Common use of Inventory Adjustment Clause in Contracts

Inventory Adjustment. (a) 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, 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 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 the 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 Value in accordance with this Section 1.5: (i) if the Closing Date 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) if the Closing Date Inventory Value is less than the Estimated Inventory Value, the Seller shall cause the amount by which the Closing Date Inventory Value is less than the Estimated Inventory Value to be paid to the Purchaser by wire transfer of immediately available funds to an account designated by the Purchaser.

Appears in 2 contracts

Samples: Asset Purchase Agreement (Oclaro, Inc.), Asset Purchase Agreement (Ii-Vi Inc)

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Inventory Adjustment. (aA) At least one business day 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 ClosingClosing 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, Seller Buyer shall deliver to Purchaser its good faith estimate of the net book value of the Transferred Inventory as of the Closing Date Seller a report (the “Estimated Preliminary Inventory ValueReport)) showing the Preliminary Inventory Level for each Inventory Category. Part 1.5(aFollowing 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 Letter contains an example calculation of Estimated Inventory Value as of October 5Schedule, 2013. The Closing Payment will be adjusted upwards or downwards as follows: (i) if Estimated Inventory Value exceeds $9,000,000 (together with the “Inventory Value Target”), then the Closing Payment will be increased by such excess, Category Adjustment Amounts and (ii) if the Estimated Inventory Value is less than the Inventory Value TargetAdjustment Amount. (C) If the Inventory Adjustment Amount is zero, then no adjustment shall be made to the Closing Payment will Cash Consideration pursuant to this Section 2(d)(v)(C). If the Inventory Adjustment Amount exceeds zero, the Cash Consideration shall be reduced by the an amount by which Estimated Inventory Value is less than equal to the Inventory Value Target. (b) Any Adjustment Amount and Seller shall pay to Buyer an amount by which the net book value of the Transferred Inventory as of the Closing Date (the “Closing Date Inventory Value”) is less than equal to 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 PriceAdjustment Amount. (c) Within 70 calendar days of the Closing Date, 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 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 the 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 Value in accordance with this Section 1.5: (i) if the Closing Date 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) if the Closing Date Inventory Value is less than the Estimated Inventory Value, the Seller shall cause the amount by which the Closing Date Inventory Value is less than the Estimated Inventory Value to be paid to the Purchaser by wire transfer of immediately available funds to an account designated by the Purchaser.

Appears in 2 contracts

Samples: Asset Purchase Agreement (Sonic Solutions/Ca/), Asset Purchase Agreement (Roxio Inc)

Inventory Adjustment. (aA) At least one business day 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 ClosingClosing 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, Seller Buyer shall deliver to Purchaser its good faith estimate of the net book value of the Transferred Inventory as of the Closing Date Seller a report (the “Estimated Preliminary Inventory ValueReport)) showing the Preliminary Inventory Level for each Inventory Category. Part 1.5(aFollowing 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 Letter contains an example calculation of Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is equal to the Estimated Inventory Value as of October 5Adjustment Amount, 2013no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). The Closing Payment will be adjusted upwards or downwards as follows: (i) if If the Estimated Inventory Value Adjustment Amount exceeds $9,000,000 (the Inventory Value Target”)Adjustment Amount, then the Closing Payment will Cash Consideration shall be increased by the amount of such excess and Buyer shall pay to Seller an amount equal to such excess, and (ii) if . If the Inventory Adjustment Amount exceeds the Estimated Inventory Value is less than Adjustment Amount, the Inventory Value Target, then the Closing Payment will Cash Consideration shall 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, such excess 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, the Seller shall prepare and deliver pay to the Purchaser a statement setting forth the calculation of the Closing Date Inventory Value, including the components thereofBuyer an amount equal to such excess. (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 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 the 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 Value in accordance with this Section 1.5: (i) if the Closing Date 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) if the Closing Date Inventory Value is less than the Estimated Inventory Value, the Seller shall cause the amount by which the Closing Date Inventory Value is less than the Estimated Inventory Value to be paid to the Purchaser by wire transfer of immediately available funds to an account designated by the Purchaser.

Appears in 1 contract

Samples: Asset Purchase Agreement (Sonic Solutions/Ca/)

Inventory Adjustment. (a) At least one business day prior to Within 15 days after the ClosingClosing Date, or at such other time as agreed between the Parties, Buyer and Seller shall deliver to Purchaser its good faith estimate will jointly conduct a physical count and valuation 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 ValueInventory) is less than ), using the Inventory Value Target will reduce Valuation Principles. The Purchase Price shall be (i) increased, on a dollar-for dollar basis, in the Purchase Price, event 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, the Seller shall prepare and deliver to the Purchaser a statement setting forth extent that the calculation value of the Closing Date Inventory Value, including the components thereof. (das determined under this Section 3.04(a) 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 ArbiterClosing Inventory Value”) for resolution, and the Accounting Arbiter will be instructed to determine the 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 the 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 Value in accordance with this Section 1.5: (i) if the Closing Date 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 and (ii) if decreased, on a dollar-for-dollar basis, in the event and to the extent that the Closing Date Inventory Value is less than the Estimated Inventory Value, the Seller shall cause the amount by which the Closing Date Inventory Value is less than the Estimated Inventory Value to (the “Inventory Adjustment”). The Parties agree the Inventory Adjustment shall be paid to in cash in the Purchaser following manner: (i) if the Inventory Adjustment calls for 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 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 of immediately available funds to an account designated by the Purchaserreceiving 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 Closing Date Inventory. Each of Buyer and Seller shall submit to the Independent Accountant their estimation of the Closing Inventory Value (the “Estimated Value”). The Independent Accountant, acting as experts and not arbitrators, shall inspect the Inventory and shall make a determination of the Closing Inventory Value (the “Accountant Determined Value”), which must be within the range of Estimated Values submitted by each of Buyer and Seller and in accordance with the Inventory Valuation Principles. The Accountant Determined Value shall be final and binding on the Parties, and the Purchase Price shall be adjusted and the applicable Party shall pay the Inventory Adjustment as a result of such Accountant Determined Value within five Business Days of its determination. The fees and expenses of the Independent Accountant shall be paid by Seller, on the one hand, and by Buyer, on the other hand, in proportion to the difference between the Estimated Value submitted by such Party and the Accountant Determined Value.

Appears in 1 contract

Samples: Asset Purchase Agreement (FreightCar America, Inc.)

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Inventory Adjustment. (aA) At least one business day 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 ClosingClosing 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, Seller Buyer shall deliver to Purchaser its good faith estimate Seller a report (the "Preliminary Inventory Report") showing thePreliminary Inventory Level for each Inventory Category. Following delivery of the net book value of Preliminary Inventory Report, the Transferred Final Inventory as of Report showing the Closing 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 “Estimated Final Inventory Value”). Part 1.5(aReport, 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 Letter contains an example calculation of Schedule, together with the Category Adjustment Amounts and the Inventory Adjustment Amount. (C) If the Inventory Adjustment Amount is equal to the Estimated Inventory Value as of October 5Adjustment Amount, 2013no adjustment shall be made to the Cash Consideration pursuant to this Section 2(d)(v)(C). The Closing Payment will be adjusted upwards or downwards as follows: (i) if If the Estimated Inventory Value Adjustment Amount exceeds $9,000,000 (the Inventory Value Target”)Adjustment Amount, then the Closing Payment will Cash Consideration shall be increased by the amount of such excess and Buyer shall pay to Seller an amount equal to such excess, and (ii) if . If the Inventory Adjustment Amount exceeds the Estimated Inventory Value is less than Adjustment Amount, the Inventory Value Target, then the Closing Payment will Cash Consideration shall 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, such excess 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, the Seller shall prepare and deliver pay to the Purchaser a statement setting forth the calculation of the Closing Date Inventory Value, including the components thereofBuyer an amount equal to such excess. (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 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 the 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 Value in accordance with this Section 1.5: (i) if the Closing Date 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) if the Closing Date Inventory Value is less than the Estimated Inventory Value, the Seller shall cause the amount by which the Closing Date Inventory Value is less than the Estimated Inventory Value to be paid to the Purchaser by wire transfer of immediately available funds to an account designated by the Purchaser.

Appears in 1 contract

Samples: Asset Purchase Agreement (Roxio Inc)

Inventory Adjustment. (a) At least one business day prior to the Closing, Seller shall deliver to Purchaser its good faith estimate The cash portion of the net book value Purchase Price shall also be increased by the amount of any Aggregate Inventory Surplus (as defined and determined below) or decreased by the Transferred amount of any Aggregate Inventory Deficiency (as of the Closing Date (the “Estimated Inventory Value”defined and determined below). Part 1.5(a) For each category of the Disclosure Letter contains Inventory identified on Schedule 2.05 (each, 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 TargetCategory”), 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, 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 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 following amounts in the Purchaser’s and the Seller’s respective calculations of the 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 Value in accordance with this Section 1.5calculated: (i) if (x) the number of pounds or tons, as applicable, of inventory of such Inventory Category at Closing Date less (y) applicable reserves (expressed in pounds or tons, as applicable) established in accordance with the Accounting Principles (for each Inventory Value Category, its “Closing Inventory Amount”) is greater than the Estimated “Target Closing Inventory ValueAmount” identified for such Inventory Category on Schedule 2.05 (its “Target Closing Inventory Amount”), the Purchaser will cause cash portion of the Purchase Price shall be increased by an amount by which (such amount, if any, the “Inventory Surplus Value”) equal to (i) the difference between the Closing Date Inventory Value exceeds Amount for such Inventory Category and the Estimated Target Closing Inventory Value to be paid Amount for 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 Seller by wire transfer of immediately available funds to an account designated by the Seller; andClosing (for each Inventory Category, its “Pre-Closing Applicable Cost”); (ii) if the Closing Date Inventory Value Amount for such Inventory Category is less than the Estimated Target Closing Inventory ValueAmount for such Inventory Category, the Seller cash portion of the Purchase Price shall cause be decreased by an amount (such amount, if any, the amount by which “Inventory Deficiency Value”) equal to (i) the difference between the Closing Date Inventory Value 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 less greater than the Estimated sum of all of the Inventory Value to Deficiency Values, then such excess shall be paid to the Purchaser by wire transfer “Aggregate Inventory Surplus”); and (iv) if the sum of immediately available funds to an account designated by all of the PurchaserInventory Deficiency Values is greater than the sum of all of the Inventory Surplus Values, then such excess shall be the “Aggregate Inventory Deficiency”). As used herein, the “Applicable Cost” of each Inventory Category shall mean cost of such item (on a per pound or ton, as applicable, basis) that would be reflected on a balance sheet prepared in accordance with the Accounting Principles.

Appears in 1 contract

Samples: Asset Purchase Agreement (Cytec Industries Inc/De/)

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