Common use of Existing Condition Clause in Contracts

Existing Condition. Since the date of the Interim Statements, and unless specifically authorized by the Bankruptcy Court, Seller has not: (a) incurred any Liabilities, other than Liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Court; (b) sold, encumbered, assigned or transferred any assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 Balance Sheet or on any date since then, except for the sale, use or consumption of inventory in the ordinary course of business consistent with past practice; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens"); (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing); (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000), or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11- (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Thousand Dollars ($50,000) except such as may be involved in ordinary repair, maintenance or replacement of its assets; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled; (k) changed any of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any transaction other than in the ordinary course of business consistent with past practice.

Existing Condition. Since the date of the Interim StatementsJanuary 31, 1997 ------------------ Balance Sheet and Financial Statement, and unless specifically authorized by the Bankruptcy Court, Seller has not: (a) incurred any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments payment or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Court; (b) sold, encumberedunencumbered, assigned or transferred any assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 January 31, 1997 Balance Sheet or on any date since then, except for the sale, use or consumption of inventory in the ordinary course of business consistent with past practicepractices; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected subject any of the Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens")financing; (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than DebtorDebtor- in-in- Possession financing); (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially material and adversely affecting its it business, operationsoperation, assets, properties or prospects prospects, or (ii) of or any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000)25,000.00, or suffered any repeated, recurring reoccurring or prolonged shortagestorage, cessation assession or interruption of supplies or utility utilities or other services required to conduct its it business and operations; -11-; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (condition, financial or otherwise); (h) received notice or had have knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an any adverse effect affect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Thousand Dollars ($50,000) 25,000.00 except such as may be involved in the ordinary repairrepairs, maintenance or replacement replacements of its assetsAssets; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled; (k) changed any of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any transaction other than in the ordinary course of business consistent with past practicepractices.

Existing Condition. Since the date of Interim Balance Sheet Date, except as set forth in the Interim Statements, and unless specifically authorized by the Bankruptcy CourtDisclosure Schedule 3.1.6, Seller with respect to the Business has not: (a) incurred any Liabilitiesmaterial liabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtproperties; (b) sold, encumbered, assigned or transferred any material assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 Interim Balance Sheet Date or on any date since then, except for the sale, use or consumption sale of inventory in the ordinary course of business consistent with past practice; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the its Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Permitted Liens specifically permitted under this Agreement ("Permitted Liens"hereinafter defined in Section 3.1.17); (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)business; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Ten Thousand Dollars ($100,00010,000.00), or suffered any repeated, recurring or prolonged shortage, cessation or interruption of material supplies or utility or other material services required to conduct its business and operations; -11-; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise)) which would have a Material Adverse Effect; (h) received written notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might is likely to have an adverse effect a Material Adverse Effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Ten Thousand Dollars ($50,000) 10,000.00), except such as may be involved in ordinary repair, maintenance or replacement of its assets; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitledentitled other than in the ordinary course of business; (k) changed any of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any material transaction other than in the ordinary course of business consistent with past practice.

Existing Condition. Since the date of Except as set forth on SCHEDULE 3.1.12, since the Interim Statements, and unless specifically authorized by the Bankruptcy CourtBalance Sheet Date, Seller with respect to the Business has not: (a) incurred any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtproperties; (b) sold, encumbered, assigned or transferred any assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 Interim Balance Sheet Date or on any date since then, except for the sale, use or consumption sale of inventory in the ordinary course of business consistent with past practice; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the its Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of or any nature whatsoever, except for Debtor-in-Possession financing and any Permitted Liens specifically permitted under this Agreement ("Permitted Liens"hereinafter defined in Section 3.1.13); (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)business; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000)3,000.00, or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11-; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Thousand Dollars (individually $50,000) 3,000.00 except such as may be involved in ordinary repair, maintenance or replacement of its assets; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled; (k) changed any of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any transaction other than in the ordinary course of business consistent with past practice.

Existing Condition. Since the date of the Interim Statements, and unless specifically authorized by the Bankruptcy Court1997 Balance Sheet Date, Seller has not: (ai) incurred any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for other than with the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtprior written consent of PRG; (bii) sold, encumbered, assigned or transferred any assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 1997 Balance Sheet Date or on an any date since then, except for the sale, use or consumption sale of inventory property in the ordinary course of business consistent with past practicepractice or with the prior written consent of PRG; (ciii) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the its Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Permitted Liens specifically permitted under this Agreement ("Permitted Liens"as defined in subsection 3.1.12), other than with the prior written consent of PRG; (div) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (business, other than Debtor-in- Possession financing)with the prior written consent of PRG; (ev) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares, other than with the prior written consent of PRG; (fvi) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, assets properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000), 7,500 or suffered 13 any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11-; (gvii) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (hviii) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its it business, operations, assets, properties or prospects; (iix) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Thousand Dollars ($50,000) except such as may be involved in ordinary repair, maintenance or replacement of its assets, other than with the prior written consent of PRG; (jx) materially increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled, other than with the prior written consent of PRG; (kxi) changed any of the accounting principles followed by it or the methods of applying such principlesprinciples other than with the prior written consent of PRG; or (lxii) entered into any transaction other than in the ordinary course of business consistent with past practice, other than with the prior written consent of PRG.

Existing Condition. Since the date of the Interim Statements, and unless specifically authorized by the Bankruptcy CourtMost Recent Balance Sheet, Seller with respect to the Business has not:not (except pursuant to this Agreement and except as disclosed on Schedule 3.11): (a) incurred any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will would reasonably be expected to cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtproperties; (b) sold, encumbered, assigned or transferred any assets or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 Most Recent Balance Sheet or on any date since then, except for the sale, use or consumption sale of inventory in the ordinary course of business consistent with past practice; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the its Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of or any nature whatsoever, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens"); (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is boundAssumed Contract, or canceled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)business; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, assets or properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000), or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11-; (f) suffered any Material Adverse Effect; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in excess of $50,000 without the aggregate Fifty Thousand Dollars ($50,000) except such as may be involved in ordinary repair, maintenance or replacement prior written consent of its assetsBuyer; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled; (kh) changed any of the accounting principles followed by it or the methods of applying such principles; , or (li) entered into any transaction other than in the ordinary course of business consistent with past practice.

Existing Condition. Since the date of Interim Balance Sheet Date, the Interim Statements, and unless specifically authorized by the Bankruptcy Court, Seller has Sellers have not: (a) except as set forth on SCHEDULE 3.1.12(a), incurred any Liabilities, Liability or Obligation with respect to the Business other than Liabilities any Liability or Obligation incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, material Encumbrance or paid any Liabilitiesmaterial Liability or Obligation, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities Liability or Obligation the failure of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it the Business or any of its assets assets, properties or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtrights; (b) except as set forth on SCHEDULE 3.1.12(b), sold, encumbered, assigned or transferred any assets material assets, properties or properties rights which would have been included in the Purchased Assets if the Closing had been held on the date of the September 30 Balance Sheet Date or on any date since then, except for the sale, use or consumption sale of inventory by the Business in the ordinary course of business consistent with past practice; (c) except as set forth on SCHEDULE 3.1.12(c), created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the Assets their assets, properties or rights to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoeverEncumbrance, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens"); (d) except as set forth on SCHEDULE 3.1.12(d), made or suffered any amendment amendment, modification or termination of any material agreementMaterial Contract or Employee Plan with respect to the Sellers, contractthe Business or its employees, commitment, lease or plan to which it is a party or by which it is boundthe Business or any of the Purchased Assets are bound or affected, or canceled, modified or waived any substantial debts or claims held by it them or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)business, which amendment, modification, termination, cancellation or waiver, individually or in the aggregate, has had or would have a Material Adverse Effect; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire materially changed any of its capital sharesthe Accounting Principles followed by Sellers for book or Tax purposes or the methods of applying such Accounting Principles; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting the Business, or its business, operations, assets, properties properties, rights, or prospects condition (financial or (iiotherwise) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000), or suffered any repeated, recurring or prolonged material shortage, cessation or interruption of supplies or utility utilities or other services required to conduct the Business and its business and operations; -11-; (g) except as set forth on SCHEDULE 3.1.12(g), suffered any material adverse change in the Business or its business, operations, assets, properties, prospects rights, or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might would reasonably be expected to have an adverse effect a Material Adverse Effect except as set for on its businessSCHEDULE 3.1.12(h) and except for any change, operationsevent or circumstance existing, assetsresulting from, properties relating to or prospectsarising out of: (i) general economic conditions, including changes in: (A) financial or credit market conditions; (B) interest rates or currency exchange rates; or (C) the price of commodities or raw materials, including steel, used in the Business; or (ii) conditions affecting the market for processed steel; (i) except as set forth on SCHEDULE 3.1.12(i), made commitments or agreements Contracts for capital expenditures or capital additions or betterments with respect to the Business exceeding $25,000 individually and $150,000 in the aggregate Fifty Thousand Dollars aggregate; provided that for purposes of this Section 3.1.12 ($50,000i) except such as may only, the Balance Sheet Date shall be involved the reference date in ordinary repair, maintenance or replacement lieu of its assetsthe Interim Balance Sheet Date; (j) except as set forth on SCHEDULE 3.1.12(j), increased the salaries or salaries, other compensation or benefits of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees their respective officers, directors, employees, independent contractors or consultants or made any increase in, or any addition to, other benefits to which any of its employees such Persons may be entitled; (k) changed any , except for annual salary increases or bonus awards to employees of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any transaction other than Business made in the ordinary course of business consistent with past practicepractice as explained on SCHEDULE 3.1.12(j), or entered into or amended any employment, severance or similar agreement with any officer, director or employee of Business; or (k) entered into any Contract to do any of the foregoing.

Existing Condition. Since the date of Balance Sheet Date, except as set forth on Schedule 6.30, the Interim Statements, and unless specifically authorized by the Bankruptcy Court, Seller Company has not: (a) incurred any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilitiesliabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy Courtproperties; (b) sold, encumbered, assigned or transferred any assets assets, properties or properties which would have been included in the Assets if the Closing had been held on the date of the September 30 Balance Sheet rights or on any date since theninterest therein, except for the sale, use or consumption of inventory sales in the ordinary course of business consistent with past practice, or made any agreement or commitment or granted any option or right with, of or to any person to acquire any assets, properties or rights of the Company or any interest therein; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the Assets its assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens")in the ordinary course of business consistent with past practice; (d) made or suffered any material amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceled, materially modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)business; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its shares of capital sharesstock or other ownership interests, other than a dividend consistent with past practice of up to $32.3 million (pursuant as well to Section 11.7), which shall have been declared and paid prior to the Closing; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000)35,000, or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11-; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise), other than as directly caused by adverse economic conditions not specific to, or having an extraordinary impact upon, the Company; (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Fifty Thousand Dollars $25,000, except ($50,000i) except in the ordinary course of business consistent with past practice, (ii) such as may be involved in ordinary repair, maintenance or replacement of its assets;; and (iii) for the implementation of a new computerized accounting system which shall not exceed $100,000 in total cost. (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled, except in the ordinary course of business consistent with past practice and not to exceed 5% for any individual unless otherwise agreed by UniCapital; John ▇▇▇▇▇▇'▇ ▇▇▇pensation (i) for the year ended December 31, 1997 did not exceed $8.5 million and (ii) for the period from January 1, 1998 through the Closing Date will not exceed an amount which is equal to the a pro rata portion of $5.12 million on an annual basis; (k) changed any of the accounting principles followed by it or the methods of applying such principles; or; (l) entered into any transaction other than in the ordinary course of business consistent with past practice; (m) changed its authorized capital or its securities outstanding or otherwise changed its ownership interests, or granted any options, warrants, calls, conversion rights or commitments with respect to any of its capital stock or other ownership interests; or (n) agreed to take any of the actions referred to above.

Existing Condition. Since the date of Interim Balance Sheet Date, Seller, with respect to the Interim StatementsBusiness, and unless specifically authorized by the Bankruptcy Court, Seller has not: (a) incurred or paid any Liabilitiesliabilities, other than Liabilities liabilities incurred in the ordinary course of business (other than Debtor-in-Possession financing), consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties (except for the failure to make any payments or discharge any Liabilities specifically authorized by the Bankruptcy Court), and Seller has made all adequate protection payments to its creditors required by the Bankruptcy CourtAcquired Assets; (b) sold, encumbered, assigned assigned, or transferred any assets or properties which would have been included in the Acquired Assets if the Closing had been held on the date of the September 30 Interim Balance Sheet Date or on any date since thenthe Interim Balance Sheet Date, except for the saledispositions of surplus or used Equipment or obsolete or unusable Inventory, use or consumption other sales of inventory Inventory in the ordinary course of business consistent with past practicebusiness; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the Acquired Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever, except for Debtor-in-Possession financing and any Liens specifically permitted under this Agreement ("Permitted Liens"); (d) Intentionally Deleted; (e) suffered any damage, destruction or loss, whether or not covered by insurance which has had or could reasonably be expected to have a Material Adverse Effect or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct the Business which has had or could reasonably be expected to have a Material Adverse Effect; (f) suffered any loss of any key employee or any change in the Business, its operations, assets, properties, prospects or condition (financial or otherwise) which has had or could reasonably be expected to have a Material Adverse Effect; (g) made any increase in the compensation, commissions or perquisites payable or to become payable to, or made any loan or advance to, any employee of the Business or agent thereof, or any payment of any bonus, profit sharing or other extraordinary compensation to any employee of the Business (other than any such increase or payment paid or to become payable in the ordinary course of business consistent with past practices); (h) received notice or had Knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or could reasonably be expected to have a Material Adverse Effect; (i) negotiated or otherwise made any commitment or incurred any liability or obligation to any labor organization or labor pension plan with respect to employees of the Business; (j) changed, in any material respect, any of its accounting principles followed by it or the methods of applying such principles with respect to transactions involving the Business; (k) experienced any cancellation of any debts owed to or claims held by or on behalf of Seller with respect to the Business, other than the settlement or write-off of Receivables in the ordinary course of business consistent with past practice; (l) except for the loss of ULTA, Linens N Things and DDB ▇▇▇▇▇▇▇, experienced any actual or threatened terminations of any business relationships or agreements between the Business' Customers or Material Suppliers which has had or could reasonably be expected to have a Material Adverse Effect; (m) experienced, with respect to the Business, any occurrence of any obligation or liability (absolute or contingent) for any indebtedness, except routine trade accounts payable, operating expenses and contract obligations incurred in the ordinary course of business; or any acceleration in the payment of, or payment other than in the ordinary course of the business of the Business and consistent with past custom and practices thereof, of any indebtedness or amounts due or payable thereunder; (n) with respect to the Business, made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or canceledcancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, whether or not in the ordinary course of business (other than Debtor-in- Possession financing)where the effect of any such event could reasonably be expected to have a Material Adverse Effect; (eo) declaredwith respect to the Business, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares; (f) suffered any damage, destruction or loss, whether or not covered by insurance, (i) materially and adversely affecting its business, operations, assets, properties or prospects or (ii) of any item or items carried on its books of account individually or in the aggregate at more than One Hundred Thousand Dollars ($100,000), or suffered any repeated, recurring or prolonged shortage, cessation or interruption of supplies or utility or other services required to conduct its business and operations; -11- (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate Two Hundred Fifty Thousand and No/100 Dollars ($50,000) 250,000.00), except such as may be involved in the ordinary repair, maintenance or replacement of its assets; (j) increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or made any increase in, or any addition to, other benefits to which any of its employees may be entitled; (k) changed any replacements of the accounting principles followed by it or the methods of applying such principles; or (l) entered into any transaction other than in the ordinary course of business consistent with past practiceEquipment.