FORTH ON SUCH ANNEX PAYABLE IN ACCORDANCE WITH SUCH
ANNEX, WHICH ADDITIONAL CONSIDERATION SHALL BE IN AN AGGREGATE AMOUNT EQUAL TO
$15,000,000 (THE "MANUFACTURING TRANSFER PAYMENT").
"PURCHASE PRICE" MEANS THE CLOSING DATE CONSIDERATION TOGETHER WITH, IF PAYABLE,
THE PMA PAYMENTS AND THE MANUFACTURING TRANSFER PAYMENTS.
(B)
PRICE ADJUSTMENTS RELATED TO INVENTORY.
THE PURCHASE PRICE
PAYABLE UNDER THIS AGREEMENT SHALL BE ADJUSTED UPWARD OR DOWNWARD AS FOLLOWS:
(I)
WITHIN FIVE (5) BUSINESS DAYS PRIOR TO THE CLOSING DATE, THE US
SELLER SHALL DELIVER TO BUYERS A GOOD FAITH ESTIMATE OF THE STATEMENT OF THE
INVENTORY OF THE BUSINESS AS OF THE CLOSING TIME (THE "ESTIMATED INVENTORY
STATEMENT"), WHICH:
(A)
INDICATES THE AGGREGATE VALUE OF THE PORTION OF SUCH INVENTORY THAT
IS CURRENT INVENTORY (AS DEFINED BELOW) (THE "INVENTORY AMOUNT"); AND
(B)
WITHIN SUCH INVENTORY, SEPARATELY IDENTIFIES THOSE THAT ARE ON
CONSIGNMENT WITH THIRD PARTIES, TOGETHER WITH AN INDICATION OF THEIR AGGREGATE
VALUE (THE "CONSIGNMENT INVENTORY AMOUNT") AND THEIR VALUE BY CUSTOMER LOCATION.
"CURRENT INVENTORY" MEANS ALL INVENTORY EXCLUDING ANY OBSOLETE OR EXCESS
INVENTORY AS DETERMINED IN A MANNER CONSISTENT WITH THE HISTORICAL ACCOUNTING
METHODS, POLICIES AND PRACTICES OF THE BUSINESS AS SET FORTH ON
SCHEDULE 1.2(B)(I)(A) (THE "ACCOUNTING METHODOLOGIES") AND AS REFLECTED IN THE
CALCULATION OF THE TARGET INVENTORY SET FORTH ON SCHEDULE 1.2(B)(I)(B).
THE
ESTIMATED INVENTORY STATEMENT SHALL BE PREPARED USING GOOD FAITH ESTIMATES BASED
ON RECORDS OF THE BUSINESS.
(II)
BASED ON THE INVENTORY AMOUNT IN THE ESTIMATED INVENTORY
STATEMENT, THE CLOSING DATE CONSIDERATION WILL BE ADJUSTED AS FOLLOWS:
(X) IF
SUCH INVENTORY AMOUNT IS
8
LESS THAN THE TARGET INVENTORY (THE AMOUNT OF ANY SUCH DEFICIENCY REFERRED TO AS
THE "INVENTORY DEFICIENCY"), THE CLOSING DATE CONSIDERATION SHALL BE ADJUSTED
DOWNWARD BY THE AMOUNT OF THE INVENTORY DEFICIENCY; (Y) IF SUCH INVENTORY AMOUNT
IS GREATER THAN THE TARGET INVENTORY (THE AMOUNT OF ANY SUCH EXCESS REFERRED TO
AS THE "INVENTORY EXCESS"), THE CLOSING DATE CONSIDERATION SHALL BE ADJUSTED
UPWARD BY THE AMOUNT OF THE INVENTORY EXCESS; OR (Z) IF SUCH INVENTORY AMOUNT IS
EQUAL TO THE TARGET INVENTORY, THERE SHALL BE NO ADJUSTMENT MADE TO THE CLOSING
DATE CONSIDERATION.
THE "TARGET INVENTORY" IS EQUAL TO $15,309,262, WHICH HAS
BEEN CALCULATED AS SET FORTH ON SCHEDULE 1.2(B)(I)(B).
(III)
SELLERS SHALL ORDER A PHYSICAL COUNT OF NON-CONSIGNMENT INVENTORY
TO BE CONDUCTED BY ITS THIRD-PARTY WAREHOUSE PROVIDERS IN THE U.S. AND EUROPE
WITHIN FIVE (5) BUSINESS DAYS OF THE CLOSING DATE.
BOTH SELLERS AND BUYERS
SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO ATTEND AND AUDIT SUCH PHYSICAL
COUNT.
REPRESENTATIVES OF SELLERS AND REPRESENTATIVES OF BUYERS SHALL,
TOGETHER, CONDUCT A PHYSICAL INSPECTION AND COUNT OF INVENTORY ON CONSIGNMENT
WITH THIRD PARTIES AT TWENTY (20) RANDOMLY SELECTED CUSTOMER LOCATIONS IN THE
U.S. AND TEN (10) RANDOMLY SELECTED CUSTOMER LOCATIONS IN EUROPE WHERE SUCH
CONSIGNMENT INVENTORY IS LOCATED.
SELLERS AND BUYERS SHALL MUTUALLY AGREE ON
THE RANDOMLY SELECTED CUSTOMER LOCATIONS.
SELLERS SHALL EXTRAPOLATE THE RESULTS
OF SUCH SAMPLING OF LOCATIONS, AFTER MAKING APPROPRIATE RECONCILING ADJUSTMENTS,
TO DETERMINE THE CONSIGNMENT INVENTORY AMOUNT.
(IV)