QUARTER-END, YEAR-END AND AUDIT ADJUSTMENTS, THE INTERIM
FINANCIALS HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP, APPLIED ON A CONSISTENT
BASIS THROUGHOUT THE PERIODS COVERED (EXCEPT AS MAY BE INDICATED IN THE NOTES TO
THE AUDITED FINANCIALS AND EXCEPT FOR THE ABSENCE OF NOTES TO THE INTERIM
FINANCIALS), AND PRESENT FAIRLY THE FINANCIAL POSITION OF SELLER AS OF THE
APPLICABLE DATE AND SELLER'S RESULTS OF OPERATIONS AND CASH FLOWS FOR THE
PERIODS THEN ENDED.
PARENT AND SELLER AGREE THAT THE PRO FORMA REVENUES
REPRESENT IN ALL MATERIAL RESPECTS THE REVENUES OF SELLER FOR THE PERIODS SET
FORTH THEREIN AS IF SALES BY SELLER TO PARENT (X) DURING THE YEAR ENDED
NOVEMBER 30, 2002 HAD OCCURRED AT PRICES SET FORTH ON SCHEDULE 3.5 HERETO AND
(Y) DURING THE SIX MONTHS ENDED MAY 31, 2003 HAD OCCURRED AT PRICES SET FORTH ON
SCHEDULES 3.1(A) AND 3.1(B) TO THE SUPPLY AGREEMENT.
PARENT AND SELLER AGREE
THAT SELLER'S AGGREGATE GROSS MARGIN ON SALES TO PARENT AND THE OTHER PERSONS
IDENTIFIED ON SCHEDULE 1.1(A) FOR THE SIX MONTHS ENDED MAY 31, 2003 WOULD NOT
HAVE BEEN MATERIALLY LESS THAN THE AGGREGATE GROSS MARGIN SET FORTH ON
SCHEDULE 3.5 IF THE PRICING ON SCHEDULES 3.1(A) AND 3.1(B) TO THE SUPPLY
AGREEMENT HAD BEEN IN EFFECT DURING SUCH PERIOD AND SUCH AGGREGATE GROSS MARGINS
HAD OTHERWISE BEEN CALCULATED IN ACCORDANCE WITH THE PRACTICES, PROCEDURES AND
METHODS USED BY SELLER IN PREPARING THE INTERIM FINANCIALS.
PARENT AND SELLER
ACKNOWLEDGE THAT KERR AND PURCHASER'S ACCEPTANCE OF THE PRICES SET FORTH ON
SCHEDULES 3.1(A) AND 3.1(B) TO THE SUPPLY AGREEMENTS IS MADE SOLELY IN RELIANCE
ON THIS REPRESENTATION.
3.6
ABSENCE OF UNDISCLOSED LIABILITIES.
AS OF
THE DATE HEREOF, SELLER DOES NOT HAVE ANY LIABILITIES (ABSOLUTE, CONTINGENT,
ACCRUED OR OTHERWISE) IN RESPECT OF THE BUSINESS OTHER THAN:
(A) LIABILITIES
REFLECTED IN THE BALANCE SHEET OF SELLER AT MAY 31, 2003 INCLUDED IN THE INTERIM
FINANCIALS (THE "LATEST BALANCE SHEET"); (B) LIABILITIES INCURRED SINCE THE DATE
OF THE LATEST BALANCE SHEET (THE "LATEST BALANCE SHEET DATE") IN THE ORDINARY
COURSE OF BUSINESS; (C) OBLIGATIONS OF CONTINUED PERFORMANCE UNDER CONTRACTS AND
OTHER COMMITMENTS AND ARRANGEMENTS ENTERED INTO IN THE ORDINARY COURSE OF THE
BUSINESS TO THE EXTENT PERMITTED UNDER SECTION 5.1; (D) THE LIABILITIES
DESCRIBED ON SCHEDULE 3.6; AND (E) LIABILITIES UNDER THIS AGREEMENT.
3.7
ABSENCE OF CERTAIN CHANGES OR EVENTS.
FROM
THE LATEST BALANCE SHEET DATE TO THE DATE HEREOF, EXCEPT AS CONTEMPLATED BY THIS
AGREEMENT OR DISCLOSED ON SCHEDULE 3.7, SELLER HAS CONDUCTED THE BUSINESS IN THE
ORDINARY COURSE OF BUSINESS AND:
(A)
THERE HAS NOT BEEN ANY MATERIAL DAMAGE TO
OR DESTRUCTION OR LOSS OF ANY ASSET, PROPERTY, RIGHT OR INTEREST OF SELLER USED
IN THE BUSINESS, WHETHER OR NOT COVERED BY INSURANCE, THAT HAS HAD OR WOULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;
(B)
SELLER HAS NOT SOLD OR TRANSFERRED ANY
MATERIAL AMOUNT OF ITS ASSETS, PROPERTIES, RIGHTS OR INTERESTS USED IN THE
BUSINESS, OTHER THAN SALES OF INVENTORY AND DISPOSAL OF OBSOLETE, DAMAGED OR
DEFECTIVE INVENTORY