Common use of Net Worth Adjustment Clause in Contracts

Net Worth Adjustment. The value by which the book value of the Assets as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 shall be known as "Net Worth". Not later than July 6, 1998, Seller shall prepare and deliver to Buyer a balance sheet of the Business as of the close of business on June 5, 1998 showing the book value of the Assets as the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business (the "Closing Balance Sheet"). The Closing Balance Sheet shall be prepared from Seller's books and records in accordance with generally accepted accounting principles ("GAAP") applied consistently with those used in preparing the year end balance sheet of the Business except for (i) GAAP exceptions of a non-material nature consistent with those applied by Seller in the year end balance sheet, (ii) Excluded Assets and Retained Liabilities shall not be included in the Closing Balance Sheet, (iii) the Closing Balance Sheet shall contain prorata accruals for utilities, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, the cost of which shall be borne by Seller and at which both Buyer and Seller may be represented (each at its own cost), and (v) the Closing Balance Sheet shall contain (i) a warranty reserve equal to $80,000; (ii) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have thirty (30) days after receipt of the Closing Balance Sheet to dispute any of the items contained on the Closing Balance Sheet by delivering written notice of such dispute to Seller (a "Net Worth Dispute Notice"). If Buyer does not deliver a Net Worth Dispute Notice to Seller within such thirty (30) day period, the Closing Balance Sheet shall be final and binding on the parties hereto. If Buyer delivers a Net Worth Dispute Notice to Seller within such thirty (30) day period and Buyer and Seller cannot resolve any dispute between them concerning the Closing Balance Sheet within ten (10) days after Seller's receipt of the Net Worth Dispute Notice, both parties hereby agree that such dispute shall immediately be submitted to an independent auditor from the firm of Ernst & Young for binding arbitration and determination of the Net Worth of the Business as of the date hereof which determination shall be rendered in not more than thirty (30) days from the date of receipt by the above firm of the notice of dispute provided by either Buyer or Seller (or both of them) and whose determination shall be final and binding on the parties hereto. The costs and fees of such independent auditor shall be shared equally by Buyer and Seller. Following determination of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditor, the Purchase Price shall be decreased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth is less than Three Million Two Hundred Thousand Dollars ($3,200,000.00) and shall be increased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth is more than Three Million Three Hundred Thousand Dollars ($3,300,000.00). Such adjustment to the Purchase Price (if any) shall be paid by Seller to Buyer or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth in immediately available funds.

Net Worth Adjustment. The value by which (i) Within forty-five (45) days after the book value of Closing Date, Sellers' shall provide to Purchasers and JAKKS at Sellers' expense (A) Sellers' combined balance sheet, prepared in a manner consistent with the Assets Financial Statements, as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 shall be known as "Net Worth". Not later than July 6, 1998, Seller shall prepare and deliver to Buyer a balance sheet of the Business as of the close of business on June 5, 1998 showing the book value of the Assets as the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business Closing Date (the "Closing Balance Sheet"). The , (B) a statement of the legal and accounting expenses relating to the transactions contemplated by this Agreement paid by (or to be paid by) Sellers' in connection with the Closing or the determination of the Net Worth Adjustment, (C) a statement of Sellers' combined Net Worth, prepared in a manner consistent with the Financial Statements, as of the close of business on the Closing Date (the "Closing Net Worth"), (D) based on the foregoing item, a computation of the difference, if any, between Sellers' Closing Net Worth and the Target Closing Net Worth, and (E) a computation of the Closing Purchase Price as determined by Sellers in accordance with this Section 2.3(a) (the "Net Worth Adjustment"). (ii) Purchasers shall provide Sellers, their respective accountants and other personnel preparing the Closing Balance Sheet shall be prepared from Seller's and statement of Sellers' Closing Net Worth with access at Purchasers' principal offices, at all times upon reasonable notice during normal business hours, to Purchasers' personnel, properties, and books and records in accordance with generally accepted accounting principles ("GAAP") applied consistently with those used in pertaining to the Assets for purposes of preparing the year end balance sheet Closing Balance Sheet and Closing Net Worth statement. Purchasers and JAKKS shall have the right to audit the preparation of the Business except for Closing Balance Sheet and/or Closing Net Worth statement, and shall have reasonable access to the workpapers of the accountants and other personnel of Sellers preparing the Closing Balance Sheet and statement of Sellers' Closing Net Worth. During the thirty (i30) GAAP exceptions days immediately following the receipt by Purchasers and JAKKS of a non-material nature consistent with those applied the items set forth in Section 2.3(a)(ii), Purchasers and JAKKS and their respective accountants shall be entitled to review such items and any working papers, trial balance and similar materials relating thereto prepared by Seller in Sellers, their accountants or other personnel. (A) If Purchasers or JAKKS do not accept the year end balance sheetClosing Balance Sheet or Sellers' computation of the Closing Purchase Price and/or the Net Worth Adjustment (including any entries, (ii) Excluded Assets and Retained Liabilities shall not be included in figures or computations on the Closing Balance Sheet, (iii) Closing Net Worth statement and any other figures or computations used in determining the Closing Balance Sheet shall contain prorata accruals for utilities, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, Purchase Price or the cost of which shall be borne by Seller and at which both Buyer and Seller may be represented (each at its own costNet Worth Adjustment), and (v) the Closing Balance Sheet Purchasers shall contain (i) a warranty reserve equal give written notice to $80,000; (ii) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have Sellers within thirty (30) days after receipt delivery thereof. Notwithstanding the foregoing or anything contained herein to the contrary, to the extent that Purchasers or JAKKS require additional written documentation and information that is reasonably necessary for them to evaluate Sellers' computation of the Closing Balance Sheet Purchase Price and/or the Net Worth Adjustment, Purchasers' and JAKKS' review period shall be extended for an additional ten (10) business days from their receipt of such additional written documentation and information. The notice shall set forth in reasonable detail the basis for Purchasers' and JAKKS's objections to dispute any of the items contained on the Closing Balance Sheet by delivering written notice of such dispute to Seller (a "Sheet, Closing Purchase Price and/or the Net Worth Dispute Notice"). Adjustment. (B) If Buyer does Purchasers or JAKKS do not deliver a Net Worth Dispute Notice to Seller object within such thirty (30) day period, the Closing Balance Sheet Sheet, Closing Purchase Price and the Net Worth Adjustment shall be final deemed accepted and binding on the parties heretoapproved by Purchasers and JAKKS. If Buyer delivers a Net Worth Dispute Notice to Seller Purchasers or JAKKS shall raise any objections within such the thirty (30) day period and Buyer and Seller period, the parties shall attempt to resolve the matter or matters in dispute. If the matters in dispute cannot resolve any be resolved by the parties within sixty (60) days after delivery of Purchasers' or JAKKS' objections, the specific matters in dispute between shall be submitted to BDO Seidman, LLP (the "Arbitrating Accountants"), which firm shall make a xxxxx and binding determination as to such matter or matters. The Arbitrating Accountants shall deliver to the parties their written determination regarding the matters submitted to them concerning within sixty (60) days, which determination shall be binding and conclusive upon all parties with respect to the Closing Balance Sheet within ten (10) days after Seller's receipt and calculation of the Closing Purchase Price and/or the Net Worth Dispute Notice, both parties hereby agree that Adjustment. Any such dispute determination shall immediately be submitted not require Sellers to an independent auditor from alter the firm of Ernst & Young for binding arbitration Financial Statements. (C) Fees and determination expenses of the Net Worth of the Business as of the date hereof which determination Arbitrating Accountants shall be rendered in not more than thirty (30) days from the date of receipt paid 50% by the above firm of the notice of dispute provided Purchasers and 50% by either Buyer or Seller Sellers. (or both of themiv) and whose determination shall be final and binding on the parties hereto. The costs and fees of such independent auditor shall be shared equally by Buyer and Seller. Following determination of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditor, the Purchase Price shall be decreased by One Dollar ($1.00) for each One Dollar ($1.00) that the If Sellers' Closing Net Worth is less than Three Million Two Hundred Thousand Dollars ($3,200,000.00) and the Target Closing Net Worth, then Sellers shall be increased by One Dollar ($1.00) for each One Dollar ($1.00) that pay Purchasers the excess of the Target Closing Net Worth is more than Three Million Three Hundred Thousand Dollars over the Closing Net Worth. If Sellers fail to make any payment required by this clause ($3,300,000.00). Such adjustment iv) within the time frame established by Section 2.3(c) below, then Sellers also shall pay interest at the Prime Rate on the amount of such payment for the period from the date such payment was due through (but excluding) the actual date of such payment to the Purchase Price (if any) shall be paid by Seller to Buyer or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth in immediately available fundsPurchasers.

Net Worth Adjustment. The value by which (a) Within forty-five (45) days after the book value of Closing Date, Buyer will deliver a certificate from its chief financial officer to the Assets as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 shall be known as "Net Worth". Not later than July 6, 1998, Seller shall prepare and deliver to Buyer Noteholder Representative setting forth (i) a balance sheet of the Business Company as of the close of business on June 5, 1998 showing the book value of the Assets as the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business Testing Date (the "Closing Balance SheetTESTING BALANCE SHEET"). The Closing Balance Sheet shall be prepared from Seller's books and records in accordance with generally accepted accounting principles ("GAAP") applied consistently with those used in preparing the year end balance sheet of the Business except for (i) GAAP exceptions of a non-material nature consistent with those applied by Seller in the year end balance sheet, (ii) Excluded Assets and Retained Liabilities shall not be included in the Closing Balance Sheet, (iii) the Closing Balance Sheet shall contain prorata accruals for utilities, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, the cost of which shall be borne by Seller and at which both Buyer and Seller may be represented (each at its own cost), and (v) the Closing Balance Sheet shall contain (iii) a warranty reserve calculation setting forth the result of (A) Total Assets minus (B) Total Adjusted Liabilities plus (C) $3,000,000 (the "NET WORTH CALCULATION"). Such certificate shall be reasonably detailed and shall be prepared on a basis consistent with the Financial Statements; provided, however, that the Net Worth Calculation shall be adjusted to reflect a ratable sharing in equal to $80,000; portions by Buyer and the Escrow Noteholders (iiother than the holders of New Demand Note Debt), of the amount of accrued payroll liability accruing from May 1, 2002, through the date of this Agreement. Such accrued payroll liability shall be calculated in a manner consistent with the Financial Statements. (b) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have Within thirty (30) days after receipt of the Closing certificate is delivered to the Noteholder Representative pursuant to Section 3.4(a), the Noteholder Representative shall deliver to Buyer either (i) a written acknowledgment accepting the Testing Balance Sheet and the Net Worth Calculation or (ii) a written report setting forth in reasonable detail any proposed adjustments to dispute any of the items contained on the Closing Testing Balance Sheet by delivering written notice of such dispute to Seller (a "and the Net Worth Dispute NoticeCalculation (the "NET WORTH ADJUSTMENT REPORT"). If the Noteholder Representative fails to respond to Buyer does not deliver a within such 30-day period, the Noteholders shall be deemed to have accepted and agreed to the Testing Balance Sheet and the Net Worth Dispute Notice Calculation as delivered pursuant to Seller Section 3.4(a). Buyer shall provide the Noteholder Representative with reasonable access to the books and records of the Company in order to verify the accuracy of the Net Worth Calculation. (c) In the event that the Noteholder Representative and Buyer fail to agree on any of the Noteholder Representative's proposed adjustments set forth in the Net Worth Adjustment Report within such thirty (30) days after Buyer receives the Net Worth Adjustment Report, the Noteholders and Buyer agree that a mutually acceptable independent accounting firm of nationally recognized standing (the "INDEPENDENT AUDITORS") within the 30-day period immediately following such 30-day period, shall make the Closing Balance Sheet final determination of the Net Worth Calculation. Buyer and the Noteholder Representative shall each provide the Independent Auditors with their respective determinations of the Net Worth Calculation. The decision of the Independent Auditors shall be final and binding on the parties hereto. If Buyer delivers a Net Worth Dispute Notice to Seller within such thirty (30) day period Noteholders and Buyer and Seller cannot resolve any dispute between them concerning the Closing Balance Sheet within ten (10) days after Seller's receipt fees, costs and expenses of the Independent Auditors shall be borne by Buyer if the Net Worth Dispute NoticeCalculation is increased by at least 10%; otherwise, both parties hereby agree that such dispute shall immediately be submitted to an independent auditor from the firm of Ernst & Young for binding arbitration fees, costs and determination of the Net Worth of the Business as of the date hereof which determination expenses shall be rendered in not more than thirty (30) days from the date of receipt borne by the above firm of the notice of dispute provided by either Buyer or Seller (or both of them) and whose determination shall be final and binding on the parties hereto. The costs and fees of such independent auditor shall be shared equally by Buyer and Seller. Following determination of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditor, the Purchase Price shall be decreased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth is less than Three Million Two Hundred Thousand Dollars ($3,200,000.00) and shall be increased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth is more than Three Million Three Hundred Thousand Dollars ($3,300,000.00). Such adjustment to the Purchase Price (if any) shall be paid by Seller to Buyer or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth Noteholders in immediately available fundsaccordance with Section 9.3.

Net Worth Adjustment. The value by which the book value of the Assets as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 shall be known as "Net Worth". (a) Not later than July 6five business days prior to the Closing Date, 1998, Seller shall Sellers will prepare and deliver to Buyer a an estimated consolidated balance sheet setting forth the Consolidated Net Book Value of the Business Sellers and 99 West as of the close Closing Date (the "ESTIMATED BALANCE SHEET"). Sellers will prepare the Estimated Balance Sheet in accordance with the methodologies set forth in Schedule 2.8 hereto. If the Consolidated Net Book Value shown on the Estimated Balance Sheet exceeds the Minimum Net Book Value, the cash portion of the Purchase Price payable at Closing shall be increased by such amount. If the Consolidated Net Book Value shown on the Estimated Balance Sheet is less than the Minimum Net Book Value, the cash portion of the Purchase Price payable at Closing shall be decreased by such amount. (b) Within 90 days after the Closing Date, Buyer will prepare and deliver to Sellers a consolidated balance sheet (the "CLOSING DATE BALANCE SHEET") for Sellers and 99 West as of the opening of business on June 5, 1998 showing the book value of Closing Date (determined on a pro forma basis as though the Assets as parties had not consummated the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business (the "Closing Balance Sheet"transactions contemplated by this Agreement). The Buyer will prepare the Closing Date Balance Sheet shall be prepared from Seller's books and records in accordance with generally accepted accounting principles ("GAAP") applied consistently with those used the methodologies set forth in preparing the year end balance sheet of the Business except for (i) GAAP exceptions of a non-material nature consistent with those applied by Seller in the year end balance sheet, (ii) Excluded Assets and Retained Liabilities shall not be included in Schedule 2.8 hereto. If Sellers have any objections to the Closing Date Balance Sheet, (iii) the Closing Balance Sheet they shall contain prorata accruals for utilities, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, the cost notify Buyer in writing within 30 days of which shall be borne by Seller and at which both Buyer and Seller may be represented (each at its own cost), and (v) the Closing Balance Sheet shall contain (i) a warranty reserve equal to $80,000; (ii) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have thirty (30) days after receipt of the Closing Date Balance Sheet and deliver a detailed written statement describing their objections. Buyer and Sellers shall use their reasonable best efforts to dispute resolve any of the items contained on the Closing Balance Sheet by delivering written notice of such dispute to Seller (a "Net Worth Dispute Notice")objections themselves. If Buyer does not deliver a Net Worth Dispute Notice to Seller within such thirty (30) day period, the Closing Balance Sheet shall be final and binding on the parties hereto. If Buyer delivers a Net Worth Dispute Notice to Seller within such thirty (30) day period and Buyer and Seller Sellers cannot resolve any dispute between them concerning the Closing Balance Sheet such objections within ten (10) 30 days after Seller's receipt Buyer receives Sellers' statement of the Net Worth Dispute Noticeobjections, both parties hereby agree that such dispute shall be referred to a mutually acceptable nationally recognized accounting firm that has not performed services for Buyer (or any Affiliate of Buyer) or Sellers or 99 West (or any Affiliate of Sellers or 99 West) within the preceding three years for conclusive and binding resolution. Buyer and Sellers shall each pay one-half of the fees and expenses of such accounting firm. (c) If the Consolidated Net Book Value shown on the Closing Date Balance Sheet (as the same may be adjusted as described in Section 2.8(b) above) exceeds the Consolidated Net Book Value shown on the Estimated Balance Sheet, Buyer will pay Sellers in cash within five business days an amount equal to such excess by wire transfer of immediately be submitted available funds to an independent auditor from the firm of Ernst & Young for binding arbitration and determination of the Net Worth of the Business as of the date hereof which determination account designated by Sellers. The additional amount shall be rendered allocated among Sellers pursuant to this Agreement and the Doe Brothers pursuant to the Merger Agreement in not more than thirty (30) days from accordance with Exhibit J. If the date of receipt by the above firm of the notice of dispute provided by either Buyer or Seller (or both of them) and whose determination shall be final and binding Consolidated Net Book Value shown on the parties hereto. The costs and fees of such independent auditor shall be shared equally by Buyer and Seller. Following determination of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditor, the Purchase Price shall be decreased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth Closing Date Balance Sheet is less than Three Million Two Hundred Thousand Dollars the Consolidated Net Book Value shown on the Estimated Balance Sheet, Sellers and the Doe Brothers will pay Buyer in cash within five business days an amount equal to such deficit by wire transfer of immediately available funds to an account designated by Buyer. ($3,200,000.00d) As soon as practical following the first anniversary of the Closing Date, Lockton Insurance Brokerage shall review the IBNR reserve for workers' compensation and shall be increased by One Dollar ($1.00) for each One Dollar ($1.00) general liability insurance payables based upon payments made from the Closing Date through the first anniversary of the Closing Date and IBNR claims still outstanding on the first anniversary of the Closing Date that relate to the period prior to Closing. To the extent that such review reflects that the Net Worth is more than Three Million Three Hundred Thousand Dollars ($3,300,000.00). Such adjustment IBNR reserve for workers' compensation and general liability insurance payables on the Closing Date Balance Sheet was overstated, Buyer shall pay the amount of such overstatement to Sellers and the Purchase Price (if any) Doe Brothers in accordance with Exhibit J. Lockton Insurance Brokerage shall be paid by Seller to Buyer or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth determine IBNR claims uxxxx xxx xethodology described in immediately available fundsSchedule 2.8.

Net Worth Adjustment. The value by which the book value of the Assets as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 Purchase Price shall be known subject to -------------------- adjustment after the Closing Date as "Net Worth". follows: (a) Not later than July 690 days after the Closing Date, 1998, Seller the Buyer (i) shall prepare and deliver to Buyer a balance sheet of the Business Company as of the close of business on June 5Closing Date (as corrected pursuant to this Subsection 1.4, 1998 showing the book value of the Assets as the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business (the "Closing Balance Sheet"), (ii) may, at its --------------------- option, cause Deloitte & Touche LLP, the Buyer's independent public accountants (the "Buyer's Auditors"), to conduct an audit of the Closing Balance Sheet and ---------------- deliver an audit report without qualification thereon, and (iii) shall deliver the Closing Balance Sheet to the Stockholders' Representative (as defined below). The Closing Balance Sheet shall be prepared from Seller's books and records in accordance with generally accepted accounting principles ("GAAP") , applied consistently with those used in preparing the year end balance sheet Company's past practices and methods (to the extent applicable under GAAP), without any adjustments applicable solely as a result of the Business except for (i) GAAP exceptions acquisition of a non-material nature consistent the Shares by the Buyer on the Closing Date. The Stockholders shall work in good faith and cooperate with those applied by Seller the Buyer and, if applicable, the Buyer's Auditors in the year end balance sheetpreparation and, if applicable, audit of the Closing Balance Sheet and the resolution of any dispute in connection therewith pursuant to paragraph (iic) Excluded Assets below. (b) The Stockholders' Representative and Retained Liabilities one firm of independent certified public accountants acting on behalf of the Stockholders and the Stockholders' Representative (the "Stockholders' Advisors") shall not be included have the right ---------------------- to review the work papers of the Buyer and, if applicable, the Buyer's Auditors utilized in auditing the Closing Balance Sheet, and shall have full access to the books, records, properties and personnel of the Company (iiiand Buyer's personnel participating in any audit) for the sole purpose of verifying the accuracy and fairness of the presentation of the Closing Balance Sheet. (c) The values or amounts for each item reflected on the Closing Balance Sheet shall contain prorata accruals for utilitiesbe binding upon the Stockholders and the Stockholders' Representative, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, unless the cost of which shall be borne by Seller and at which both Buyer and Seller may be represented (each at its own cost), and (v) the Closing Balance Sheet shall contain (i) a warranty reserve equal to $80,000; (ii) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have thirty (30) Stockholders' Representative gives written notice within 30 calendar days after receipt of the Closing Balance Sheet to dispute of disagreement with any of the items contained values or amounts shown on the Closing Balance Sheet by delivering written notice Sheet, specifying, as to each such item in reasonable detail, the nature and extent of such dispute to Seller disagreement (a the "Net Worth Dispute Notice"). If the Buyer does not deliver and the -------------- Stockholders' Representative are unable to resolve any such disagreement within 30 days after the receipt by the Buyer of the Dispute Notice, the disagreement shall be submitted to arbitration in accordance with the provisions of Subsection 7.3 hereof. If as a Net Worth Dispute Notice result of the resolution of any disputes by agreement pursuant to Seller within this Subsection 1.4 or by arbitration pursuant to Subsection 7.3, any amount shown on the Closing Balance Sheet is determined to be erroneous, such thirty erroneous amount shall be deleted from the Closing Balance Sheet and the correct amount shall be inserted in lieu thereof. The Closing Balance Sheet, if and as so corrected, shall constitute the Closing Balance Sheet for purposes of this Agreement. (30d) day period, The Buyer shall pay the fees and disbursements of the Buyer's Auditors. The fees and disbursements of the Stockholders' Advisors incurred in the review of the Closing Balance Sheet shall be final and binding on paid by the parties heretoStockholders in the Stockholder Proportions. If The Buyer delivers a Net Worth Dispute Notice to Seller within such thirty shall under no circumstances be liable for any fees or disbursements of the Stockholders' Advisors nor shall the Stockholders be responsible for the fees or disbursements of the Buyer's Auditors. (30e) Immediately upon the expiration of the 30 calendar-day period and Buyer and Seller cannot resolve any dispute between them concerning following the Closing Balance Sheet within ten (10) days after SellerStockholders' Representative's receipt of the Net Worth Closing Balance Sheet, if no Dispute Notice, both parties hereby agree that such dispute shall immediately be submitted to an independent auditor from the firm of Ernst & Young for binding arbitration and determination of the Net Worth of the Business as of the date hereof which determination shall be rendered in not more than thirty (30) days from the date of receipt Notice is given by the above firm of the notice of dispute provided by either Buyer or Seller (or both of them) and whose determination shall be final and binding on the parties hereto. The costs and fees end of such independent auditor shall be shared equally by Buyer and Seller. Following determination period, or immediately upon the resolution of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditordisputes, if any, pursuant to this Subsection 1.4, the Purchase Price shall be decreased by One Dollar adjusted as follows, based upon the Closing Balance Sheet ($1.00as so adjusted, the "Adjusted Purchase Price"): ----------------------- (i) for each One Dollar If the net worth ($1.00defined as depreciated book value of all assets, including patents, trademarks and other similar intangible items less total liabilities) that of the Net Worth Company as shown on the Closing Balance Sheet is less than Three Million Two One Hundred Thousand Dollars dollars ($3,200,000.00) and 100,000), the deficiency shall be increased promptly paid by cashiers or certified check by the Stockholders to the Buyer, with such payment to be effected on a pro rata basis according to the Stockholder Proportions. The Buyer shall have the right, in its sole discretion, to set off any or all of such deficiency against the Further Consideration and/or any Contingent Consideration payable pursuant to this Agreement. (ii) If the net worth of the Company as shown on the Closing Balance Sheet is greater than One Dollar Hundred Ten Thousand dollars ($1.00110,000), the excess shall be promptly paid by cashiers or certified check by the Buyer to the Stockholders, with such payment to be effected on a pro rata basis according to the Stockholder Proportions. (iii) for each If the net worth of the Company as shown on the Closing Balance Sheet is equal to or greater than One Dollar Hundred Thousand dollars ($1.00100,000) that the Net Worth is more but less than Three Million Three or equal to One Hundred Ten Thousand Dollars dollars ($3,300,000.00110,000). Such , there shall be no adjustment to the Purchase Price (if any) shall be paid by Seller pursuant to Buyer or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth in immediately available fundsthis Section 1.4.

Net Worth Adjustment. The value (a) Promptly after the Closing, the individuals serving as the chief financial officers of Ladenburg and New Valley on the date hereof (or, if either such individual is not so serving on the Closing Date, a substitute individual mutually selected by which the book value of the Assets as of the close of business on June 5, 1998 exceeds the book value of the Assumed Liabilities as of the close of business on June 5, 1998 Purchaser and New Valley) shall be known as "Net Worth". Not later than July 6, 1998, Seller shall cooperate with each other to cause Ladenburg to prepare and deliver to Buyer a consolidated balance sheet of Ladenburg and its subsidiaries as at the Business as Closing Date (but without giving effect to the consummation of the close transactions contemplated hereby) from which the net worth of business Ladenburg and such subsidiaries on June 5, 1998 showing the book value of the Assets as the only assets of the Business, and showing the book value of the Assumed Liabilities as the only liabilities of the Business a consolidated basis on such date (the "Closing Balance SheetNet Worth"). The Closing Balance Sheet ) shall be prepared from Seller's books and records determined in accordance with generally accepted accounting principles ("GAAP") , applied consistently with those used in preparing the year end balance sheet of the Business except for (i) GAAP exceptions of a non-material nature consistent with those applied by Seller as in the year end balance sheetFinancial Statements except that, (ii) Excluded Assets if not required by GAAP, appropriate reserves and Retained Liabilities accruals shall not nevertheless be included in the Closing Balance Sheet, (iii) the Closing Balance Sheet shall contain prorata accruals made for utilities, property taxes, sales commissions, and like items, (iv) Inventories shall be determined pursuant to a physical count, the cost of which the annual audit and preparation of tax returns for Ladenburg for the year ended December 31, 2000. Upon its preparation, such balance sheet and determination of Closing Net Worth shall be borne by Seller and at which both Buyer and Seller may be represented submitted to the Enforcement Committee (each at its own costas defined in Section 2.9), New Valley and Berliner and shall be deemed conclusively accepted unless written objection thereto is given by any Party to the other Parties within 30 days after submission. (vb) If, within the 30-day period specified in Section 2.4(a), an objection is made pursuant to the last sentence of paragraph (a) above, the Purchaser's Accountants and the Sellers' Accountants shall jointly review the balance sheet and the determination of the Closing Balance Sheet shall contain Net Worth prepared by Ladenburg (ithe "Initial Determination") and attempt to reach a warranty reserve equal mutually satisfactory determination of the Closing Net Worth. If the Purchaser's Accountants and the Sellers' Accountants are unable to $80,000; (ii) an Accounts Receivable reserve for doubtful accounts equal to $25,000 and (iii) an Inventory reserve equal to $784,000. Buyer shall have thirty (30) reach such a mutually satisfactory determination within 30 days after the Initial Determination has been submitted to them for their joint review, they shall promptly submit the Initial Determination to a firm of independent accountants jointly selected by them. The independent third firm shall submit its determination of Closing Net Worth to New Valley, Berliner and the Enforcement Committee within 30 days of its receipt of the Closing Balance Sheet to dispute any Initial Determination, and the determination of the items contained on the Closing Balance Sheet by delivering written notice of such dispute to Seller (a "Net Worth Dispute Notice"). If Buyer does not deliver a Net Worth Dispute Notice to Seller within by such thirty (30) day period, the Closing Balance Sheet third firm shall be final and binding on conclusive upon the parties heretoParties. The Purchaser shall pay the fees and expenses of the Purchaser's Accountants and New Valley and Berliner shall pay the fees and expenses of the Sellers' Accountants. The fees and expenses of any independent third firm shall be paid 50% by the Purchaser and 50% by New Valley and Berliner. (c) If Buyer delivers a Net Worth Dispute Notice to Seller within such thirty (30) day period and Buyer and Seller cannot resolve any dispute between them concerning the Closing Balance Sheet within ten (10) days after Seller's receipt of the Net Worth Dispute NoticeWorth, both parties hereby agree that such dispute shall immediately be submitted to an independent auditor from the firm of Ernst & Young for binding arbitration and determination of the Net Worth of the Business as of the date hereof which determination shall be rendered in not more than thirty (30) days from the date of receipt by the above firm of the notice of dispute provided by either Buyer or Seller (or both of them) and whose determination shall be final and binding on the parties hereto. The costs and fees of such independent auditor shall be shared equally by Buyer and Seller. Following determination of the Net Worth of the Business either as a result of an agreement between Buyer and Seller or the arbitration of the auditorfinally determined, the Purchase Price shall be decreased by One Dollar ($1.00) for each One Dollar ($1.00) that the Net Worth is less than Three Million Two Hundred Thousand Dollars $28.6 million, the New Valley Parties and Berliner shall promptly contribute to the capital of Ladenburg an amount, in cash, equal to the difference between $28.6 million and the Closing Net Worth. ($3,200,000.00d) and shall be increased by One Dollar ($1.00) for each One Dollar ($1.00) that If the Closing Net Worth Worth, as finally determined, is more than Three Million Three Hundred Thousand Dollars ($3,300,000.00). Such adjustment 30.6 million, the Purchaser shall promptly pay to the Sellers, as an addition to the Purchase Price (if any) Price, cash equal to the difference between the Closing Net Worth and $30.6 million. Such payment shall be paid made by Seller wire transfer to Buyer the accounts of the Sellers specified pursuant to Section 1.3(a). (e) Payments by and to the New Valley Parties and Berliner pursuant to this Section 2.4 shall be made in the proportion of 80.1% by or Buyer to Seller, as the case may be, not later than ten (10) days after the final determination of Net Worth in immediately available fundsLTGI and 19.9% by or to Berliner.