THE OPERATION OF THE BUSINESS OR ITS OWNERSHIP OF THE
TRANSFERRED ASSETS, AND OWNS OR POSSESSES SUCH PERMITS FREE AND CLEAR OF ALL
ENCUMBRANCES, EXCEPT THE FAILURE TO HAVE A GIVEN PERMIT WOULD NOT BE MATERIAL TO
THE BUSINESS OR THE TRANSFERRED ASSETS.
SELLER IS NEITHER IN DEFAULT, NOR HAS
SELLER RECEIVED ANY WRITTEN NOTICE OF ANY CLAIM OF DEFAULT WITH RESPECT TO ANY
SUCH PERMIT.
3.9
FINANCIAL INFORMATION; BOOKS AND RECORDS. SELLER HAS PROVIDED TO
PURCHASER ACCURATE AND COMPLETE COPIES OF THE AUDITED BALANCE SHEET AND RELATED
STATEMENTS OF INCOME OR LOSS THE TWELVE-MONTH PERIOD ENDING ON DECEMBER 31, 2004
AND THE BALANCE SHEET, RELATED STATEMENTS OF INCOME OR LOSS AND THE PRELIMINARY
AUDIT REPORT FOR THE TWELVE-MONTH PERIOD ENDING ON DECEMBER 31, 2005 (THE
"AUDITED FINANCIAL STATEMENTS"), AND AN UNAUDITED BALANCE SHEET AND RELATED
STATEMENT OF INCOME OR LOSS FOR THE NINE-MONTH PERIOD ENDING ON SEPTEMBER 30,
2006 (THE "INTERIM FINANCIAL STATEMENTS," AND TOGETHER WITH THE AUDITED
FINANCIAL STATEMENTS, THE "FINANCIAL STATEMENTS").
EXCEPT AS SET FORTH IN
SECTION 3.9 OF THE DISCLOSURE SCHEDULE OR AS NOTED IN THE FINANCIAL STATEMENTS,
THE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH SELLER'S BOOKS
AND RECORDS AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED
(SUBJECT, IN THE CASE OF THE INTERIM FINANCIAL STATEMENTS, TO NORMAL YEAR-END
ADJUSTMENTS AND THE ABSENCE OF NOTES) AND FAIRLY PRESENT, IN ALL MATERIAL
RESPECTS, THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF SELLER FOR THE
RESPECTIVE PERIODS AND AS OF THE DATES IDENTIFIED THEREIN, RESPECTIVELY. THE
ACCOUNTING BOOKS AND RECORDS OF SELLER ACCURATELY AND FAIRLY REFLECT THE
ACTIVITIES OF SELLER IN CONNECTION WITH THE BUSINESS. SELLER HAS NOT ENGAGED IN
ANY TRANSACTION, MAINTAINED ANY BANK ACCOUNT OR USED ANY CORPORATE FUNDS, EXCEPT
FOR TRANSACTIONS, BANK ACCOUNTS OR FUNDS WHICH HAVE BEEN AND ARE REFLECTED IN
THE NORMALLY MAINTAINED ACCOUNTING BOOKS AND RECORDS.
3.10
LIABILITIES.
SELLER HAS NO MATERIAL LIABILITIES OR OBLIGATIONS
(ABSOLUTE, ACCRUED, CONTINGENT OR OTHERWISE) RELATING TO THE BUSINESS OR THE
TRANSFERRED ASSETS EXCEPT (A) LIABILITIES DISCLOSED IN THE FINANCIAL STATEMENTS,
(B) LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE, (C) LIABILITIES ARISING UNDER CONTRACTS ASSUMED BY PURCHASER UNDER
THIS AGREEMENT AND (D) LIABILITIES EXPRESSLY IDENTIFIED IN SECTION 3.10 OF THE
DISCLOSURE SCHEDULE.
UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, PURCHASER WILL HAVE NO LIABILITY WITH RESPECT TO ANY SUCH LIABILITIES
OF SELLER EXCEPT TO THE EXTENT THEY SHALL CONSTITUTE ASSUMED LIABILITIES.
22
3.11
LITIGATION.
EXCEPT AS SET FORTH IN SECTION 3.11 OF THE DISCLOSURE
SCHEDULE, THERE IS NO ACTION PENDING OR, TO SELLER'S KNOWLEDGE, THREATENED,
AGAINST, RELATING TO OR AFFECTING SELLER OR ANY OF THE TRANSFERRED ASSETS WHICH
SEEKS TO ENJOIN OR OBTAIN DAMAGES IN RESPECT OF THE TRANSACTIONS CONTEMPLATED
HEREBY, AND WITH RESPECT TO WHICH THERE IS A REASONABLE LIKELIHOOD OF A
DETERMINATION WHICH WOULD PREVENT SELLER FROM CONSUMMATING THE TRANSACTIONS
CONTEMPLATED HEREBY.
EXCEPT AS SET FORTH IN SECTION 3.11 OF THE DISCLOSURE
SCHEDULE, THERE ARE PRESENTLY NO OUTSTANDING JUDGMENTS, DECREES OR ORDERS OF ANY
COURT OR