by wire transfer of immediately available funds to this Section 2(d)(v)(C). If an account designated by the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by an amount equal to the Inventory Adjustment Amount and Seller shall pay to Buyer an amount equal to the Inventory Adjustment AmountPurchaser.