Allocation of Purchase Price Buyer and Sellers shall allocate any amounts treated as consideration for U.S. federal income tax purposes among the assets of the Company (the “Allocation”) in the manner required by Code Section 1060 and the Treasury Regulations Section 1.1060-1(c) as follows: (i) to the Company’s Tangible Personal Property based on the Company’s adjusted tax basis; (ii) to the Company’s (a) inventory; (b) accounts receivable; (c) Cash; and (d) any other short term assets, based on the Company’s net book value as illustrated on the Company’s Financial Statements as of the Balance Sheet Date; and (iii) to all of the Company’s intangible assets, based on the residual value of such assets (the “Allocation Principles”). Within one hundred eighty (180) days after the Closing Date, the Shareholder Representative shall deliver to Buyer a draft IRS Form 8594 prepared in a manner consistent with the Allocation Principles (“Sellers’ Allocation”). The Buyer shall have the right to review the Sellers’ Allocation and, if Buyer disagrees with Sellers’ Allocation, Buyer may, within thirty (30) days after delivery of Sellers’ Allocation, deliver a written notice (“Buyer’s Allocation Notice”) to the Shareholder Representative to such effect, specifying those items as to which Buyer disagrees and setting forth the Buyer’s proposed Allocation. If Buyer’s Allocation Notice is duly and timely delivered, Buyer and the Shareholder Representative shall use their reasonable best efforts to reach agreement on the disputed items or amounts, if any. If Buyer and the Shareholder Representative are unable to reach such agreement within twenty (20) days after delivery of Buyer’s Allocation Notice, they shall promptly cause the Independent Accountants to resolve any remaining disagreement. Any Allocation determined pursuant to the decision of the Independent Accountants shall incorporate, reflect, and be consistent with the Allocation Principles. Sellers’ Allocation if no Buyer’s Allocation Notice is timely delivered, as adjusted pursuant to any agreement between the Shareholder Representative and Buyer and/or pursuant to any resolution of the Independent Accountants (the “Final Allocation”) shall be final and binding on all Parties. Any fees and expenses of the Independent Accountants shall be borne equally by Buyer, on the one hand, and by Sellers, on the other hand. Any payments treated as an adjustment to the Purchase Price pursuant to Section 2.3(d)(i) or Section 8.6 shall be allocated among the assets of the Company in accordance with the Allocation Principles and the Final Allocation (and the Final Allocation shall be adjusted accordingly). The Parties shall not (and shall cause their respective Affiliates not to) take any position in any Tax Proceeding inconsistent with the Final Allocation, except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any similar provision of state, local or foreign Law).
