Inventory Statement. (a) Not later than three (3) days prior to the Closing Date, Seller shall deliver to Buyer a statement setting forth (i) the Advances Value and (ii) Seller’s good faith calculation of the Inventory Value (the “Seller’s Estimated Inventory Value”). Not later than seven (7) calendar days after the Closing Date, Buyer shall provide Seller with a statement (the “Buyer’s Inventory Value Statement”) of Buyer’s calculation of the Inventory Value (the “Buyer’s Inventory Value”). If Seller disagrees with Buyer’s Inventory Value set forth in Buyer’s Inventory Value Statement, Seller may provide written notice to Buyer disputing such calculations or lack thereof (an “Inventory Dispute Notice”), which Inventory Dispute Notice shall specify Seller’s calculation of the Inventory Value and the nature of the disagreement to the extent practicable. If Seller does not provide an Inventory Dispute Notice within seven (7) calendar days after its receipt of Buyer’s Inventory Value Statement, then, subject to Buyer’s compliance with this Section 2.7(a), such Buyer’s Inventory Value Statement shall be deemed accepted by Seller, and Buyer’s Inventory Value shall be deemed final, and no longer subject to review or contest by Seller in the absence of fraud or manifest error. If an Inventory Dispute Notice is timely delivered to Buyer, then, during the seven (7) calendar day period following delivery of the Inventory Dispute Notice, the Parties shall negotiate in good faith to resolve all disagreements and to agree upon the calculation of the Closing Inventory Value and the amount of Inventory Value agreed upon by the Parties in writing shall be deemed final for purposes of this Agreement. If the Parties are unable to so agree, they shall follow the dispute resolution mechanism set forth in Section 2.7(b). Any Inventory Value finally determined in accordance with this Section 2.7(a) or Section 2.7(b) shall be deemed the “Closing Inventory Value” for purposes of this Agreement. Upon final calculation of the Closing Inventory Value:
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Inventory Statement. (a) Not later than three (3) days prior to the Closing Date, Seller shall deliver to Buyer a detailed statement (the “Seller’s Estimated Inventory Value Statement”) setting forth (i) the Advances Value and (ii) Seller’s good faith calculation of the Inventory Value projected as of the Closing Date (the “Seller’s Estimated Inventory Value”). Not later than seven thirty (730) calendar days after the Closing Date, Buyer shall provide Seller with a statement (the “Buyer’s Inventory Value Statement”) of Buyer’s calculation of the Inventory Value as of the Closing Date (the “Buyer’s Inventory Value”). If Seller disagrees with the Buyer’s Inventory Value set forth in Buyer’s Inventory Value Statement, Seller may provide written notice to Buyer disputing such calculations or lack thereof (an “Inventory Dispute Notice”), which Inventory Dispute Notice shall specify Seller’s calculation of the Inventory Value and the nature of the disagreement to the extent practicable. If Seller does not provide an Inventory Dispute Notice within seven thirty (730) calendar days after its the receipt of Buyer’s Inventory Value Statement, then, subject to Buyer’s compliance with this Section 2.7(a), such Buyer’s Inventory Value Statement shall be deemed accepted by Seller, and the Buyer’s Inventory Value shall be deemed final, and no longer subject to review or contest by Seller in the absence of fraud or manifest error. If an Inventory Dispute Notice is timely delivered to Buyer, then, during the seven thirty (730) calendar day period following delivery of the Inventory Dispute Notice, the Parties shall negotiate in good faith to resolve all disagreements and to agree upon the calculation of the Closing Initial Inventory Value and the amount of Inventory Value agreed upon by the Parties in writing shall be deemed final for purposes of this Agreement. If the Parties are unable to so agree, they shall follow the dispute resolution mechanism set forth in Section 2.7(b2.7(c). Any Inventory Value finally determined in accordance with this Section 2.7(a) or Section 2.7(b2.7(c) shall be deemed the “Closing Initial Inventory Value” for purposes of this Agreement. Upon final calculation of the Closing Initial Inventory Value:,
(i) if, the Initial Inventory Value is less than the Seller’s Estimated Inventory Value, Seller shall pay Buyer an amount equal to seventy-five percent (75%) of the difference between the Initial Inventory Value and the Seller’s Estimated Inventory Value, and twenty-five percent (25%) of such difference shall be withheld and added to, and constitute a portion of, the Hold Back Amount; or
(ii) if the Initial Inventory Value exceeds the Seller’s Estimated Inventory Value, Buyer shall pay Seller an amount equal to seventy-five percent (75%) of the difference between the Initial Inventory Value and the Seller’s Estimated Inventory Value, and twenty-five percent (25%) of such difference shall be withheld and added to, and constitute a portion of, the Hold Back Amount. Any payment under this Section 2.7(a) shall be made within five (5) Business Days after such payment is due pursuant to this Section 2.7, by wire transfer of immediately available funds in United States dollars to an account or accounts designated by Seller or Buyer, as the case may be, in writing prior to payment.
(b) For a period of one hundred eighty (180) days after the Closing Date (the “Inventory Sell-Off Period”), Buyer will provide Seller a monthly report of the Net Sales Proceeds of the Acquired Inventory. In addition, no later than the Inventory Sell-Off Report Date, Buyer will provide Seller with a report of the Net Sales Proceeds of the Acquired Inventory (the “Final Inventory Report”). At any time, and from time to time, commencing on the date that is 90 days after the Closing Date and ending on the date of final determination of the Inventory Value pursuant to this Agreement (the “Audit Period”), Seller, Parent and their representatives shall have the right to audit Buyer’s monthly reports of Net Sales Proceeds, the Final Inventory Report and the related gross sales of Acquired Inventory and Buyer shall, and shall cause its Affiliates and representatives to, cooperate with, and provide reasonable assistance in respect of, such audits. Once a month for a reasonable continuous period during the Audit Period, Buyer shall provide the Hampshire Parties and their representatives with reasonable access during normal business hours upon reasonable advance notice to the Books and Records and to employees and auditors of the Business as is reasonably requested by Seller. If Seller disagrees with Buyer’s calculation of the Net Sales Proceeds, Seller may provide written notice to Buyer disputing such calculations or lack thereof (a “Net Sales Dispute Notice”), which Net Sales Dispute Notice shall specify Seller’s calculation of the Net Sales Proceeds and the nature of the disagreement to the extent practicable. If Seller does not provide a Net Sales Dispute Notice within thirty (30) calendar days after Seller’s receipt of the Final Inventory Report, then, subject to Buyer’s compliance with this Section 2.7(b), such statement shall be deemed accepted by Seller, and the Net Sales Proceeds shall be deemed final, and no longer subject to review or contest by Seller in the absence of fraud or manifest error. If a Net Sales Dispute Notice is timely delivered to Buyer, then, during the thirty (30) calendar day period following delivery of the Net Sales Dispute Notice, the Parties shall negotiate in good faith to resolve all disagreements and to agree upon the calculation of the Net Sales Proceeds and the amount of Net Sales Proceeds agreed upon by the Parties in writing shall be deemed final for purposes of this Agreement. If the Parties are unable to so agree, they shall follow the dispute resolution mechanism set forth in Section 2.7(c). Upon final calculation of the Net Sales Proceeds,
(i) if, as of the end of the Inventory Sell-Off Period, the Net Sales Proceeds exceed the Initial Inventory Value, Buyer shall pay the entire Hold Back Amount to Seller after the Net Sales Proceeds are finally determined to have exceeded the Initial Inventory Value;
(ii) if, as of the end of the Inventory Sell-Off Period, the Net Sales Proceeds are less than the Initial Inventory Value (such occurrence, a “Short Fall”) but the Short Fall is less than the Hold Back Amount, the amount of the Short Fall shall be deducted from the Hold Back Amount and retained by Buyer and the balance shall be paid to Seller; or
(iii) if, as of the end of the Inventory Sell-Off Period, there is a Short Fall but the amount of the Short Fall is greater than the Hold Back Amount, Buyer shall retain the entire Hold Back Amount and Seller or Parent shall pay to Buyer an amount equal to the amount by which the Short Fall exceeds the Hold Back Amount. Any payment under this Section 2.7(b) shall be made within five (5) Business Days after such payment is due pursuant to this Section 2.7, by wire transfer of immediately available funds in United States dollars to an account or accounts designated by Seller or Buyer, as the case may be, in writing prior to payment.
(c) In the event the Parties are unable to agree upon the calculation of the Net Sales Proceeds or the Initial Inventory Value, as the case may be, within the relevant thirty (30) day period, either Buyer or Seller may refer the dispute to the New York City office of the Expert. The Expert is to be instructed to make a decision on the dispute and notify Buyer and Seller of its decision within twenty (20) Business Days of receiving the reference or such longer reasonable period as the Expert may determine. For purposes of this Section 2.7(c), (x) the Expert shall act as an expert and not an arbitrator, and (y) Seller and Buyer shall each promptly prepare a written statement solely on the items in dispute including their respective calculations of the Net Sales Proceeds or the Initial Inventory Value, as the case may be, which, together with all relevant documents, shall be submitted to the Expert and to the other Party, and provide to the Expert all such information as the Expert shall reasonably request. The Expert’s decision with respect to the Net Sales Proceeds or the Initial Inventory Value, as the case may be, shall be within the range of the Net Sales Proceeds and Initial Inventory Value amounts submitted by Buyer and Seller. The decision of the Expert shall, in the absence of fraud or manifest error, be final and binding on the Parties. Buyer and Seller each shall pay one-half of the fees and expenses of the Expert.
(d) For purposes of this Agreement, “Inventory Value” means (i) the landed duty-paid value of the Acquired Inventory (excluding, for the avoidance of doubt, Goods-In-Transit) determined in accordance with GAAP including, without limitation, (x) the actual cost of such Acquired Inventory (including insurance, freight costs, duties, commissions, Landed Costs and similar customary costs allocated thereto) at the first port of arrival in the United States and any import duties thereon, plus (y) standard freight and receiving costs and Landed Costs to transport and receive such goods in the first warehouse or distribution center owned, leased or operated by Seller or a third party for Seller’s behalf or account. “Net Sales Proceeds” means the gross proceeds earned by Buyer from the sale of the Acquired Inventory during the Inventory Sell-Off Period, less returns, trade discounts and chargebacks relating to the Acquired Inventory (including any proceeds assigned to Buyer’s factor or insurance proceeds received by Buyer in respect of such Acquired Inventory), less advertising and markdown allowances that Buyer extends to customers in the ordinary course of business and in a manner consistent with the practices of Seller with respect to the Business prior to the Closing Date; provided, however, that such proceeds earned are received on or before February 28, 2012.
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Inventory Statement. (a) Not No later than three two (32) days prior to the Closing DateClosing, Seller shall will deliver to Buyer a written statement (the “Estimated Inventory Statement”) setting forth (i) in good faith the Advances Value and (ii) Seller’s good faith calculation estimate of the value of the Inventory Value (as defined below), together with an itemization. The value of the “Inventory will be based on Seller’s currently disclosed cost by SKU as listed on the Estimated Inventory Value”)Statement. Not later than seven (7) calendar Within 30 days after the Closing Date, Buyer shall provide will prepare and deliver to Seller with a statement (the “Buyer’s Inventory Value Statement”) of setting forth Buyer’s calculation of the value of the Inventory Value (the “Buyer’s Inventory ValueClosing Statement”), together with an itemization. If Seller disagrees with Buyer’s Inventory Value set forth in Buyer’s Inventory Value Within five (5) days after receipt of the Closing Statement, Seller will notify Buyer in writing of its agreement or disagreement, as the case may be, with the Closing Statement. If the Seller does not provide written notice to the Buyer disputing such calculations or lack thereof objecting to the Closing Statement within five (an “5) days of receipt, the Closing Statement will be deemed the Final Inventory Dispute Notice”Statement (as defined below). If the Seller disputes any aspect of the Closing Statement, which Inventory Dispute Notice shall specify the Seller’s written notice of objection must include its proposed alternative calculation of the Inventory Value and the nature value of the disagreement to the extent practicable. If Seller does not provide an Inventory Dispute Notice within seven (7) calendar days after its receipt of Buyer’s Inventory Value Statement, then, subject to Buyer’s compliance with this Section 2.7(a), such Buyer’s Inventory Value Statement shall be deemed accepted by SellerInventory, and Buyer’s Inventory Value shall be deemed finalbasis therefore. Thereafter, Buyer and no longer subject to review or contest by Seller in the absence of fraud or manifest error. If an Inventory Dispute Notice is timely delivered to Buyer, then, during the seven (7) calendar day period following delivery of the Inventory Dispute Notice, the Parties shall negotiate will attempt in good faith to resolve all disagreements and to agree upon finally determine the calculation value of the Closing Inventory. In connection with the resolution of any dispute, each party shall pay its own fees and expenses, including without limitation, legal, accounting and consultant fees and expenses.
(c) Upon the final determination of the value of the Inventory Value and pursuant to Section 3.6(b) (the amount of “Final Inventory Value agreed upon by Statement”), the Parties Purchase Price will be adjusted as set forth in writing shall be deemed final for purposes of this AgreementSection 3.6(c). If the Parties are unable Final Inventory Statement is less than the Estimated Inventory Statement, the Purchase Price will be decreased by the difference and the Seller will promptly pay to so agree, they shall follow the dispute resolution mechanism set forth in Section 2.7(b)Buyer such amount. Any Inventory Value finally determined in accordance with payment due under this Section 2.7(a3.6(c) or Section 2.7(b) shall will be deemed made by wire transfer of immediately available funds within five business days after the “Closing Final Inventory Value” for purposes of this Agreement. Upon final calculation of the Closing Inventory Value:Statement has been determined.
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