into or exercisable or
exchangeable for, any shares of capital stock of any class or other equity
interests of the Company Subsidiary. The Company Subsidiary does not have any
assets or liabilities.
2.5
Financial Statements.
(A)
THE COMPANY HAS DELIVERED TO HARBOR THE
FOLLOWING FINANCIAL STATEMENTS, COPIES OF WHICH ARE INCLUDED IN SECTION 2.5 OF
THE DISCLOSURE SCHEDULE (COLLECTIVELY, THE "FINANCIAL STATEMENTS"):
(I)
AUDITED BALANCE SHEET OF THE COMPANY AS
OF DECEMBER 31, 2005 AND 2004, AND STATEMENTS OF INCOME AND RETAINED EARNINGS
AND STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS THEN ENDED;
(II)
UNAUDITED ADJUSTED BALANCE SHEET OF THE
COMPANY AS OF THE END OF THE FISCAL PERIOD ENDED JULY 31, 2006 (THE "BASE
BALANCE SHEET"); AND
(III)
UNAUDITED ADJUSTED STATEMENT OF INCOME OF
THE COMPANY THROUGH THE END OF THE FISCAL PERIOD ENDED JULY 31, 2006.
Subject to the absence of footnotes and year-end audit adjustments with respect
to any unaudited Financial Statements, the Financial Statements have been
prepared in accordance with
15
GAAP consistently applied, and present fairly in all material respects the
financial condition and results of operations of the Company.
(B)
AS OF THE DATE OF THIS AGREEMENT, ALL
LIABILITIES AND OBLIGATIONS OF THE COMPANY OF A TYPE THAT WOULD BE REQUIRED TO
BE SHOWN ON THE FINANCIAL STATEMENTS IN ACCORDANCE WITH GAAP HAVE BEEN
(I) STATED OR ADEQUATELY RESERVED AGAINST ON THE BASE BALANCE SHEET OR THE NOTES
THERETO, (II) REFLECTED IN SECTION 2.5 OF THE DISCLOSURE SCHEDULE, OR
(III) INCURRED AFTER THE DATE OF THE BASE BALANCE SHEET IN THE ORDINARY COURSE
OF BUSINESS CONSISTENT WITH PAST PRACTICES, EXCEPT FOR LIABILITIES AND
OBLIGATIONS WHICH ARE NOT REASONABLY LIKELY TO HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT ON THE COMPANY.
2.6
Absence of Certain Developments. Since the
date of the Base Balance Sheet and through the date of this Agreement, the
Company has conducted its business only in the ordinary course consistent with
past practice and, except as set forth in Section 2.6 of the Disclosure
Schedule, there has not been:
(A)
ANY CHANGE IN THE ASSETS, LIABILITIES,
FINANCIAL CONDITION, PROPERTIES, BUSINESS OR OPERATIONS OF THE COMPANY, WHICH
CHANGE BY ITSELF OR IN CONJUNCTION WITH ALL OTHER SUCH CHANGES, WHETHER OR NOT
ARISING IN THE ORDINARY COURSE OF BUSINESS, HAS HAD OR COULD BE REASONABLY
LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY;
(B)
ANY MORTGAGE, LIEN OR OTHER ENCUMBRANCE
PLACED ON ANY OF THE PROPERTIES OF THE COMPANY, OTHER THAN PURCHASE MONEY LIENS
AND LIENS FOR TAXES NOT YET DUE AND PAYABLE;
(C)
ANY PURCHASE, SALE OR OTHER DISPOSITION, OR
ANY AGREEMENT OR OTHER ARRANGEMENT FOR THE PURCHASE, SALE OR OTHER DISPOSITION,
OF ANY PROPERTIES OR ASSETS (OTHER THAN RAW MATERIAL AND GOODS FOR RESALE) BY
THE COMPANY, INCLUDING ANY OF ITS INTELLECTUAL PROPERTY RIGHTS (AS DEFINED IN
SECTION 2.11), INVOLVING THE PAYMENT OR RECEIPT OF MORE THAN $50,000;
(D)
ANY DAMAGE, DESTRUCTION OR LOSS, WHETHER OR
NOT COVERED BY INSURANCE, THAT HAS HAD OR