Common use of Inventory Adjustment Clause in Contracts

Inventory Adjustment. (a) For purposes of this Agreement, the term "Inventory Value" shall be determined in accordance with GAAP applied on a consistent basis with the accounting principles and methodologies historically used by the Sellers, which were used to prepare the statement of product contribution set forth on Schedule 2.06 (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year end. (b) Sellers and Purchaser have jointly conducted a physical count of the Inventory as of the Closing Date pursuant to the procedures set forth on Exhibit 1.04(b) hereto. Such physical count was observed by the Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity shall be billed to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver a certificate indicating such Inventory Value to the Purchaser (the "Inventory Calculation"). For purposes of the Inventory Calculation, Inventory in transit on the Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from Purchaser. (c) If the Purchaser disagrees in good faith with the Inventory Calculation, the Purchaser shall provide a detailed objection to the Sellers in writing within ten (10) business days after receipt of notice from Sellers of the Inventory Calculation, and the (d) In the event that the Inventory Calculation for the Inventory shall be less than $24.0 million ($24,000,000) (the "Minimum Inventory Value"), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment to the Sellers for such excess. In the event of a shortfall, (i) any amounts owed by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and (ii) any amounts owed by the Sellers to the Purchaser as a result of the determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 shall be treated as an adjustment to the Purchase Price for all purposes.

Inventory Adjustment. (a) For purposes The Buyer’s calculation of this Agreement, the term "Inventory Value" shall be determined in accordance with GAAP applied on a consistent basis with Purchase Price pursuant to Section 2.1 above assumes that the accounting principles and methodologies historically used by the Sellers, which were used to prepare the statement of product contribution set forth on Schedule 2.06 (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year end. (b) Sellers and Purchaser have jointly conducted a physical count actual aggregate book value of the Inventory Assets and the Vendor Deposits as of the Closing Date pursuant to the procedures set forth on Exhibit 1.04(b) hereto. Such physical count was observed by the Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity shall be billed to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25Closing, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and calculated in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver a certificate indicating such Inventory Value to the Purchaser Seller’s past practices (the "“Inventory Calculation"Actual Closing Value”). For purposes of , will be at least equal to $227,000 (the “Inventory Calculation, Inventory in transit on the Target Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from Purchaser”). (c) If the Purchaser disagrees in good faith with the Inventory Calculation, the Purchaser shall provide a detailed objection to the Sellers in writing within ten (10) business days after receipt of notice from Sellers of the Inventory Calculation, and the (d) 2.2.2.1 In the event that the Inventory Calculation for Actual Closing Value is less than the Inventory shall be less than $24.0 million ($24,000,000) (Target Closing Value at the "Minimum Inventory Value")Closing, the Sellers shall pay Buyer may reduce the Purchase Price on a dollar for dollar basis by an amount equal to (i) the Inventory 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 Purchaser the shortfallfirst dollar. In the event that the Inventory Calculation for Actual Closing Value is less than the Inventory Target Closing Value at Closing, the amount of any such Inventory Deduction shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment paid to the Sellers for such excess. 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 of that the Inventory Actual Closing Value is greater than the Inventory Target Closing Value at the Closing, the Buyer shall pay to the Seller, on a shortfalldollar for dollar basis, an amount equal to (i) any amounts owed by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and Actual Closing Value minus (ii) any amounts owed by the Sellers 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 Purchaser 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 a result of the determination full amount of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser Addition payment is paid in full on or through a determination of the Independent Accountant) shall be made within two (2) business days of such determinationbefore November 15, 2021. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 Inventory Addition payment shall not be treated as an adjustment to the Purchase Price for all purposesPrice.

Inventory Adjustment. (a) For purposes of this AgreementAs soon as practicable after Closing, but in any event not later than thirty (30) days thereafter, the term "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 be determined make available to the other party upon request copies of the work papers used in accordance with GAAP applied on a consistent basis with the accounting principles and methodologies historically used by the Sellers, which were used to prepare the statement of product contribution set forth on Schedule 2.06 (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year endits calculations. (b) Sellers and Purchaser have jointly conducted a physical count In the event of any difference in the Inventory as parties’ calculations of the Closing Date pursuant Inventory Value, the parties shall attempt in good faith to reconcile such differences. If such differences remain unreconciled after ten (10) days, the procedures set forth on Exhibit 1.04(bparties shall submit a statement of all unresolved differences together with copies of their respective calculations and work papers, to PricewaterhouseCoopers LLP (the “Accountants”) hereto. Such physical count was observed by for a binding and nonappealable determination of the Independent AccountantClosing Inventory Value to be rendered within thirty (30) days after such submission. All fees and expenses of the Independent Accountant Accountants incurred in this capacity shall be billed to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver a certificate indicating such Inventory Value to the Purchaser (the "Inventory Calculation"). For purposes of the Inventory Calculation, Inventory in transit on the Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from PurchaserPurchasers. (c) If For purposes of determining the Purchaser disagrees in good faith with Purchase Price, if the Inventory CalculationValue differs by more than five percent (5%) from the Closing Inventory Value, the Purchaser Base Price shall provide a detailed objection be (i) decreased, if the Inventory Value exceeds the Closing Inventory Value, by the full amount of such excess, or (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 Sellers in writing appropriate recipient within ten (10) business days Business Days after receipt of notice from Sellers the amount of the Inventory Calculation, and the (d) In the event that the Inventory Calculation for the Inventory payment is determined. Such payment shall be less than $24.0 million ($24,000,000) (accompanied by interest from the "Minimum Inventory Value"), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment to the Sellers for such excess. In the event of a shortfall, (i) any amounts owed by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and (ii) any amounts owed by the Sellers to the Purchaser as a result of the determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 shall be treated as an adjustment to the Purchase Price for all purposesClosing Date calculated at 5 percent per annum.

Inventory Adjustment. (a) For purposes of this AgreementOn or prior to the Closing Date, the term "Inventory Value" SELLER and the BUYER shall be determined in accordance with GAAP applied on a consistent basis with the accounting principles and methodologies historically used by the Sellers, which were used to prepare the statement of product contribution set forth on Schedule 2.06 (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year end. (b) Sellers and Purchaser have jointly conducted conduct a physical count of the Inventory as of the Closing Date pursuant and the BUYER shall make or cause to be made a calculation of the procedures 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) 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 Exhibit 1.04(bSchedule 2.2), to the extent of such excess, but in no event shall the Calculation include an amount greater than 50% of the standard cost for such excess items. For purposes of the Calculation, all "twin-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 (15) hereto. Such physical count was observed days after the Closing Date. (b) SELLER shall have a period of thirty (30) days in which to review the Calculation and the work papers associated therewith provided by the Independent AccountantBUYER. If the SELLER disagrees with all or any part of the Calculation, the 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 mutually agreed (the "Accountants") for a binding and nonappealable determination to be rendered within thirty (30) days after such submission. All fees and expenses of the Independent Accountant Accountants incurred in this capacity shall be billed to and shared equally by the Sellers SELLER and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver a certificate indicating such Inventory Value to the Purchaser (the "Inventory Calculation"). For purposes of the Inventory Calculation, Inventory in transit on the Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from PurchaserBUYER. (c) If the Purchaser disagrees Calculation reflects an Inventory value that is either less than or in good faith with the Inventory Calculationexcess of $5,507,252, the Purchaser shall provide a detailed objection Purchase Price will be 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 Sellers SELLER or the SELLER will pay the amount of any such decrease to the BUYER, in writing immediately available funds, within ten (10) five business days after receipt of notice from Sellers of the Inventory Calculation, and the (d) In the event that the Inventory Calculation for the Inventory shall be less than $24.0 million ($24,000,000) (the "Minimum Inventory Value"), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment to the Sellers for such excess. In the event of a shortfall, (i) any amounts owed by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and (ii) any amounts owed by the Sellers to the Purchaser as a result of the final determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 shall be treated as an adjustment to the Purchase Price for all purposesvalue.

Inventory Adjustment. (a) For purposes of this AgreementAt least three business days prior to the Closing, the term "Inventory Value" Seller shall be determined in accordance with GAAP applied on a consistent basis with the accounting principles and methodologies historically used by the Sellers, which were used deliver to prepare the statement of product contribution set forth on Schedule 2.06 (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year end. (b) Sellers and Purchaser have jointly conducted a physical count its good faith estimate of the book value of the Transferred Inventory as of the Closing Date pursuant to (the procedures set forth on Exhibit 1.04(b“Estimated Inventory Value”). The Closing Payment will be adjusted upwards or downwards as follows: (i) hereto. Such physical count was observed 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 Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity shall be billed to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles Estimated Inventory Value is less than the Inventory Value for 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, the Seller shall prepare and deliver to the Purchaser a certificate indicating 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 final Closing Date Inventory Calculation")Value and deliver the same to the Purchaser and the Seller as soon as possible. For purposes The Accounting Arbiter will consider only those items and amounts in the Purchaser’s and the Seller’s respective calculations of the Inventory Calculation, Inventory in transit on the Closing Date shall 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 in herein. The determination of the calculation 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 shall pay Sellersconsistently 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, at Sellers' cost, 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 any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from Purchaserits appointment. (ce) If the Purchaser disagrees in good faith with the Inventory Calculation, the Purchaser shall provide a detailed objection to the Sellers in writing within ten Within five (105) business days after receipt of notice from Sellers the final determination of the Closing Date Inventory Calculation, and theValue in accordance with this Section 1.5:] (di) In if the event that the Closing Date Inventory Calculation for the Inventory shall be less than $24.0 million ($24,000,000) (the "Minimum Inventory Value"), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more Value is greater than the Minimum Estimated Inventory Value, the Purchaser shall retain will cause the excess amount by which the Closing Date Inventory without further payment Value exceeds the Estimated Inventory Value to be paid to the Sellers for such excess. In the event Seller by wire transfer of a shortfall, (i) any amounts owed immediately available funds to an account designated by the Sellers 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 as a result by wire transfer of the Sellers' Inventory Calculation delivered pursuant immediately available funds to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and (ii) any amounts owed an account designated by the Sellers to the Purchaser as a result of the determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 shall be treated as an adjustment to the Purchase Price for all purposesPurchaser.

Inventory Adjustment. (a) The parties hereto acknowledge and agree that in calculating the Purchase Price for the Assets, they determined the purchase price for the Inventory based upon an assumed value of the Inventory at Closing as reflected on Sellers' books and records. The parties further acknowledge and agree that, for this purpose, the assumed value of the Inventory at Closing ("Inventory Value") is $92 million. (For purposes of this Agreement, Inventory Value equals the term "Inventory Value" shall be determined perpetual stock ledger value minus discount reserves, calculated in accordance with GAAP applied Sellers' past practices.) Within three (3) Business Days prior to the Closing Date, Sellers shall deliver to Buyer their good faith estimate of the actual Inventory Value (together with a copy of inventory records supporting such estimate) as of the opening of business on a consistent basis with the accounting principles and methodologies historically used by the Sellers, which were used to prepare the statement of product contribution set forth on Schedule 2.06 Closing Date (the "Valuation PrinciplesEstimated Inventory Value"). The Purchase Price to be paid at Closing shall be increased or decreased, determined as if the Closing Date were case may be, by 50% of the Company's normal year endamount that the Estimated Inventory Value is more or less than $92 million. (b) Immediately prior to the Closing, Buyer shall cause to be taken a physical inventory by stock keeping unit (the "Inventory Count") of all Inventory held by Buyer as of the Closing Date. The Inventory Count shall be taken by RGIS Inventory Services, or if RGIS Inventory Services is unable to so serve, by an independent inventory service designated jointly by Sellers and Purchaser have jointly conducted a physical count Buyer (the "Inventory Service"). The cost of the Inventory Service shall be paid equally by Sellers and Buyer. The instructions to be delivered to the Inventory Service with respect to the conduct of the Inventory Count shall be mutually agreed upon by Buyer and Sellers and shall be delivered to the Inventory Service as promptly as possible following execution of this Agreement; provided, that each of Buyer and Sellers shall act reasonably in reaching an agreement on such instructions. The Inventory Service shall be additionally instructed by Buyer and Sellers to prepare and deliver to Buyer and Sellers, immediately upon completion of the Inventory Count, and in no event later than thirty (30) calendar days after Closing, a final certified report of Inventory Count. Promptly (and in no event later than fourteen (14) calendar days) following the day on which the Inventory Service shall have delivered the final report of Inventory Count to Sellers and Buyer, Sellers and Buyer shall jointly calculate and agree, each acting reasonably and in good faith, an actual Inventory Value as of the Closing Date pursuant to based upon the procedures principles set forth on Exhibit 1.04(b) hereto. Such physical count was observed by the Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity shall be billed to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver a certificate indicating such Inventory Value to the Purchaser above (the "Inventory Calculation"). For purposes of the Inventory Calculation, Inventory in transit on the Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from Purchaser. (c) If the Purchaser disagrees in good faith with the Inventory Calculation, the Purchaser shall provide a detailed objection to the Sellers in writing within ten (10) business days after receipt of notice from Sellers of the Inventory Calculation, and the (d) In the event that the Inventory Calculation for the Inventory shall be less than $24.0 million ($24,000,000) (the "Minimum Actual Inventory Value"). If Sellers and Buyer are unable to reach an agreement regarding the Actual Inventory Value on or prior to fourteen (14) calendar days following the delivery of the Inventory Count by the Inventory Service, on the Sellers next Business Day thereafter the disagreement shall pay be presented to a leading independent accounting firm to be mutually selected by Buyer and Sellers. Such accounting firm shall be instructed to render a decision as to the Purchaser Actual Inventory Value within thirty (30) calendar days thereafter, and such decision shall be final and binding upon each of the shortfallparties. The fees, costs and expenses incurred in connection therewith shall be shared in equal amounts by Buyer and Sellers. Following a final determination of Actual Inventory Value, it shall be compared to the Estimated Inventory Value. In the event that the Actual Inventory Calculation for Value exceeds the Inventory shall be more than the Minimum Estimated Inventory Value, Buyer shall promptly remit 50% of the Purchaser shall retain the excess Inventory without further payment difference to the Sellers for such excessSellers. In the event that the Estimated Inventory Value exceeds the Actual Inventory Value, Sellers shall promptly remit 50% of a shortfall, the difference to Buyer. (ic) any amounts owed by the Sellers In addition to the Purchaser as a result Inventory, at Closing, Buyer shall pay to Sellers 100% of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery full landed cost as determined by Sellers of such notice of Inventory Calculation, and Buyer in good faith (ii) any amounts owed by the Sellers to the Purchaser as a result of the determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii"On Order Merchandise Cost") of the immediately preceding sentence on order merchandise inventory described on Schedule 3.3(c) (ethe "On Order Merchandise"). Buyer shall have the right to direct Sellers to divert the delivery destinations of any of the On Order Merchandise to any locations that may be selected by Buyer, and Buyer agrees that such On Order Merchandise shall remain at such location (and not be sold by Sellers) Amounts payable pursuant pending the Closing. The Purchase Price to this Section 1.04 be paid at Closing shall be treated as an adjustment to increased by the Purchase Price for all purposesOn Order Merchandise Cost.

Inventory Adjustment. (a) For purposes The Purchase Price shall be adjusted upward or downward by an amount (“Inventory Adjustment”) equal to the value of this Agreementthe Inventory of the Business as of the Closing Date (the “Closing Inventory Value”) minus $994,808.81, the term "value of the Inventory Value" shall be determined in accordance with GAAP applied on a consistent basis with of the accounting principles and methodologies historically used by the SellersBusiness as of June 30, which were used to prepare the statement of product contribution 2011 as set forth on Schedule 2.06 3.3(a). Following the Closing, in accordance with Sections 3.3(b) and (c) below, Purchaser shall determine Closing Inventory Value and the "Valuation Principles")Inventory Adjustment, determined as if the Closing Date were the Company's normal year endany. (b) Sellers Within thirty (30) days after the Closing Date, Purchaser will prepare, and Purchaser have jointly conducted cause to be delivered to Seller, a physical count computation of the Closing Inventory Value and a written calculation of the Inventory as Adjustment, if any. Each party shall fully cooperate in providing the other parties with reasonable access to all data and other information necessary to determine such amounts. Purchaser’s calculation of any Inventory Adjustment, if any, shall become final and binding on the Closing Date pursuant thirtieth (30th) day after delivery to Seller, except to the procedures set forth on Exhibit 1.04(b) hereto. Such physical count was observed by the Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity shall be billed extent, if any, that Purchaser receives written notice from Seller prior to and shared equally by the Sellers and Purchaser. Such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the Inventory as of the Closing Date and deliver such date identifying a certificate indicating such Inventory Value to the Purchaser (the "Inventory Calculation"). For purposes dispute of the Inventory Calculation, Adjustment and the extent and nature of such dispute. (c) All quantities of Inventory in transit on the Closing Date shall not to be included in the calculation of Closing Inventory Value. Purchaser Value shall pay Sellersbe determined by the physical count conducted by the parties’ on-site authorized Representatives as soon as practicable, at Sellers' costbut in any event within five (5) Business Days, for any such Inventory in transit on after the Closing Date. Sellers shall deliver , provided that such Inventory to Purchaser upon receipt of payment from Purchaser. (c) If the Purchaser disagrees in good faith with the Inventory Calculation, the Purchaser shall provide a detailed objection to the Sellers in writing within ten (10) business days after receipt of notice from Sellers of the Inventory Calculation, and the (d) In the event that the Inventory Calculation for the Inventory count shall be less than $24.0 million ($24,000,000) (adjusted to reflect any transactions affecting Inventory from the "Minimum Inventory Value"), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment to the Sellers for Closing Date through such excesscount. In the event of any dispute between the parties concerning the quantity of any Inventory, the parties shall, if such dispute remains unresolved upon the expiration of fifteen (15) Business Days following the Closing Date (during which fifteen (15) Business Day period, the parties shall use good faith efforts to resolve such dispute), hire ParenteBeard (“Designated Expert”) to determine the Closing Date quantities of Inventory. If the Designated Expert is unavailable for whatever reason, and the parties are unable to agree on a shortfallreplacement, (i) any amounts owed then they will petition a court of competent jurisdiction to select the most competent and qualified independent expert from a list submitted by each. The Designated Expert’s calculation of the disputed quantities shall not be less than the lowest amount, nor higher than the highest amount, proposed by Purchaser and Seller. All quantities determined by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) expert so chosen shall be delivered to Purchaser within two (2) business days of delivery by Sellers final and binding on the parties, with the cost of such notice work allocated to each party based on the proportion by which the amount in dispute was determined in favor of Inventory Calculation, and one party or the other. (iid) any amounts owed by the Sellers to the Purchaser as a result of the determination of Within five (5) Business Days after the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations between the Sellers Adjustment becomes final and the Purchaser or through a determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of the immediately preceding sentence (e) Amounts payable binding pursuant to this Section 1.04 3.3; (i) if the amount of the Inventory Adjustment is a positive number, Purchaser shall be treated pay to Seller, as an adjustment to the Purchase Price for all purposesPrice, an amount equal to the Inventory Adjustment by wire transfer in immediately available funds; or (ii) if the amount of the Inventory Adjustment is a negative number, Seller shall pay to Purchaser, as an adjustment to the Purchase Price, an amount equal to the Inventory Adjustment by wire transfer in immediately available funds.

Inventory Adjustment. (a) To the extent that the Inventory Amount (as defined below) as of the Closing Date, exceeds $1,700,000, the Tentative Purchase Price shall be increased by the amount of such excess, and to the extent that the Inventory Amount is less than $1,700,000, the Tentative Purchase Price shall be decreased by the amount of such deficiency (such positive or negative amount hereinafter referred to as the “Inventory Adjustment Amount”). For purposes hereof, “Inventory Amount” means (i) the cost of this Agreementthe inventory as of the Closing Date, the term "Inventory Value" shall be as determined in accordance with GAAP applied on a the provisions of this Section 2.2 below and consistent basis with the accounting principles and methodologies historically methodology used by in preparing the SellersNovember 30, 2006 Financial Statements (as defined in Section 3.5), which were used the parties acknowledge and agree includes certain allocated charges above just the purchase cost, except that no adjustment will be made to prepare reflect any market pricing of the statement of product contribution set forth on Schedule 2.06 Inventory, multiplied by (the "Valuation Principles"), determined as if the Closing Date were the Company's normal year endii) 0.9. (b) Sellers and Purchaser have jointly A physical inventory shall be conducted a physical count of in good faith by the Inventory parties as of the Closing Date pursuant to (which the procedures set forth parties will begin on Exhibit 1.04(bJune 29) heretofor purposes of determining the Inventory Amount. Such physical count was observed by the Independent Accountant. All fees and expenses of the Independent Accountant incurred in this capacity The Inventory Amount shall be billed to and shared equally by the Sellers and Purchaser. Such determined based on such physical inventory count occurred on August 25, 2001, August 26, 2001 and August 27, 2001. Within five business days following using the physical count, the Sellers shall calculate in good faith and in accordance with the Valuation Principles the Inventory Value for the aggregate cost of Annaco’s Inventory as of the Closing Date Effective Time calculated in the manner described in this Section 2.2, and deliver a certificate indicating such Inventory Value to the Purchaser (the "Inventory Calculation"). For purposes of the Inventory CalculationAdjustment Amount, Inventory in transit as so determined, shall be added to or deducted from the Tentative Purchase Price, as the case may be, based on the Closing Date shall not be included in the calculation of Inventory Value. Purchaser shall pay Sellers, at Sellers' cost, for any such Inventory in transit on the Closing Date. Sellers shall deliver such Inventory to Purchaser upon receipt of payment from Purchasercalculation. (c) If the Purchaser disagrees Annaco and Buyer will attempt in good faith with to agree on the Inventory CalculationAmount and the Inventory Adjustment Amount as of the Effective Time before the Closing Date. If the parties cannot agree on the Inventory Amount and the Inventory Adjustment Amount before the Closing Date, each of Annaco and Buyer will (i) for a period of thirty (30) days following the Purchaser shall provide a detailed objection Closing Date, cooperate in good faith to mutually agree upon the Sellers in writing within ten Inventory Amount and the Inventory Adjustment Amount and (10ii) business days after receipt of notice from Sellers if the parties cannot reach an agreement during such thirty (30) day period, submit its determination of the Inventory CalculationAmount to a mutually agreed upon referee (the “Referee”) and the Referee shall make the final determination thereof. Such determination shall be made in accordance with the provisions hereof within 30 days after submission to the Referee; and the Referee’s determination shall be final, conclusive and thebinding on Annaco and Buyer. Buyer and Annaco agree to share equally the cost and expenses of the Referee, but each party shall bear its own legal and other expenses, if any. (d) In the event that If Annaco and Buyer do not agree upon the Inventory Calculation for Amount on the Closing Date, Buyer will pay Sellers an amount at Closing based on an estimated Inventory shall be less than Adjustment Amount equal to $24.0 million 2,350,000 (which assumes an Inventory Amount equal to $24,000,0004,500,000 x 0.9 = $4,050,000) (the "Minimum “Estimated Inventory Value"Adjustment Amount”), the Sellers shall pay to the Purchaser the shortfall. In the event that the Inventory Calculation for the Inventory shall be more than the Minimum Inventory Value, the Purchaser shall retain the excess Inventory without further payment to the Sellers for such excess. In the event of a shortfall, (i) any amounts owed by the Sellers to the Purchaser as a result of the Sellers' Inventory Calculation delivered pursuant to Section 1.04(b) shall be delivered to Purchaser within two (2) business days of delivery by Sellers of such notice of Inventory Calculation, and (ii) any amounts owed by the Sellers to the Purchaser as a result of Following the determination of the Inventory Calculation pursuant to Section 1.04(c) (whether through negotiations Amount by the parties or the Referee, as the case may be, after Closing, payment of the difference between the Sellers actual Inventory Adjustment Amount and the Purchaser Estimated Inventory Adjustment Amount paid at Closing shall be made by Buyer to Annaco or through a Annaco to Buyer by wire transfer within 15 days after the final determination of the Independent Accountant) shall be made within two (2) business days of such determination. Any amounts owed pursuant to clause (ii) of Inventory Amount by the immediately preceding sentence (e) Amounts payable pursuant to this Section 1.04 shall be treated parties or the Referee, as an adjustment to the Purchase Price for all purposescase may be.