Operational Matters 7.1 The LGB shall comply with the obligations set out in Appendix 2 which deals with the day-to-day operation of, and delegation of responsibilities to, the LGB. 7.2 The LGB will adopt and will comply with all policies of the Trustees communicated to the LGB from time to time. 7.3 Both the Trustees and all members of the LGB have a duty to act with integrity, objectivity and honesty in the best interests of the Company and the Academy and shall be open about decisions and be prepared to justify those decisions except in so far as any matter may be considered confidential. 7.4 The LGB will review its policies and practices on a regular basis, having regard to recommendations made by the Trustees from time to time, in order to ensure that the governance of the Academy is best able to adapt to the changing political and legal environment. 7.5 The LGB shall provide such data and information regarding the business of the Academy and the pupils attending the Academy as the Trustees may require from time to time. 7.6 The LGB shall submit to any inspections by the Trustees, and any inspections pursuant to section 48 of the Education Act 2005 (Statutory Inspections of Anglican and Methodist Schools). 7.7 The LGB shall work closely with and shall promptly implement any advice or recommendations made by the Trustees in the event that intervention is either threatened or is carried out by the Secretary of State and the Trustees expressly reserve the unfettered right to review or remove any power or responsibility conferred on the LGB under this Scheme in such circumstances.
Financial Matters (a) The Borrowers have heretofore furnished to the Lender (i) the audited consolidated financial statements (including consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows) of the Company and its consolidated Subsidiaries as at March 31, 1996, 1997, and 1998 and for each of the three (3) consecutive Fiscal Years ended on such dates, and (ii) the unaudited consolidated financial statements (including consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows) of the Company and its consolidated Subsidiaries as of the March 31, 1999 (collectively, the "Financial Statements"). (b) The Financial Statements have been prepared in accordance with GAAP on a consistent basis for all periods, are complete and correct in all material respects, and fairly present the consolidated financial condition of the Company and its consolidated Subsidiaries as at said dates, and the results of operations for the periods stated. The books of account and other financial records of the Company and each of the Subsidiaries have been maintained in accordance with GAAP, consistently applied. The Borrowers acknowledge that the financial results set forth in its Financial Statements for the first, second and third quarters of the Fiscal Year ended March 31,1999 will require restatement and that the representations set forth in this Section 3.01(b) are subject to, and qualified by, any such Restatement(s). (c) Neither the Company nor any of the Subsidiaries has any liabilities, Indebtedness, obligations or commitments of any kind or nature whatsoever, whether absolute, accrued, contingent or otherwise above $100,000 in the aggregate or $25,000 individually (collectively "Liabilities and Contingencies"), including, without limitation, Liabilities and Contingencies under employment agreements and with respect to any "earn-outs", stock appreciation rights, or related compensation obligations, except: (i) Liabilities and Contingencies disclosed in the Financial Statements or footnotes thereto, or in the Pro Forma Balance Sheet, (ii) Liabilities and Contingencies not incurred in the ordinary course of the Business Operations, all of which (and the amounts thereof, to the extent determinable) are disclosed on Schedules to this Agreement (to the extent required to be so disclosed hereunder) or in public filings made with the SEC under the Securities Exchange Act of 1934, as amended (true and complete copies of which filings have been furnished to the Lender), (iii) Liabilities and Contingencies incurred in the ordinary course of business and consistent with past practice since the date of the most recent Financial Statements, which are not required to be disclosed on Schedules to this Agreement, or (iv) those Liabilities which are not required to be disclosed under GAAP. The reserves, if any, reflected on the consolidated balance sheet of the Company and the Subsidiaries included in the most recent Financial Statements are appropriate and reasonable. The Borrowers have not had and do not presently have any contingent obligations, liabilities for taxes or unusual forward or long-term commitments except as specifically set forth in the Financial Statements or in Schedule "3.01" annexed hereto. (d) Except as otherwise reflected on Schedule "3.01," Schedule "3.04" or Schedule "3.05" to this Agreement, since the date of the most recent Financial Statements, no Material Adverse Effect shall have occurred and shall be continuing, including, without limitation, the following: (i) there has been no change in any assumptions underlying, or in any methods of calculating, any bad debt, contingency or other reserve relating to the Company or any of the Subsidiaries; (ii) there have been no write-downs in the value of any inventory of, and there have been no write-offs as uncollectible of any notes, accounts receivable or other receivables of, the Company and the Subsidiaries, except for write-downs and write-offs in the ordinary course of business and consistent with past practice, none of which shall be material (and all of which are described in the Schedules to this Agreement or in the Financial Statements); (iii) no material debts have been canceled, no claims or rights of substantial value have been waived and no significant properties or assets (real, personal or mixed, tangible or intangible) have been sold, transferred, or otherwise disposed of by the Company or any Subsidiary, except in the ordinary course of business and consistent with past practice; (iv) there has been no change in any method of accounting or accounting practice utilized by the Company or any of the Subsidiaries; (v) no material casualty, loss or damage has been suffered by the Company or any of the Subsidiaries, regardless of whether such casualty, loss or damage is or was covered by insurance; and (vi) no action described in this Section 3.01(d) has been agreed to be taken by the Company or any of the Subsidiaries.