Nautilus 2006 Annual Report Download - page 154

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Article 3.14 Books and Records; Tax Returns . Seller's books of account reflect all items of income and expense and all assets and
liabilities of the Business required to be reflected therein in accordance with PRC generally accepted accounting principles
and neither Seller nor any Affiliate of Seller has failed to file any material report or return with respect to the Business which
may be required by any law or regulation of the PRC or political subdivision thereof to be filed, and, except as set forth in
Schedule 3.14, Seller has duly paid or accrued on it's books of account all taxes, duties and charges pursuant to such reports
and returns or assessed against Seller. Seller has fully filed, on or before the due date therefor or the expiration of any
extended period for filing, all returns or reports with respect to any Taxes required to be filed by Seller, which returns or
reports disclose as having become due and payable all Taxes becoming due and payable for the periods covered therein.
Except as set forth in Schedule 3.14, Seller has paid all Taxes reflected in such returns and reports and all other Taxes
currently due or claimed to be due from Seller by any Government Authority.
Article 3.15 Absence of Certain Changes, Events and Conditions . Since December 31, 2006, there has not been any material adverse
change in the condition (financial or otherwise) of the Assets, liabilities, business, results of operations or prospects of the
Business, including, without limitation, any damage or destruction of property by fire or other casualty involving loss in
excess of US$100,000 or the equivalent thereof in RMB in the aggregate, whether or not covered by insurance. Except as
described in Schedule 3.15, there are no conditions known to the senior management of Seller or any Shareholder existing
with respect to the products, facilities, personnel, raw materials, supplies or Assets of the Business which might reasonably
be expected to have a material adverse effect on the Business or its prospects.
Article 3.16 Insurance . Schedule 3.16 contains a list and brief description (including the name of the insurer, the amount of the annual
premium for the current policy period, amount insured and coverage period) of the policies and contracts of insurance held
since January 1, 2003 by Seller or World Gear with respect to the Business. Except as indicated on Schedule 3.16, all such
policies are in full force and effect. Seller shall keep such policies in such amounts duly in force through the Closing Date.
Article 3.17 Suppliers . Listed on Schedule 3.17 are the names and addresses of each of the suppliers of services materials, components,
and supplies used in the Business and involving in the aggregate payments exceeding U.S.$100,000 or the equivalent in
RMB for the twelve-month period ended on the date hereof, supplemented prior to Closing to include each such supplier for
the period from the date hereof to the Closing Date. Except as set forth in Schedule 3.17, neither Seller nor any Shareholder
has any knowledge or information that any of such suppliers will not sell products or provide services to Buyer at any time
after the Closing Date on terms and conditions similar to those imposed on prior sales to Seller.
Article 3.18
Environmental Matters
. There is no pending, and neither Seller nor any