Adjustment Procedures. (i) Not later than 60 days after the Closing Date, the Buyer will prepare and deliver to Joseph Herson (the "SELLER▇' ▇▇▇▇▇") ▇▇ unaudited balance sheet (the "CLOSING BALANCE SHEET") of the Company as of the Closing Date, consisting of a computation of the net book value of the tangible assets (including without limitation receivables, security deposits and assets in respect of Taxes) of the Company (excluding the Distributed Assets, as defined in Section 1.7) as of the Closing Date, less the book value of the liabilities of the Company (excluding the Distributed Liabilities, as defined in Section 1.7) as of the Closing Date, all in accordance with generally accepted accounting principles consistently applied ("GAAP"), except as provided below. The tangible net book value reflected on the Closing Balance Sheet is hereinafter called the "NET BOOK VALUE." The Closing Balance Sheet will be prepared in accordance with the following principles: (A) it will utilize the first in-first out (FIFO) method of inventory accounting; (B) the liabilities of the Company shall include any Tax liabilities associated with the conversion from the last in-first out (LIFO) method of accounting to the FIFO method of accounting; (C) there shall be included appropriate write-offs for doubtful accounts receivable and bad debts, to the extent not already reserved for in the listing of accounts receivable, and for damaged, spoiled or obsolete inventory; (D) any receivables due the Company from any of the Sellers, any of the directors, officers, employees or Affiliates of the Company or any of the persons or entities contemplated by Section 7.8 shall be excluded as assets (except that any cash received contemporaneously with the Closing in satisfaction and payment of such receivables shall be included as assets); (E) the liabilities of the Company shall include appropriate accruals for all Tax liabilities of the Company associated with the distribution of the Distributed Assets and Distributed Liabilities or the forgiveness of any of the Company's indebtedness or other liabilities or obligations owed to any of the persons or entities referred to in Section 7.8 of this Agreement; (F) any amounts loaned or contributed by the Company to the Leasing Subsidiary (as defined in Section 1.7) shall not be included as an asset; (G) all goodwill carried on the Company's books shall not be included as an asset; (H) the Inducement Fee will not be included as a liability of the Company; (I) any liability of the Company owed to any persons or entities contemplated by Section 7.8 which is satisfied in connection with the Closing shall not be included as a liability; and (J) the values of the following asset categories shall be calculated as follows:
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Adjustment Procedures. (i) Not later than 60 days after the Closing Date, the Buyer will prepare and deliver to Joseph Herson (the "SELLER▇' ▇▇▇▇▇") ▇▇ Seller, an unaudited balance sheet (the "CLOSING BALANCE SHEETClosing ------- Balance Sheet") of the Company as of the Closing Date, consisting of a ------------- computation of the net book value of the tangible assets (including without limitation receivables, security deposits and assets in respect of Taxes) of the Company (excluding the Distributed Assets, as defined in Section 1.71.5 hereof) as of the Closing Date, less the book value of the liabilities of the Company (excluding the Distributed Liabilities, as defined in Section 1.7) as of the Closing Date, all in accordance with generally accepted accounting principles consistently applied ("GAAP")) as consistently applied by the Company and subject to the exceptions to ---- GAAP set forth on Schedule 3.13, except as provided and subject to the additional principles set ------------- forth below. The tangible net book value reflected on the Closing Balance Sheet is hereinafter called the "NET BOOK VALUENet Book Value." The Closing Balance Sheet will be -------------- prepared in accordance with the following additional principles: (A) it will utilize the first in-first out (FIFO) method of inventory accounting; (B) the liabilities of the Company shall include any Tax (as defined in Section 3.21(a)) liabilities associated with the conversion from the last in-first out (LIFO) method of accounting to the FIFO method of accounting; (C) there shall not be included appropriate write-offs a reserve for doubtful accounts receivable and bad debts, to the extent not already reserved for in the listing of accounts receivable, and for damaged, spoiled or obsolete inventory; (D) any receivables due the Company from any of the Sellers, Seller or any of the directors, officers, employees or Affiliates (as defined in Section 3.5 below) of the Company or any of the persons or entities contemplated by Section 7.8 Seller shall be excluded as assets (except assets, provided, that any cash received contemporaneously with the Closing in satisfaction and payment of such receivables from employees that are not material in amount and are in the ordinary course of the Company's business and for which there are in place reimbursement arrangements acceptable to the Buyer shall be included as assets); (E) the liabilities of the Company shall include appropriate accruals for all Tax liabilities liabilities, and all other costs and expenses, of the Company associated with the distribution of the Distributed Assets and Distributed Liabilities or the forgiveness of any of the Company's indebtedness or other liabilities or obligations owed to any of the persons or entities referred to in Section 7.8 of this AgreementAssets; (F) in the event that the Distributed Assets are subject to any amounts loaned liabilities or contributed by the Company encumbrances which are not satisfied and discharged in full at or prior to the Leasing Subsidiary (as defined in Section 1.7) Closing, such liabilities and encumbrances shall not be included as an asset; (G) all goodwill carried on the Company's books shall not be included as an asset; (H) the Inducement Fee will not be included as a liability liabilities of the Company; (IG) any liability the assets of the Company owed to any persons or entities contemplated by Section 7.8 which is satisfied in connection with shall include the Closing depreciated book value of the Owned Real Property, including the improvements located thereon, but shall not be included as a liabilityinclude leasehold improvements unless they are subject to Leases with third parties; and (JH) the values of the following asset categories shall be calculated as follows:
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Adjustment Procedures. (i) Not later than 60 days after the Closing Date, the Buyer will prepare and deliver to Joseph Herson (the "SELLER▇' ▇▇▇▇▇") ▇▇ Seller, an unaudited combined balance sheet (the "CLOSING BALANCE SHEETClosing Balance Sheet") of the Company Companies as of the Closing Date, consisting of --------------------- a computation of the net book value of the tangible assets (including without limitation receivables, security deposits and assets in respect of Taxes) of the Company Companies (excluding the Distributed Assets, as defined in Section 1.71.5 hereof) as of the Closing Date, less the book value of the liabilities of the Company (excluding the Distributed Liabilities, as defined in Section 1.7) Companies as of the Closing Date, all in accordance with generally accepted accounting principles consistently applied ("GAAP")) as consistently applied by the Companies and subject to the exceptions ---- to GAAP set forth on Schedule 3.13, except as provided and subject to the additional principles set ------------- forth below. The tangible net book value reflected on the Closing Balance Sheet is hereinafter called the "NET BOOK VALUENet Book Value." The Closing Balance Sheet will be -------------- prepared in accordance with the following additional principles: (A) it will utilize the first in-first out (FIFO) method of inventory accounting; (B) the liabilities of the Company Companies shall include any Tax (as defined in Section 3.21(a)) liabilities associated with the conversion from the last in-first out (LIFO) method of accounting to the FIFO method of accounting; (C) there shall not be included appropriate write-offs a reserve for doubtful accounts receivable and bad debts, to the extent not already reserved for in the listing of accounts receivable, and for damaged, spoiled or obsolete inventory; (D) any receivables due the Company Companies from any of the Sellers, Seller or any of the directors, officers, employees or Affiliates (as defined in Section 3.5 below) of the Company Companies or any of the persons or entities contemplated by Section 7.8 Seller shall be excluded as assets (except assets, provided, that any cash received contemporaneously with the Closing in satisfaction and payment of such receivables from employees that are not material in amount and are in the ordinary course of the Company's business and for which there are in place reimbursement arrangements acceptable to the Buyer shall be included as assets); (E) all real property (other than leasehold improvements subject to a Lease) shall be excluded as assets; (F) the liabilities of the Company Companies shall include appropriate accruals for all Tax liabilities liabilities, and all other costs and expenses, of the Company Companies associated with the distribution of the Distributed Assets and Distributed Liabilities or the forgiveness of any of the Company's indebtedness or other liabilities or obligations owed to any of the persons or entities referred to in Section 7.8 of this Agreement; (F) any amounts loaned or contributed by the Company to the Leasing Subsidiary (as defined in Section 1.7) shall not be included as an assetAssets; (G) all goodwill carried on in the Company's books event that the Distributed Assets are subject to any liabilities or encumbrances which are not satisfied and discharged in full at or prior to Closing, such liabilities and encumbrances shall not be included as an asset; (H) the Inducement Fee will not be included as a liability liabilities of the Company; (I) any liability of the Company owed to any persons or entities contemplated by Section 7.8 which is satisfied in connection with the Closing shall not be included as a liabilityCompanies; and (JH) the values of the following asset categories shall be calculated as follows:
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