AS VERIFIED BY PURCHASER.
ALL NONQUALIFYING CLOSING
INVENTORY SHALL BE REVIEWED FOR APPROPRIATE LOWER OF COST OR
16
MARKET VALUATION ADJUSTMENT AS MUTUALLY AGREED UPON BY PURCHASER AND SELLER, IT
BEING EXPRESSLY UNDERSTOOD THAT THE CALCULATION OF MARKET VALUE SHALL BE
DETERMINED BY USING THE EXPECTED SELLING PRICE REDUCED BY (X) NORMAL SELLING
COSTS AND (Y) A REASONABLE SELLING MARGIN REPRESENTATIVE OF THE HISTORICAL
SELLING MARGIN OF SELLER IN THE PRODUCT CATEGORY.
(B)
INVENTORY VALUATION METHODOLOGY.
THE FOLLOWING CONVENTIONS SHALL
APPLY TO THE IDENTIFICATION AND VALUATION OF THE INVENTORY, THE CLOSING
INVENTORY AND THE NONQUALIFYING CLOSING INVENTORY:
(I) THE PRELIMINARY ESTIMATE
SHALL BE BASED ON SELLER'S CUSTOMARY INVENTORY REPORT PREPARED BY SELLER AS OF
TWO BUSINESS DAYS OR LESS OF CLOSING AND DELIVERED TO PURCHASER PRIOR TO
CLOSING, THE VALUE FOR WHICH SHALL BE BASED ON SELLER'S COST AS CONTAINED IN
SUCH REPORT; (II) THE CLOSING INVENTORY AND NONQUALIFYING CLOSING INVENTORY
SHALL BE BASED ON THE JOINT PHYSICAL INSPECTION OF THE INVENTORY BY PURCHASER
AND SELLER, (III)
PURCHASER'S PROPOSED FINAL VALUATION SHALL INCLUDE VERIFIED
SELLER'S COST INFORMATION FOR EACH ITEM OF INVENTORY AND ALSO SHALL INCLUDE
INVENTORY WHICH HAS BEEN PREPAID BY SELLER AND RECEIVED AFTER THE CLOSING; (IV)
THE CLOSING INVENTORY SHALL NOT INCLUDE "RETURN TO VENDOR" OR REPAIR ITEMS; (V)
THE VALUE OF ANY INVENTORY ACQUIRED BY PURCHASER FOLLOWING THE CLOSING DATE
(INCLUDING CUSTOMER RETURNS) SHALL NOT BE INCLUDED IN THE INVENTORY VALUE; AND
(VI) INVENTORY VALUE, OTHER THAN NONQUALIFYING CLOSING INVENTORY, SHALL BE BASED
ON SELLER'S HISTORICAL COSTING METHOD AS VERIFIED BY PURCHASER ("SELLER'S
COST"), UNLESS SELLER, IN ITS SOLE DISCRETION, AGREES TO A LESSER VALUE, IN
WHICH EVENT THE LESSER VALUE SHALL BECOME THE "SELLER'S COST."
THE PARTIES
SHALL BEAR THEIR OWN EXPENSES IN THE VALUATION OF THE INVENTORY, THE
NONQUALIFYING CLOSING INVENTORY AND CLOSING INVENTORY.
(C)
INVENTORY VALUATION DISPUTES.
IF SELLER SHALL DISAGREE WITH THE
PURCHASER'S FINAL CALCULATION OF THE VALUE OF THE CLOSING INVENTORY THAT SELLER
RECEIVED FROM PURCHASER PURSUANT TO SECTION 2.6(A), IT SHALL NOTIFY PURCHASER OF
SUCH DISAGREEMENT IN WRITING, SETTING FORTH IN REASONABLE DETAIL THE PARTICULARS
OF SUCH DISAGREEMENT, WITHIN TWENTY (20) DAYS AFTER RECEIPT OF THE CALCULATION
OF THE VALUATION OF THE CLOSING INVENTORY, ACCOMPANIED BY REASONABLE SUPPORTING
DOCUMENTATION.
IN THE EVENT THAT SELLER DOES NOT PROVIDE SUCH A NOTICE OF
DISAGREEMENT WITHIN SUCH TWENTY (20) DAY PERIOD, SELLER SHALL BE DEEMED TO HAVE
ACCEPTED THE CALCULATION OF CLOSING INVENTORY.
IN THE EVENT ANY SUCH NOTICE OF
DISAGREEMENT IS TIMELY PROVIDED, PURCHASER AND SELLER SHALL USE COMMERCIALLY
REASONABLE EFFORTS FOR A PERIOD OF TWENTY (20) DAYS FOLLOWING RECEIPT OF THE
CALCULATION OF THE VALUATION OF THE CLOSING INVENTORY (OR SUCH LONGER PERIOD AS
THEY MAY MUTUALLY AGREE) TO RESOLVE ANY DISAGREEMENTS WITH RESPECT TO THE
CALCULATION OF THE CLOSING INVENTORY.
IF, AT THE END OF SUCH PERIOD, THEY ARE
UNABLE TO RESOLVE SUCH DISAGREEMENTS, THE BANKRUPTCY COURT SHALL RESOLVE ANY
REMAINING MATTERS IN DISPUTE.
2.7
Allocation.
Purchaser shall use its commercially reasonable
efforts to deliver to Seller, within ninety