Common use of Inventory Payment Clause in Contracts

Inventory Payment. (a) On the Closing Date (or such earlier date as agreed by Seller and Buyer), Seller shall conduct a physical count of the Inventory, which count shall be observed by Buyer and Buyer's Accountants, and shall as promptly as practicable thereafter, and in no event more than thirty (30) days thereafter, prepare and deliver to Buyer a schedule (the "Inventory Report") setting forth the quantity and value of each particular type of Inventory as of the Closing Date. The valuation of the Inventory shall be determined in accordance with the principles set forth in Exhibit I. Seller shall deliver to Buyer, simultaneously with delivery of the Inventory Report, a certificate of Seller's chief financial officer that the valuation set forth on the Inventory Report has been prepared in accordance with this Agreement and such work papers and other supporting detail as Buyer and Buyer's Accountants shall reasonably request. The sum of the values of all Inventory reflected in the Inventory Report, adjusted as provided in paragraph (b) below, shall constitute the inventory value (the "Inventory Value"). (b) Following delivery of the Inventory Report, Buyer and Buyer's Accountants shall have twenty (20) days in which to review and examine the Inventory Report. If Buyer does not Exhibit 2.4 (continued) give Seller notice of any dispute with respect to the accuracy of the Inventory Report or the determination of the Inventory Value within such period, the Inventory Value shall be the amount set forth in such Inventory Report. If, following such review, Buyer disputes the accuracy of the Inventory Report or the determination of the Inventory Value, Buyer and Seller or each of their accountants, shall meet to reconcile any such dispute. If such dispute has not been reconciled within twenty (20) days following delivery of the Inventory Report, Seller and Buyer shall refer such dispute to the Referee Accountant for resolution. Seller and Buyer shall furnish to the Referee Accountant copies of the Inventory Report and all such working papers and supporting detail as the Referee Accountant shall reasonably request. Seller and Buyer each shall use reasonable efforts to obtain a decision from the Referee Accountant, and such decision of the Referee Accountant shall be final and binding upon all parties, absent manifest error. Seller and Buyer each shall pay one-half of the fees and expenses of the Referee Accountant. (c) Immediately following the determination of the Inventory Value, Buyer shall make the Inventory Payment in Cash in an amount equal to the Inventory Value to Seller in the manner provided in Section 2.2. In the event of any dispute in the amount of the Inventory Value, Buyer shall promptly pay to Seller in the manner provided in Section 2.2 an amount equal to the portion of the Inventory Value not in dispute (the first $4,000,000 of which shall be paid into escrow as provided in Section 2.2(b)) and shall pay an amount equal to the remainder of the Inventory Value immediately upon the determination thereof in the manner set forth in Section 2.4(b).

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. Notwithstanding the foregoing, IDW shall be required to use each line item of the transferred inventory before it uses any newly purchased identical inventory line item. 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 (a"Initial Inventory"). The inventory shall be valued at the market value of the inventory when consumed. For any used inventory in excess of the Initial Inventory, IDW shall pay TFS for the used inventory at the market value when consumed. Commencing on the Closing Date and terminating one (1) On year from the Closing Date (or such earlier date as agreed by Seller and Buyerthe "Anniversary Date"), Seller IDW shall conduct track the inventory used during each ninety (90) day period. After each ninety (90) day period ("Inventory Audit Period"), IDW shall identify the amount of inventory used during such period, if any, and make a physical count payment to TFS for any used inventory in excess of the InventoryInitial Inventory ("Inventory Payment"). If TFS desires to review any information relating to the Inventory Payment or lack thereof, which count shall be observed by Buyer and Buyer's Accountants, and shall as promptly as practicable thereafter, and in no event more than for a period of thirty (30) days thereafter, prepare and deliver to Buyer a schedule (from the "Inventory Report") setting forth the quantity and value of each particular type of Inventory as end of the Closing Daterespective Inventory Audit Period, TFS shall have the right to review such information at IDW's corporate office in Roseville, California, provided, however, (i) TFS shall provide IDW with reasonable prior written notice, (ii) the review shall take place in person at a reasonable time and in a manner so as not to interfere with the normal operations of IDW, (iii) no copies of any documents shall be made without the prior written consent of IDW, (iv) any such review will be subject to supervision by IDW, and (v) TFS shall bear the sole expense of any such review. The valuation All information relating to IDW that is not known to the public or identified by IDW as confidential shall be deemed "confidential." In connection with any confidential information of IDW or IDW HK, TFS shall not disclose or use the confidential information for any purpose or in any manner whatsoever and shall execute a confidential non-disclosure agreement at IDW's request. At the end of the Inventory shall be determined in accordance with the principles set forth in Exhibit I. Seller shall deliver to Buyer, simultaneously with delivery of the Inventory Report, a certificate of Seller's chief financial officer that the valuation set forth on the Inventory Report has been prepared in accordance with this Agreement and such work papers and other supporting detail as Buyer and Buyer's Accountants shall reasonably request. The sum of the values of all Inventory reflected in the Inventory Report, adjusted as provided in paragraph (b) below, shall constitute the inventory value (the "Inventory Value"). (b) Following delivery of the Inventory Report, Buyer and Buyer's Accountants shall have twenty (20) days in which to review and examine the Inventory Report. If Buyer does not Exhibit 2.4 (continued) give Seller notice of any dispute with respect to the accuracy of the Inventory Report or the determination of the Inventory Value within such one year period, at the Inventory Value shall be the amount set forth in such Inventory Report. Ifelection of TFS, following such review, Buyer disputes the accuracy of the Inventory Report or the determination of the Inventory Value, Buyer IDW will ship and Seller or each of their accountants, shall meet transfer all unused inventory to reconcile any such dispute. If such dispute has not been reconciled within twenty (20) days following delivery of the Inventory Report, Seller and Buyer shall refer such dispute to the Referee Accountant for resolution. Seller and Buyer shall furnish to the Referee Accountant copies of the Inventory Report and all such working papers and supporting detail as the Referee Accountant shall reasonably request. Seller and Buyer each shall use reasonable efforts to obtain a decision from the Referee Accountant, and such decision of the Referee Accountant shall be final and binding upon all parties, absent manifest error. Seller and Buyer each shall pay one-half of the fees and expenses of the Referee AccountantTFS at TFS sole expense. (c) Immediately following the determination of the Inventory Value, Buyer shall make the Inventory Payment in Cash in an amount equal to the Inventory Value to Seller in the manner provided in Section 2.2. In the event of any dispute in the amount of the Inventory Value, Buyer shall promptly pay to Seller in the manner provided in Section 2.2 an amount equal to the portion of the Inventory Value not in dispute (the first $4,000,000 of which shall be paid into escrow as provided in Section 2.2(b)) and shall pay an amount equal to the remainder of the Inventory Value immediately upon the determination thereof in the manner set forth in Section 2.4(b)."