Common use of Absence of Certain Liabilities and Changes Clause in Contracts

Absence of Certain Liabilities and Changes. Except to the extent reflected or reserved for in the Preliminary Balance Sheet, there are no liabilities or obligations material to the Business or the Assets that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles except (i) liabilities or obligations incurred in the ordinary course of business since the date of the Preliminary Balance Sheet, and (ii) liabilities and obligations disclosed in the Schedules hereto and liabilities and obligations not required to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreement. Since the date of the Preliminary Balance Sheet, Sellers have operated the Business in the ordinary course and, except as set forth on Schedule 4.5, or contemplated by Schedule 6.2, there has not been: (a) any change in the business, financial condition or results of operations of the Business that has had or could reasonably be expected to have a Material Adverse Effect; (b) any change in any of the Assets or any change in the manner of conducting the Business that has had or could reasonably be expected to have a Material Adverse Effect; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; (e) any lien, security interest or other encumbrance ("Lien") created or assumed by the Sellers on any of the Assets other than a Permitted Lien (as such term is defined in Section 4.13); (f) any grant of any severance or termination pay by the Sellers to any executive officer or director of the Sellers or any increase in compensation or benefits payable by the Sellers under existing employment agreements or severance or termination pay policies to any of their employees other than (x) in the ordinary course of business consistent with past practices, including without limitation normal merit increases for salaried employees, (y) increases or grants required by contracts disclosed herein or by applicable law, or (z) increases, agreements and bonuses disclosed in Schedule 4.11; (g) any adoption of, or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers and any of their directors, officers or other employees, other than as disclosed in Schedule 4.11; or (h) any capital expenditures by Sellers in connection with the Business which in the aggregate are material; (i) any agreement made by the Sellers to take any action that would cause any representation or warranties in this Section 4.5 to be untrue or incorrect.

Absence of Certain Liabilities and Changes. Except to the extent ------------------------------------------ reflected or reserved for in the Preliminary Balance Sheet, Final Statement of Net Assets there are no liabilities or obligations obligations, individually or in the aggregate, material to the Business or the Assets that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles except (i) liabilities or obligations incurred in the ordinary course of business since the date of the Preliminary Balance Sheet, Statement of Net Assets; and (ii) liabilities and obligations disclosed in the Schedules hereto and liabilities and obligations not required to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreementhereto. Since the date of the Preliminary Balance SheetStatement of Net Assets, Sellers have the Company has operated the Business in the ordinary course and, except as set forth on Schedule 4.5, or contemplated by Schedule 6.2, there has not been: (a) any change in the business, financial condition condition, significant accounting policies or results of operations of the Business that has had or could reasonably be expected to have a Material Adverse Effect; (b) any change in any of the Assets or any change in the manner of conducting the Business that has had or could reasonably be expected to have a Material Adverse Effect; (c) any damage, destruction or loss (whether or not covered by insurance insurance) that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material change in the accounting methods or principles of the Seller; (e) any material transaction made by Sellers the Seller relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000Assets) other than in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; (ef) any lien, security interest or other encumbrance ("Lien") created or assumed by the Sellers Seller on any of the Assets other than a Permitted Lien (as such term is defined in Section 4.13)the ordinary course of business; (fg) any grant of any severance or termination pay by the Sellers Seller to any executive officer or director of the Sellers Seller or any increase in compensation or benefits payable by the Sellers Seller under existing employment agreements or severance or termination pay policies to any of their employees other than (xi) in the ordinary course of business consistent with past practices, including without limitation limitation, normal merit increases for salaried employees, ; (yii) increases or grants required by contracts disclosed herein or by applicable law, ; or (ziii) increases, agreements and bonuses disclosed in Schedule 4.11; (gh) any adoption of, or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers Seller and any of their its directors, officers or other employees, other than as disclosed in Schedule 4.11; or (h) any capital expenditures by Sellers in connection with the Business which in the aggregate are material; (i) any entering into, amendment or termination of any material contract, agreement, lease, franchise, security instrument, permit or license between the Seller and any party that has had or could reasonably be expected to have a Material Adverse Effect; (j) any existing agreement or arrangement made by the Sellers Seller to take any action that would cause any representation or warranties warranty in this Section 4.5 to be untrue or incorrect; or (k) any item of tangible personal property acquired that has, in each case, a carrying value in excess of $10,000.

Absence of Certain Liabilities and Changes. (a) Except to the extent expressly reflected or expressly reserved for in the Preliminary Balance SheetFinancial Statements (or expressly described in the notes thereto), there are no liabilities or obligations material to the Business Company, Rexair or the Assets Business that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles Principles, or described in the notes thereto, except (i) liabilities or obligations incurred in the ordinary course of business since the date of the Preliminary Balance SheetApril 2, 2005, and (ii) liabilities and obligations disclosed in the Schedules hereto and liabilities and obligations not required to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of in this Agreement. . (b) Since October 2, 2004, the date of Company, Rexair and the Preliminary Balance Sheet, Sellers Business have operated the Business in the ordinary course and, except as set forth on Schedule 4.54.07, or contemplated by Schedule 6.26.02 and except as described in Section 1.03 , there has not been: (ai) any change in the business, financial properties, assets, condition or results of operations of the Company, Rexair or the Business that has had or could is reasonably be expected likely to have a Material Adverse Effect; (bii) any amendment or other change in the Company’s or Rexair’s constituent documents; (iii) any change in the accounting methods or principles of Rexair that would be required to be disclosed under GAAP; (iv) except in the ordinary course of business, any entering into, amendment or termination of any material contract, agreement, lease, franchise, security, instrument, permit or license with any party that has had or is reasonably likely to have a Material Adverse Effect or have the effect of preventing, materially delaying, making illegal or otherwise interfering with this Agreement, the transactions contemplated herein or any action taken or required to be taken by Jacuzzi, JUSI, the Company or Rexair pursuant hereto or in connection with the transactions contemplated herein; (v) any (A) material sale (except for sales of inventory in the ordinary course of business), lease, alteration, or other disposition of, or material write down of the book value of (except for amortization and depreciation thereof consistent with the Financial Statements), any material asset of the Company or Rexair, or (B) material sale, lease or other disposition of, or termination, lapse or other expiration of any material rights to the use of, any of the Assets Intellectual Property (as defined in ARTICLE 11 hereof); (vi) entry into, amendment to, termination of, or receipt of written notice, or to the best of JUSI’s knowledge, oral notice, of termination of (A) any material license, distributorship, dealer, sales representative, joint venture, credit or other similar agreement, (B) any material agreement involving the commitment of the Company or Rexair extending for more than one year, (C) any contract or transaction involving a total remaining commitment by the Company or Rexair of at least $50,000, or (D) any leases or subleases for all or any material portion of the owned real property or the leased real property; (vii) payment of, accrual or commitment for, capital expenditures in excess of $20,000 individually; (A) any material payment, discharge or satisfaction of, except in the ordinary course of business, liabilities reflected or reserved against the Financial Statements or subsequently incurred in the ordinary course of business; (B) any cancellation or waiver of any claims or rights with a value to the Company or Rexair in excess of $50,000, (C) any settlement or compromise of any material action, or (D) any material modification, amendment or termination of any material contract or waiver, release or assignment of any material rights or claims other than in the ordinary course of business; (ix) any change in the manner (A) business organization of conducting the Business that has had Company or could Rexair (including all supply, license, franchise and similar relationships of the Business), (B) services provided by the officers, employees, and agents of the Company or Rexair, or (C) the relationships and goodwill with suppliers, distributors, sales representatives, customers, clients, landlords, lessors, creditors, employees, agents, and others having business relationships with the Company or Rexair, in each case, which is reasonably be expected likely to have a Material Adverse Effect; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (dx) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than change in the ordinary course existing levels of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; (e) any lien, security interest or other encumbrance ("Lien") created or assumed by the Sellers on any insurance coverage of the Assets other than a Permitted Lien (as such term is defined in Section 4.13); (f) any grant of any severance Company or termination pay by the Sellers to any executive officer or director of the Sellers or any increase in compensation or benefits payable by the Sellers under existing employment agreements or severance or termination pay policies to any of their employees other than (x) in the ordinary course of business consistent with past practices, including without limitation normal merit increases for salaried employees, (y) increases or grants required by contracts disclosed herein or by applicable law, or (z) increases, agreements and bonuses disclosed in Schedule 4.11; (g) any adoption of, or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers and any of their directors, officers or other employees, other than as disclosed in Schedule 4.11Rexair; or (hxi) any capital expenditures by Sellers in connection with the Business which in the aggregate are material; (i) any existing agreement made by Jacuzzi, JUSI, the Sellers Company or Rexair to take any action that would cause any representation or warranties warranty contained in this Section 4.5 Agreement that is qualified by a materiality standard to be untrue or incorrectincorrect and any representation or warranty not so qualified to be untrue or incorrect in any material respect. (c) As of the Closing (i) neither the Company nor Rexair shall have any indebtedness for borrowed money or any guarantee in respect of the indebtedness for borrowed money of another Person; (ii) the Company will have no assets other than membership interests in Rexair; (iii) none of the properties or assets of the Company or Rexair shall be subject to any Lien (other than Liens permitted under items (ii) through (iv) of the definition of Permitted Liens) in respect of the obligations of any other Person (including, without limitation, in respect of indebtedness for borrowed money and Taxes of any other Person); (d) The reserves recorded in the Financial Statements in respect of the Company’s and Rexair’s contractual and statutory liabilities for warranties and product returns comply with the Accounting Principles and constitute the Company’s and Rexair’s good faith estimate of the Company’s and Rexair’s future warranty expense, based on current unit sales, historical warranty return rates and repair costs and management’s good faith judgment regarding anticipated rates of warranty claims and cost per claim (it being understood that no representation or warranty with respect to actual future warranty expense is being made hereby). To the best of JUSI’s knowledge, no fact would render such warranty reserves to become inadequate.

Absence of Certain Liabilities and Changes. (a) Except to the extent reflected or reserved for in the Preliminary Balance Sheet, there are no liabilities or obligations material to the Business or the Assets that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles except (i) liabilities or obligations incurred in the ordinary course of business since the date of the Preliminary Balance Sheet, and (ii) liabilities and obligations disclosed in the Schedules hereto and liabilities and obligations not required to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreement. Since the date of the Preliminary Balance Sheet, Sellers have operated the Business in the ordinary course and, except as set forth on Schedule 4.5Section 3.7(a) of the Disclosure Letter, in the audited financial statements of the Company for the period ended as of September 30, 1999 (a copy of which has been delivered to Parent), in the condensed consolidated balance sheets of the Company as of December, 31, 1999, March 31, 2000, and June 30, 2000 or in the Company Reports, neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent, or contemplated by Schedule 6.2, there has not been: (a) any change in the business, financial condition or results of operations of the Business otherwise that has had or could reasonably be expected to have result in a Company Material Adverse Effect;. (b) any change Since September 30, 1999, the Company and its subsidiaries have conducted their respective businesses in any of the Assets or any change in the a manner of conducting the Business that has had or could reasonably be expected to have a Material Adverse Effect; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; (e) any lienpractices, security interest or other encumbrance ("Lien") created or assumed by and neither the Sellers on Company nor any of the Assets its subsidiaries has become subject to any material liabilities or obligations other than a Permitted Lien liabilities or obligations (as such term is defined in Section 4.13); (fi) any grant of any severance or termination pay by the Sellers to any executive officer or director of the Sellers or any increase in compensation or benefits payable by the Sellers under existing employment agreements or severance or termination pay policies to any of their employees other than (x) incurred in the ordinary course of business consistent with past practices, including without limitation normal merit increases for salaried employees, (y) increases or grants required by contracts disclosed herein or by applicable law, or (zii) increases, agreements incurred in connection with this Agreement or the Merger and bonuses disclosed in Schedule 4.11;set forth on Section 3.7(b) of the Disclosure Letter. (gc) any adoption of, or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers and any of their directors, officers or other employees, other than Except as disclosed in Schedule 4.11; or (h) any capital expenditures by Sellers in connection with the Business which Company Reports filed prior to the date of this Agreement, since September 30, 1999, the Company has conducted its business only in the aggregate are material;ordinary course consistent with prior practice, and there has not been: (i) any agreement made Company Material Adverse Change; (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company's capital stock; (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; (iv) except as set forth on Section 3.7 of the Disclosure Letter, any granting by the Sellers Company or any of its subsidiaries to take any action director, officer, employee, agent or contractor of the Company or any of its subsidiaries of: (A) any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements in effect as of the date of the most recent audited financial statements included in the Company Reports filed prior to the date hereof and set forth on Section 3.9 of the Disclosure Letter; or (B) any right to participate in (by way of bonus or otherwise) the profits of the Company or any of its subsidiaries; (v) except as set forth on Section 3.7 of the Disclosure Letter, any granting by the Company or any of its subsidiaries to any such director, officer, employee, agent or contractor of any increase in severance or termination pay, except as was required under employment, severance or termination agreements in effect as of the date of the most recent audited financial statements included in the Company Reports filed prior to the date hereof and set forth on Section 3.9 of the Disclosure Letter, (vi) except as set forth on Section 3.7 of the Disclosure Letter, any entry into, or renewal or modification, by the Company or any of its subsidiaries, of any employment, consulting, severance or termination agreement with any director, officer, employee, agent or contractor of the Company or any of its subsidiaries; (vii) any damage, destruction or loss, whether or not covered by insurance, that would cause has or could reasonably be expected to have a Company Material Adverse Effect; or (viii) any representation change in accounting methods, principles or warranties in this Section 4.5 to be untrue practices by the Company materially affecting its assets, liabilities or incorrectbusiness.

Absence of Certain Liabilities and Changes. Except to the extent reflected or reserved for in the Preliminary Balance Sheet, to the best of Seller's knowledge, there are no liabilities or obligations obligations, secured or unsecured, whether accrued, absolute, contingent or otherwise and whether known or unknown, material to the Business or the Assets that would normally be shown on a balance sheet or related footnotes, if any, prepared in accordance with the Accounting Principles except (i) liabilities or obligations incurred in the ordinary course of business since the date of the Preliminary Balance Sheet, and (ii) liabilities and obligations disclosed in the Schedules hereto and liabilities and obligations not required to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreement. Since the date of the Preliminary Balance Sheet, Sellers have the Subsidiary has operated the Business in the ordinary course and, except as set forth on Schedule 4.5, SCHEDULE 4.7 or contemplated by Schedule 6.2, SCHEDULE 6 2 there has not been: (a) any change in the business, assets, financial condition or results of operations of the Business that has had or could reasonably be expected to have a Material Adverse Effect; (b) any change in any of the Assets or any material change in the manner accounting methods or principles of conducting the Business Subsidiary that has had or could reasonably would be expected required to have a Material Adverse Effectbe disclosed under the Accounting Principles; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; (e) any lien, security interest or other encumbrance ("Lien") created or assumed by the Sellers on any of the Assets other than a Permitted Lien (as such term is defined in Section 4.13); (f) any grant of any severance or termination pay by the Sellers Subsidiary to any executive officer or director of the Sellers Subsidiary or any increase in compensation or benefits payable by the Sellers Subsidiary under existing employment agreements or severance or termination pay policies to any of their employees other than (x) in the ordinary course of business consistent with past practices, including without limitation normal merit increases for salaried employees, (y) increases or grants required by contracts disclosed herein or by applicable law, or (z) increases, agreements and bonuses disclosed in Schedule 4.11SCHEDULE 4.13; (gd) any adoption of, or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers Subsidiary and any of their its directors, officers or other employees, other than as disclosed in Schedule 4.11SCHEDULE 4.13; (e) any entering into, amendment or termination of any material contract, agreement, lease, franchise, security, instrument, permit or license between the Subsidiary and any party, except in the ordinary course of business; (f) any declaration or payment of a distribution of cash or any other asset of the Subsidiary to the Seller (i) in the nature of a dividend, (ii) in redemption or as the purchase price of any of its capital stock, or (iii) in discharge or cancellation, whether in part or in whole, of any indebtedness owing to Seller, except in the ordinary course of business; (g) any purchase commitments in excess of its normal business requirements; or (h) any capital expenditures by Sellers in connection with the Business which in the aggregate are material; (i) any existing agreement or arrangement made by the Sellers Subsidiary to take any action that would cause any representation representations or warranties warranty in this Section 4.5 4.7 to be untrue or incorrect.

Absence of Certain Liabilities and Changes. Except to the extent reflected or reserved for as set forth on SCHEDULE 3.7, in the Preliminary Balance Sheetaudited financial statements of the Company for the period ended and as of December 31, there are no 1998 (a copy of which has been delivered to Parent), or in the Company Reports, neither the Company nor any of its subsidiaries has any liabilities or obligations material of any nature, whether or not accrued, contingent, or otherwise that could, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. Since December 31, 1998, the Business Company and its subsidiaries have conducted their respective businesses in a manner consistent with past practices, and neither the Company nor any of its subsidiaries has become subject to any liabilities or the Assets that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles except (i) obligations other than liabilities or obligations incurred in the ordinary course of business consistent with past practices or incurred in connection with this Agreement, or the Merger and disclosed in the Company Reports or consisting of legal, printing, accounting and other customary fees (but not including those of Xxxxxx Brothers, Inc., or in the audited financial statements of the Company as of and for the period ended December 31, 1998 (a copy of which has been delivered to Parent) the Company's financial advisor (the "Advisor")) not exceeding $800,000 in the aggregate and incurred in connection with this Agreement or the Merger. Except as disclosed on SCHEDULE 3.7, in the Company Reports filed prior to the date of this Agreement and publicly available, since September 30, 1998, the Company has conducted its business only in the ordinary course consistent with prior practice, and there has not been (i) any Company Material Adverse Change, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company's capital stock, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) any granting by the Company or any of its subsidiaries to any officer or employee of the Company or any of its subsidiaries of (x) any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements in effect as of the date of the Preliminary Balance Sheet, and (ii) liabilities and obligations disclosed most recent audited financial statements included in the Schedules hereto and liabilities and obligations not required Company Reports filed prior to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreement. Since the date of the Preliminary Balance Sheet, Sellers have operated the Business in the ordinary course and, except as set forth on Schedule 4.5, this Agreement or contemplated by Schedule 6.2, there has not been: (ay) any change right to participate in (by way of bonus or otherwise) the business, financial condition or results of operations profits of the Business that has had Company or could reasonably be expected to have a Material Adverse Effect; (b) any change in any of the Assets or any change in the manner of conducting the Business that has had or could reasonably be expected to have a Material Adverse Effect; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than its subsidiaries except in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; practice, (ev) any lien, security interest or other encumbrance ("Lien") created or assumed granting by the Sellers on Company or any of the Assets other than a Permitted Lien (as its subsidiaries to any such term is defined in Section 4.13); (f) any grant officer or employee of any increase in severance or termination pay by the Sellers to any executive officer or director of the Sellers or any increase in compensation or benefits payable by the Sellers pay, except as was required under existing employment agreements or employment, severance or termination pay policies agreements in effect as of the date of the most recent audited financial statements included in the Company Reports filed prior to the date of this Agreement and publicly available, (vi) any entry into, or renewal or modification, by the Company or any of their employees other than (x) in its subsidiaries, of any employment, consulting, severance or termination agreement with any officer, director or employee of the ordinary course Company or any of business consistent with past practices, including without limitation normal merit increases for salaried employeesits subsidiaries, (yvii) increases any damage, destruction or grants required loss, whether or not covered by contracts disclosed herein insurance, that has or could reasonably be expected to have a Company Material Adverse Effect, (viii) any change in accounting methods, principles or practices by applicable lawthe Company materially affecting its assets, liabilities or business, or (z) increases, agreements and bonuses disclosed in Schedule 4.11; (gix) any adoption of, other action taken by the Company or increase in the payments to or benefits under any employment, bonus or deferred compensation agreement entered into between the Sellers and any of their directorsits subsidiaries which, officers if SECTION 5.1 had then been in effect, would have been prohibited by such Article if taken without Parent's consent (and no agreement, understanding, obligation or other employees, other than as disclosed in Schedule 4.11; or (h) any capital expenditures by Sellers in connection with the Business which in the aggregate are material; (i) any agreement made by the Sellers commitment to take any such action that would cause any representation or warranties in this Section 4.5 to be untrue or incorrectexists).

Absence of Certain Liabilities and Changes. Except to the extent reflected or reserved for as set forth on Schedule 3.7, in the Preliminary Balance Sheetaudited financial statements of the Company for the period ended and as of December 31, there are no 1998 (a copy of which has been delivered to Parent), or in the Company Reports, neither the Company nor any of its subsidiaries has any liabilities or obligations material of any nature, whether or not accrued, contingent, or otherwise that could, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. Since December 31, 1998, the Business Company and its subsidiaries have conducted their respective businesses in a manner consistent with past practices, and neither the Company nor any of its subsidiaries has become subject to any liabilities or the Assets that would normally be shown on a balance sheet prepared in accordance with the Accounting Principles except (i) obligations other than liabilities or obligations incurred in the ordinary course of business consistent with past practices or incurred in connection with this Agreement, or the Merger and disclosed in the Company Reports or consisting of legal, printing, accounting and other customary fees (but not including those of Lehmxx Xxxthers, Inc., or in the audited financial statements of the Company as of and for the period ended December 31, 1998 (a copy of which has been delivered to Parent) the Company's financial advisor (the "Advisor")) not exceeding $800,000 in the aggregate and incurred in connection with this Agreement or the Merger. Except as disclosed on Schedule 3.7, in the Company Reports filed prior to the date of this Agreement and publicly available, since September 30, 1998, the Company has conducted its business only in the ordinary course consistent with prior practice, and there has not been (i) any Company Material Adverse Change, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company's capital stock, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) any granting by the Company or any of its subsidiaries to any officer or employee of the Company or any of its subsidiaries of (x) any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements in effect as of the date of the Preliminary Balance Sheet, and (ii) liabilities and obligations disclosed most recent audited financial statements included in the Schedules hereto and liabilities and obligations not required Company Reports filed prior to be so disclosed because of their failure to meet the materiality thresholds set forth therein, and (iii) liabilities and obligations which are being retained by Sellers or allocated to Buyer under the terms of this Agreement. Since the date of the Preliminary Balance Sheet, Sellers have operated the Business in the ordinary course and, except as set forth on Schedule 4.5, this Agreement or contemplated by Schedule 6.2, there has not been: (ay) any change right to participate in (by way of bonus or otherwise) the business, financial condition or results of operations profits of the Business that has had Company or could reasonably be expected to have a Material Adverse Effect; (b) any change in any of the Assets or any change in the manner of conducting the Business that has had or could reasonably be expected to have a Material Adverse Effect; (c) any damage, destruction or loss not covered by insurance that has had or could reasonably be expected to have a Material Adverse Effect; (d) any material transaction made by Sellers relating to the Assets or Business (including the acquisition or disposition of Assets or the entering into or terminating any contract or transaction involving more than $20,000) other than its subsidiaries except in the ordinary course of business consistent with past practice or as otherwise permitted or contemplated by this Agreement; practice, (ev) any lien, security interest or other encumbrance ("Lien") created or assumed granting by the Sellers on Company or any of the Assets other than a Permitted Lien (as its subsidiaries to any such term is defined in Section 4.13); (f) any grant officer or employee of any increase in severance or termination pay by the Sellers to any executive officer or director of the Sellers or any increase in compensation or benefits payable by the Sellers pay, except as was required under existing employment agreements or employment, severance or termination pay policies agreements in effect as of the date of the most recent audited financial statements included in the Company Reports filed prior to the date of this Agreement and publicly available, (vi) any entry into, or renewal or modification, by the Company or any of their employees other than (x) in the ordinary course its subsidiaries, of business consistent with past practices, including without limitation normal merit increases for salaried employees, (y) increases or grants required by contracts disclosed herein or by applicable law, or (z) increases, agreements and bonuses disclosed in Schedule 4.11; (g) any adoption of, or increase in the payments to or benefits under any employment, bonus consulting, severance or deferred compensation termination agreement entered into between with any officer, director or employee of the Sellers and Company or any of their directorsits subsidiaries, officers or other employees, other than as disclosed in Schedule 4.11; or (hvii) any capital expenditures damage, destruction or loss, whether or not covered by Sellers in connection with the Business which in the aggregate are material; insurance, that has or could reasonably be expected to have a Company Material Adverse Effect, (iviii) any agreement made by the Sellers to take any action that would cause any representation or warranties in this Section 4.5 to be untrue or incorrect.change in