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Stock Purchase Agreement

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Sectors: Specialty Retail
Governing Law: Delaware, View Delaware State Laws
Effective Date: June 21, 1998
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EXECUTION COPY


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STOCK PURCHASE AGREEMENT

BY AND BETWEEN

TANDY CORPORATION,

AS SELLER,

AND

COMPUSA INC.,

AS BUYER,

FOR THE PURCHASE AND SALE OF

ALL OUTSTANDING CAPITAL STOCK OF

COMPUTER CITY, INC.,

A DELAWARE CORPORATION


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DATED AS OF JUNE 21, 1998

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TABLE OF CONTENTS


PAGE
---- ARTICLE I. SALE AND PURCHASE. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1. Agreement to Sell and to Purchase . . . . . . . . . . . . . . . .1
SECTION 1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.3. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.4. Preliminary Purchase Price; Payment . . . . . . . . . . . . . . .2
SECTION 1.5. Post-Closing Adjustment to Preliminary
Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . .4


ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE SELLER. . . . . . . . . . . . . .6
SECTION 2.1. Corporate Organization. . . . . . . . . . . . . . . . . . . . . .6
SECTION 2.2. Capitalization; Title to the Shares . . . . . . . . . . . . . . .7
SECTION 2.3. Subsidiaries and Equity Investments;
Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 2.4. Validity of Agreement; Authorization. . . . . . . . . . . . . . .9
SECTION 2.5. No Conflict or Violation. . . . . . . . . . . . . . . . . . . . 10
SECTION 2.6. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7. Financial Statements. . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.8. Absence of Certain Changes or Events. . . . . . . . . . . . . . 11
SECTION 2.9. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 16
SECTION 2.11. Interests in Real Property . . . . . . . . . . . . . . . . . . 16
SECTION 2.12. Personal Property. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.13. Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.14. Licenses, Permits and Governmental
Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.15. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.16. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.17. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.18. Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.19. Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.20. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.21. Customers and Suppliers. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.22. Bonds and Insurance. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.23. Transactions with Directors, Officers
and Affiliates . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.24. Change in Ownership. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.25. Environmental Matters. . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.26. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.27. Products Liability . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.28. Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.29. Vendor Debits. . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.30. Accuracy of Information. . . . . . . . . . . . . . . . . . . . 35
SECTION 2.31. Investment Representations . . . . . . . . . . . . . . . . . . 35
SECTION 2.32. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


(i)


ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . . . . . . 36
SECTION 3.1. Corporate Organization. . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.2. Validity of Agreement; Authorization. . . . . . . . . . . . . . 36
SECTION 3.3. No Conflict or Violation. . . . . . . . . . . . . . . . . . . . 37
SECTION 3.4. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.5. SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.6. Financial Statements. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.7. No Material Adverse Change. . . . . . . . . . . . . . . . . . . 38
SECTION 3.8. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39


ARTICLE IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.1. HSR Act Compliance. . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.2. Certain Changes and Conduct of Business . . . . . . . . . . . . 39
SECTION 4.3. Access to Properties and Records. . . . . . . . . . . . . . . . 43
SECTION 4.4. Negotiations. . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.5. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.6. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.7. Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.8. Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.9. Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.10. Confidential Information . . . . . . . . . . . . . . . . . . . 46
SECTION 4.11. Transfer of Seller Note. . . . . . . . . . . . . . . . . . . . 46
SECTION 4.12. Amended Schedules. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.13. Lease Cancellation . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.14. Benefit and Compensation Plans . . . . . . . . . . . . . . . . 48
SECTION 4.15. Assigned Intellectual Property Rights. . . . . . . . . . . . . 49
SECTION 4.17. Transitional Services. . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.18. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.19. Contribution of Certain Assets . . . . . . . . . . . . . . . . 50
SECTION 4.20. Company's Credit Card Program. . . . . . . . . . . . . . . . . 50
SECTION 4.21. Real Property Leases . . . . . . . . . . . . . . . . . . . . . 52


ARTICLE V. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.1. Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . 53
SECTION 5.2. Tax Indemnity and Tax Return Filings. . . . . . . . . . . . . . 55
SECTION 5.3. Other Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.4. Retention of Carryovers . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.5. Retention of Books, Records, Tax Software
and Reference Materials . . . . . . . . . . . . . . . . . . . 59


ARTICLE VI. CONDITIONS TO OBLIGATIONS OF THE BUYER. . . . . . . . . . . . . . . . 60
SECTION 6.1. Representations and Warranties of the
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.2. Performance of the Seller's Obligations . . . . . . . . . . . . 60
SECTION 6.3. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.4. HSR.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.5. No Violation of Orders. . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.6. No Material Adverse Change. . . . . . . . . . . . . . . . . . . 61
SECTION 6.7. Other Closing Matters . . . . . . . . . . . . . . . . . . . . . 61


(ii)


SECTION 6.8. Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.9. Intellectual Property Assignment. . . . . . . . . . . . . . . . 62


ARTICLE VII. CONDITIONS TO OBLIGATIONS OF THE SELLER. . . . . . . . . . . . . . . 62
SECTION 7.1. Representations and Warranties of the
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.2. Performance of the Buyer's Obligations. . . . . . . . . . . . . 62
SECTION 7.3. HSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.4. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.5. No Violation of Orders. . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.6. No Material Adverse Change. . . . . . . . . . . . . . . . . . . 63
SECTION 7.7. Other Closing Documents . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.8. Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . 63


ARTICLE VIII. TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.1. Methods of Termination; Upset Date. . . . . . . . . . . . . . . 64
SECTION 8.2. Procedure Upon Termination. . . . . . . . . . . . . . . . . . . 65
SECTION 8.3. Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . 65


ARTICLE IX. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.1. Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.2. Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . 67


ARTICLE X. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.1. Survival of Provisions . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.2. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.3. Successors and Assigns; No
Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . 69
SECTION 10.4. Investment Bankers, Financial
Advisors, Brokers and Finders. . . . . . . . . . . . . . . . 69
SECTION 10.5. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.7. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.8. Waivers and Amendments . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.10. Titles and Headings. . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.11. Signatures and Counterparts. . . . . . . . . . . . . . . . . . 72
SECTION 10.12. Enforcement of the Agreement . . . . . . . . . . . . . . . . . 73
SECTION 10.13. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 73


(iii)


EXHIBITS - --------


EXHIBIT A FORM OF SELLER NOTE


SELLER DISCLOSURE SCHEDULE - -------------------------- SECTION 2.1 CORPORATE ORGANIZATION SECTION 2.3 SUBSIDIARIES AND EQUITY INVESTMENTS SECTION 2.5 CONFLICTS OR VIOLATIONS SECTION 2.6 CONSENTS AND APPROVALS SECTION 2.7 FINANCIAL STATEMENTS SECTION 2.8 CERTAIN CHANGES OR EVENTS SECTION 2.9 TAX MATTERS SECTION 2.10 UNDISCLOSED LIABILITIES SECTION 2.11 REAL PROPERTY INTERESTS SECTION 2.12 PERSONAL PROPERTY SECTION 2.13 TRADEMARKS, TRADE NAMES AND KNOW-HOW SECTION 2.14 LICENSES, PERMITS AND GOVERNMENTAL APPROVAL SECTION 2.15 COMPLIANCE WITH LAWS SECTION 2.16 LITIGATION SECTION 2.17 CONTRACTS SECTION 2.18 ACCOUNTS RECEIVABLE SECTION 2.20 EMPLOYEE PLANS SECTION 2.21 CUSTOMERS, SUPPLIERS AND COMPETITORS SECTION 2.22 INSURANCE SECTION 2.23 TRANSACTIONS WITH DIRECTORS, OFFICERS
AND AFFILIATES SECTION 2.25 ENVIRONMENTAL MATTERS SECTION 2.26 LABOR MATTERS SECTION 4.2 CERTAIN CHANGES AND CONDUCT OF BUSINESS SECTION 4.16 PRE-CLOSING DIVIDEND


BUYER DISCLOSURE SCHEDULE - -------------------------


SECTION 3.3 BUYER CONFLICTS OR VIOLATIONS SECTION 3.4 BUYER CONSENTS AND APPROVALS SECTION 6.3 CONSENTS AND APPROVALS (BUYER CLOSING CONDITION) SECTION 7.4 CONSENTS AND APPROVALS (SELLER CLOSING CONDITION)


(iv)

STOCK PURCHASE AGREEMENT


THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into as of this 21ST day of June, 1998, by and between Tandy Corporation, a Delaware corporation (the "SELLER"), and CompUSA Inc., a Delaware corporation (the "BUYER").

W I T N E S S E T H:


WHEREAS, the Seller owns 100% of the issued and outstanding shares of Series A and Series B Common Stock of Computer City, Inc. (the "COMPANY") (all such shares of capital stock are referred to herein as the "SHARES");


WHEREAS, the Buyer desires to purchase the Shares from the Seller, and the Seller desires to sell the Shares to the Buyer, in each case upon the terms and subject to the conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto hereby agree as follows:


ARTICLE I.
SALE AND PURCHASE


SECTION 1.1. AGREEMENT TO SELL AND TO PURCHASE. On the Closing Date (as hereinafter defined) and upon the terms and subject to the conditions set forth in this Agreement, the Seller shall sell, assign, transfer, convey and deliver the Shares, free and clear of any liens, claims, charges, security interests or other legal or equitable encumbrances, limitations or restrictions, to the Buyer, and the Buyer shall purchase and accept the Shares from the Seller.


SECTION 1.2. CLOSING. The closing of such sale and purchase (the "CLOSING") shall take place at 10:00 A.M., on the last day of the month during which the conditions to Closing set forth in Articles VI and VII hereof (other than the conditions with respect to actions the respective parties will take at the Closing itself) are satisfied, but not earlier than 60 days after the date hereof, or at such other time and date as the parties hereto shall agree in writing (the "CLOSING DATE"), at the offices of Thompson & Knight, P.C., 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, or at such other place as the parties hereto shall agree in writing. At the Closing, the Seller shall deliver to the Buyer or its designees stock certificates representing the Shares, duly endorsed in blank for transfer or


accompanied by appropriate stock powers duly executed in blank, with all taxes, direct or indirect, attributable to the transfer of such Shares paid or provided for. In full consideration and exchange for the Shares, the Buyer shall thereupon pay to the Seller the Purchase Price as provided in Section 1.3 hereof.


SECTION 1.3. PURCHASE PRICE. Subject to the terms and conditions set forth in this Agreement, the aggregate purchase price (the "PURCHASE PRICE") to be paid to the Seller for the Shares shall be an amount equal to the Adjusted Net Book Value (as defined below) MINUS $12,500,000, payable as provided herein.


SECTION 1.4. PRELIMINARY PURCHASE PRICE; PAYMENT.


(a) PRELIMINARY PURCHASE PRICE. The Seller shall prepare and deliver to the Buyer at least five Business Days prior to the Closing Date an estimated consolidated balance sheet (the "PRELIMINARY CLOSING BALANCE SHEET") for the Company as of the Closing Date (the "PRELIMINARY CLOSING BALANCE SHEET DATE"). As used in this Agreement, the term "BUSINESS DAY" shall mean any day except a Saturday, Sunday or other day on which commercial banking institutions in the City of Dallas are authorized by law or executive order to close. The Preliminary Closing Balance Sheet shall be prepared in accordance with generally accepted accounting principles for financial reporting in the United States ("GAAP") applied on a basis consistent with, and following the accounting principles, procedures, policies and methods employed in preparing, the 1997 Financial Statements (as defined in Section 2.7 hereof), it being understood that the balances reflected in the Preliminary Closing Balance Sheet shall represent the Seller's best estimates of balances as of the Closing Date and shall be based on the best information then available. As used in this Agreement, the term "ADJUSTED NET BOOK VALUE" shall mean the consolidated stockholder's equity of the Company as reflected in the Preliminary Closing Balance Sheet and Final Closing Balance Sheet, adjusted as follows: (i) there shall be included as liabilities of the Company (x) all severance obligations, termination payments or similar liabilities to Company employees arising as a result of the transactions contemplated hereby other than such obligations, payments or liabilities arising out of actions taken by the Buyer or the Company after the Closing Date and (y) all fees and expenses incurred by the Company in connection with the consummation of the transactions contemplated hereby; (ii) there shall be deemed to be contributed to the capital of the Company the entire outstanding principal of, and accrued and unpaid interest on, all intercompany notes and payables of the Company payable to Seller or any Affiliate (as hereinafter defined) which are outstanding


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as of the Closing Date (the "INTERCOMPANY PAYABLES"), all of which obligations of the Company thereunder shall be deemed to be satisfied as of the Closing Date; (iii) no value shall be attributed to the Assigned Intellectual Property Rights (as defined in Section 4.15 hereof); (iv)any write down of assets arising from the application of Statement of Financial Accounting Standards No. 121 after the date of the Interim Balance Sheet shall be excluded from the calculation of Adjusted Net Book Value; (v) any prepaid insurance as of the Closing Date shall not be included as an asset; and (vi) such balance sheets shall give effect to the transactions contemplated by Sections 4.15, 4.16 and 4.19. The Seller represents that the aggregate amount of Intercompany Payables outstanding as of May 31, 1998 was $130,386,304.40. On the Closing Date, the Seller shall surrender to the Company for cancellation all notes, instruments and agreements, if any, evidencing the Intercompany Payables. The Buyer acknowledges that the Company has outstanding indebtedness. Seller agrees that on or prior to Closing it will repay in full all indebtedness under the Credit Agreement dated December 19, 1997 between the Company, NationsBank of Texas, N.A. and other Lenders (the "Company Credit Agreement"), and that it will take all action necessary to terminate such agreement effective as of the Closing Date with no further obligation or liability of the Company or any Subsidiary thereunder.


(b) PAYMENT. The Buyer shall pay on the Closing Date, in the manner specified below, an amount equal to the Adjusted Net Book Value as of the Preliminary Closing Balance Sheet Date, MINUS $12,500,000 (the "PRELIMINARY PURCHASE PRICE"). Such payment shall be made by (i) the Buyer delivering to the Seller a subordinated promissory note in the principal amount of $150,000,000 in the form attached as Exhibit A hereto (the "SELLER NOTE"), (ii) the Buyer making a cash payment, by wire transfer in immediately available funds to an account or accounts designated by the Seller (which account or accounts shall be designated by the Seller not less than two (2) Business Days prior to the Closing Date), of an amount equal to the Preliminary Purchase Price MINUS $150,000,000; PROVIDED, HOWEVER, that if the Preliminary Purchase Price is less than $150,000,000, then, on the Closing Date, in lieu of the cash payment referred to in clause (ii) of this sentence, the Seller shall make a cash payment to the Buyer, by wire transfer in immediately available funds to an account or accounts designated by the Buyer (which account or accounts shall be designated by the Buyer not less than two (2) Business Days prior to the Closing Date), of an amount equal to the amount by which $150,000,000 exceeds the Preliminary Purchase Price.


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SECTION 1.5. POST-CLOSING ADJUSTMENT TO PRELIMINARY PURCHASE PRICE. The Preliminary Purchase Price shall be subject to adjustment after the Closing as follows:


(a) FINAL BALANCE SHEET.


(i) As soon as practicable, but not later than 60 calendar days after the Closing Date, the Seller shall deliver to the Buyer the audited consolidated balance sheet (the "FINAL CLOSING BALANCE SHEET") of the Company as at the Preliminary Closing Balance Sheet Date. The Final Closing Balance Sheet shall be examined by and accompanied by the report of Price Waterhouse LLP, independent certified public accountants. The Seller warrants that the Final Closing Balance Sheet shall be prepared in accordance with GAAP, applied on a basis consistent with, and following the accounting principles, procedures, policies and methods employed in preparing, the 1997 Financial Statements.


(ii) The Final Closing Balance Sheet shall be examined by the Buyer, which shall, not later than 30 calendar days after receipt of the Final Closing Balance Sheet, render a written report thereon (the "FINAL CLOSING BALANCE SHEET REPORT"). The Seller agrees that the Buyer and Ernst & Young LLP shall have immediate access to the books and records, other financial information (including the working papers of Price Waterhouse LLP) and appropriate financial personnel of the Seller which the Buyer reasonably deems necessary or advisable for the Final Closing Balance Sheet Report. The Final Closing Balance Sheet Report shall list those items the Buyer disputes, the Buyer's proposed adjustments and an adjusted balance sheet reflecting such adjustments. If the Buyer fails to deliver to the Seller the Final Closing Balance Sheet Report within 30 calendar days following receipt of the Final Closing Balance Sheet or the Buyer acknowledges in writing that the Final Closing Balance Sheet is accurate, the Buyer shall be deemed to have accepted the Final Closing Balance Sheet for the purposes of any Purchase Price adjustment under Section 1.5(b). If the Seller does not give the Buyer notice within 20 calendar days following receipt of the Final Closing Balance Sheet Report (which notice disputes the Buyer's proposed adjustments or proposes in writing other adjustments supported in writing by the Seller's independent accountant's as a result of the adjustments proposed by the Buyer) or the Seller acknowledges in writing that the Final Closing Balance Sheet as adjusted by the Buyer is accurate, the Seller shall be deemed to have accepted the Final Closing Balance Sheet as adjusted for the


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purposes of any Purchase Price adjustment under Section 1.5(b).


(iii) If the Seller gives the Buyer notice of objections to the Final Closing Balance Sheet Report, and if the Buyer and the Seller are unable, within 15 calendar days after receipt by the Buyer of the notice of objections by the Seller, to resolve the disputed exceptions and such other proper adjustments raised by the Seller in connection therewith, all such disputed items and proper adjustment will be referred to another firm of independent certified public accountants ("INDEPENDENT ACCOUNTING FIRM") mutually acceptable to the Seller and the Buyer unless the Buyer notifies the Seller by the end of such 15 day period that the Buyer elects to withdraw the objections raised by it in the Final Closing Balance Sheet Report, in which case the Final Closing Balance Sheet shall be deemed accepted by the parties for the purposes of any Purchase Price adjustment under Section 1.5(b). The Independent Accounting Firm shall, within 60 days following its selection, deliver to the Seller and the Buyer a written report determining such disputed exceptions, and its determinations will be conclusive and binding upon the parties to this Agreement for the purposes of any Purchase Price adjustment under Section 1.5(b). The fees and disbursements of the Independent Accounting Firm acting under this Section shall be shared equally by the Buyer and the Seller.

(b) PURCHASE PRICE ADJUSTMENT. Within two Business Days following the final determination of the Final Closing Balance Sheet pursuant to Section 1.5(a), (i) if the Preliminary Purchase Price exceeded an amount equal to (x) the Adjusted Net Book Value as reflected on the Final Closing Balance Sheet MINUS (y) $12,500,000 (such sum being referred to herein as the "RECOMPUTED PURCHASE PRICE"), the Seller shall pay to the Buyer in cash such excess amount, plus interest on such excess amount from and including the Closing Date through the date of payment referred to in this Section 1.5(b) at an annual rate equal to 7.5%, calculated on the basis of a 365-day year or for the actual days elapsed, in immediately available funds to an account designated by the Buyer, or (ii) if the Preliminary Purchase Price was less than the Recomputed Purchase Price, the Buyer shall pay to the Seller in cash such excess amount, plus interest on such excess amount from and including the Closing Date through the date of payment referred to in this Section 1.5(b) at an annual rate equal to 7.5%, calculated on the basis of a 365-day year or for the actual days elapsed, in immediately available funds to an account designated by the Buyer.


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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE SELLER


The Seller hereby represents, warrants and agrees as follows:


SECTION 2.1. CORPORATE ORGANIZATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority and all governmental licenses, authorizations, permits, consents and approvals to own its properties and assets and to conduct its businesses as now conducted, except where the failure to have such licenses, authorizations, permits, consents and approvals would not have a Material Adverse Effect. The Company is duly qualified to do
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