Common use of Inventory Verification Clause in Contracts

Inventory Verification. (a) SECTION 1.10(a) of the Disclosure Letter contains a preliminary list of all of the items comprising the Inventory on hand as of June 30, 2004 (the "Preliminary Inventory"), which list includes the quantities of such items on hand as of such date, as well as the book values of such items. (b) Promptly following the date hereof, in the presence of representatives of both Seller and Purchaser, the Company shall commence a physical count and reconciliation of the Inventory in accordance with the Company's normal inventory procedures, as described in the Summary of Inventory Accounting Policies, a copy of which is set forth in SECTION 1.10(b) of the Disclosure Letter, as of November 1, 2004 and shall prepare an updated version of the list contained in SECTION 1.10(a) of the Disclosure Letter reflecting the results of such physical count and reconciliation (the "Final Inventory"). Such physical count and reconciliation shall be completed as expeditiously as possible but in any event within thirty (30) Business Days after the date hereof (or, if necessary, such later time as the parties may mutually agree, but in no event later than seventy-five (75) Business Days after the Closing) (the "Inventory Verification Period"). If, upon completion of such physical count, the parties agree on the Final Inventory, each of them shall execute a certificate in writing certifying as to their agreement regarding the Final Inventory and attach thereto a copy of the list of the Final Inventory so agreed to. Any items of Inventory that cannot be used or returned to a usable state in accordance with the Company's past practices due to improper or missing documentation related to such items required under applicable Company Permits or Law shall not be included in the determination of the Final Inventory. (c) If the parties are unable to agree upon the Final Inventory on or before the expiration of the Inventory Verification Period, Seller on the one hand and Purchaser on the other shall each prepare a written statement specifying therein in detail the basis and reason for all disputes between the parties regarding the determination of the Final Inventory and the amounts in dispute. Within five (5) Business Days after the expiration of the Inventory Verification Period, they shall each submit such written statements to the Auditors, who shall act as an arbitrator, for resolution of all disputes set forth in such written statements. The Auditors shall be instructed to use commercially reasonable efforts to resolve all disputes as soon as practicable and in any event within twenty (20) Business Days after the submission to it of the parties' written statements. Each of the parties shall bear all costs and expenses incurred by it in connection with such arbitration, and the fees of the Auditors shall be shared equally by Purchaser and Seller. This provision for arbitration shall be specifically enforceable by the parties, and the decision of the Auditors shall be final and binding and there shall be no right of appeal therefrom. (d) Within five (5) Business Days after the date on which the Final Inventory is finally determined in accordance with this SECTION 1.10 (whether by agreement of the parties or by decision of the Auditors), (i) if the Final Inventory exceeds the aggregate book value of the Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter by more than $200,000, then Purchaser shall pay Seller the amount of such excess in immediately available funds, or (ii) if the aggregate book value of the Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter exceeds the aggregate book value of the Final Inventory by more than $100,000, then Seller shall pay Purchaser the amount of such excess in immediately available funds.

Inventory Verification. (a) SECTION 1.10(a) of the Disclosure Letter contains a preliminary list of all of the items comprising the Inventory on hand as of June 30, 2004 (the "“Preliminary Inventory"”), which list includes the quantities of such items on hand as of such date, as well as the book values of such items. (b) Promptly following the date hereof, in the presence of representatives of both Seller and Purchaser, the Company shall commence a physical count and reconciliation of the Inventory in accordance with the Company's ’s normal inventory procedures, as described in the Summary of Inventory Accounting Policies, a copy of which is set forth in SECTION 1.10(b) of the Disclosure Letter, as of November 1, 2004 and shall prepare an updated version of the list contained in SECTION 1.10(a) of the Disclosure Letter reflecting the results of such physical count and reconciliation (the "“Final Inventory"”). Such physical count and reconciliation shall be completed as expeditiously as possible but in any event within thirty (30) Business Days after the date hereof (or, if necessary, such later time as the parties may mutually agree, but in no event later than seventy-five (75) Business Days after the Closing) (the "“Inventory Verification Period"”). If, upon completion of such physical count, the parties agree on the Final Inventory, each of them shall execute a certificate in writing certifying as to their agreement regarding the Final Inventory and attach thereto a copy of the list of the Final Inventory so agreed to. Any items of Inventory that cannot be used or returned to a usable state in accordance with the Company's ’s past practices due to improper or missing documentation related to such items required under applicable Company Permits or Law shall not be included in the determination of the Final Inventory. (c) If the parties are unable to agree upon the Final Inventory on or before the expiration of the Inventory Verification Period, Seller on the one hand and Purchaser on the other shall each prepare a written statement specifying therein in detail the basis and reason for all disputes between the parties regarding the determination of the Final Inventory and the amounts in dispute. Within five (5) Business Days after the expiration of the Inventory Verification Period, they shall each submit such written statements to the Auditors, who shall act as an arbitrator, for resolution of all disputes set forth in such written statements. The Auditors shall be instructed to use commercially reasonable efforts to resolve all disputes as soon as practicable and in any event within twenty (20) Business Days after the submission to it of the parties' ’ written statements. Each of the parties shall bear all costs and expenses incurred by it in connection with such arbitration, and the fees of the Auditors shall be shared equally by Purchaser and Seller. This provision for arbitration shall be specifically enforceable by the parties, and the decision of the Auditors shall be final and binding and there shall be no right of appeal therefrom. (d) Within five (5) Business Days after the date on which the Final Inventory is finally determined in accordance with this SECTION 1.10 (whether by agreement of the parties or by decision of the Auditors), (i) if the Final Inventory exceeds the aggregate book value of the Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter by more than $200,000, then Purchaser shall pay Seller the amount of such excess in immediately available funds, or (ii) if the aggregate book value of the Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter exceeds the aggregate book value of the Final Inventory by more than $100,000, then Seller shall pay Purchaser the amount of such excess in immediately available funds.