Common use of Initial Adjustment Clause in Contracts

Initial Adjustment. (a) No later than three (3) Business Days prior to the Closing Date, the Company shall deliver to the Parent a certificate of the Manager of the Company (or an authorized officer whose responsibilities relate to the preparation of financial statements of the Company) (the “Initial Closing Certificate”) setting forth (i) an estimated balance sheet of the Company as of the Closing Calculation Date, prepared in accordance with GAAP applied on a basis consistent with past practice and the principles used in the preparation of the Latest Balance Sheet, (ii) an estimated calculation of Net Working Capital prepared in accordance with the definition of Net Working Capital (the “Estimated Working Capital”), (iii) the estimated amount of Closing Cash (the “Estimated Closing Cash”) and (iv) the estimated amount of Closing Indebtedness. In the event that Parent disagrees with any amounts set forth in the Initial Closing Certificate, the parties shall work together in good faith to resolve any such disputes, and any changes to the amounts set forth in the Initial Closing Certificate agreed upon in writing by the Company and the Parent shall be substituted for the amounts set forth in the Initial Closing Certificate. If such dispute is not resolved prior to Closing, then the amounts set forth in the Initial Closing Certificate shall be binding for purposes of the Closing. (b) If the Estimated Working Capital is: (i) greater than the Target Working Capital, then an amount equal to (x) the Estimated Working Capital minus (y) the Target Working Capital will be added to the Base Consideration; and (ii) less than the Target Working Capital, then an amount equal to (x) the Target Working Capital minus (y) the Estimated Working Capital will be subtracted from the Base Consideration.