Common use of Inventory Payment Clause in Contracts

Inventory Payment. All inventory shall be transferred to IDW at Closing and all transferred inventory shall be tracked by IDW. Under no circumstances shall IDW be obligated to use any of the transferred inventory. In the event, IDW uses the transferred inventory it may use such inventory without any payment to TFS so long as the value of the used inventory does not exceed $2 million ("Initial Inventory"). The inventory shall be valued at the book value of the inventory on the Closing Date (the "Book Value"). For any used inventory in excess of the Initial Inventory, IDW shall pay TFS for the used inventory at the Book Value. Commencing on the Closing Date and terminating one (1) year from the Closing Date (the "Anniversary Date"), IDW shall track the inventory used during each ninety (90) day period. After each ninety (90) day period, IDW shall identify the amount of inventory used during such period, if any, and make a payment to TFS for any used inventory in excess of the Initial Inventory ("Inventory Payment"). At the end of the one year period, at the election of TFS, IDW will ship and transfer all unused inventory to TFS at TFS sole expense.