OF THE AUDIT.
THE COST OF
THE AUDIT SHALL BE EVENLY SPLIT BETWEEN THE PURCHASER AND THE SHAREHOLDERS, WITH
THE SHAREHOLDERS' PORTION OF SUCH COST BEING PAID DIRECTLY BY THE SHAREHOLDERS
(AND NOT FROM EITHER THE REGULAR ESCROW OR THE SPECIAL ESCROW, UNLESS OTHERWISE
ELECTED BY THE PURCHASER IN ITS SOLE DISCRETION) AND SHALL NOT BE SUBJECT TO THE
THRESHOLD AMOUNT.
THE PURCHASER AND THE SHAREHOLDERS SHALL INSTRUCT THE AUDITOR
THAT THE CLOSING BALANCE SHEET SHALL BE PREPARED IN ACCORDANCE WITH GAAP (EXCEPT
AS SET FORTH ON SCHEDULE 5.4, WHICH SUCH EXCEPTIONS SHALL BE APPLICABLE TO THE
CLOSING BALANCE SHEET) CONSISTENT IN ALL RESPECTS (INCLUDING CLASSIFICATION AND
PRESENTATION OF LINE ITEMS) WITH THE ACCOUNTING METHODS, PRACTICES AND
PROCEDURES USED TO PREPARE THE BALANCE SHEET INCLUDED IN THE UNAUDITED FINANCIAL
STATEMENTS (AUGUST 31, 2009).
FOR THE AVOIDANCE OF DOUBT, THE VALUE OF THE
INVENTORY AS OF 11:59 P.M. (EST) ON THE CLOSING DATE SHALL BE DETERMINED IN
ACCORDANCE WITH THE METHODOLOGY SET FORTH ON SCHEDULE 4.1.1 (THE "INVENTORY
METHODOLOGY"), WHICH METHODOLOGY IS CONSISTENT WITH THE CORPORATION'S PAST
PRACTICE.
TO THE EXTENT THAT THE INVENTORY METHODOLOGY CONFLICTS WITH GAAP, THE
INVENTORY METHODOLOGY SHALL CONTROL.
THE PURCHASER AND THE SHAREHOLDERS SHALL
CAUSE THE AUDITORS TO DELIVER THE CLOSING BALANCE SHEET, TOGETHER WITH A
CALCULATION OF THE NET ASSETS OF THE CORPORATION AS OF 11:59 P.M. (EST) ON THE
CLOSING DATE BASED UPON THE CLOSING BALANCE SHEET (THE "CLOSING NET ASSETS"), TO
THE PURCHASER AS SOON AS REASONABLY PRACTICAL AFTER THE CLOSING DATE.
THE
CLOSING BALANCE SHEET SHALL NOT INCLUDE OR REFLECT ANY OF THE EXCLUDED ASSETS OR
THE TAX DEPOSIT.
IN THE EVENT THE PURCHASER DISPUTES THE CLOSING BALANCE SHEET
AS DELIVERED BY THE AUDITOR, THE PURCHASER SHALL PROVIDE WRITTEN NOTICE (A
"NOTICE OF DISPUTE") SPECIFYING IN REASONABLE DETAIL ALL POINTS OF DISAGREEMENT
WITH THE CLOSING BALANCE SHEET TO THE SHAREHOLDERS' REPRESENTATIVE WITHIN THIRTY
(30) DAYS AFTER THE PURCHASER'S RECEIPT OF THE CLOSING BALANCE SHEET.
IF THE
PURCHASER FAILS TO DELIVER A NOTICE OF DISPUTE WITHIN SUCH 30-DAY PERIOD, THEN
THE CLOSING BALANCE SHEET AS DELIVERED BY THE AUDITOR SHALL BE USED FOR PURPOSES
OF SECTION 4.1.2.
IF THE PURCHASER DELIVERS A NOTICE OF DISPUTE WITHIN SUCH
30-DAY PERIOD, THE PURCHASER AND THE SHAREHOLDERS' REPRESENTATIVE SHALL ENDEAVOR
IN GOOD FAITH TO RESOLVE ALL SPECIFIED POINTS OF DISAGREEMENT WITHIN THIRTY (30)
DAYS AFTER THE SHAREHOLDERS' REPRESENTATIVE'S RECEIPT OF THE NOTICE OF DISPUTE.
IF THE DISPUTE IS NOT RESOLVED WITHIN SUCH 30-DAY PERIOD, WHICH PERIOD MAY BE
EXTENDED BY MUTUAL AGREEMENT OF THE PARTIES, THE DISPUTE SHALL BE RESOLVED IN
ACCORDANCE WITH SECTION 11.10.
4.1.2
THE MERGER CONSIDERATION SHALL BE SUBJECT TO ADJUSTMENT AS FOLLOWS:
THE MERGER CONSIDERATION SHALL BE SUBJECT TO AN UPWARD ADJUSTMENT ON A
DOLLAR FOR DOLLAR BASIS IN THE EVENT THE CLOSING NET ASSETS ACCOMPANYING THE
CLOSING BALANCE SHEET AS FINALLY DETERMINED (BY AGREEMENT OR OTHERWISE) IN
ACCORDANCE WITH THIS AGREEMENT, INCLUDING ARBITRATION SET FORTH IN
SECTION 11.10, IS GREATER THAN THE AMOUNT EQUAL TO THE SUM OF THE TARGET