OF (I) ANY "EXCESS PARACHUTE
PAYMENT" WITHIN THE MEANING OF CODE SECTION 280G (OR ANY CORRESPONDING PROVISION
OF FEDERAL, STATE, PROVINCIAL, TERRITORIAL, LOCAL OR FOREIGN TAX LAW) AND
(II) ANY AMOUNT THAT WILL NOT BE FULLY DEDUCTIBLE AS A RESULT OF CODE
SECTION 162(M) (OR ANY CORRESPONDING PROVISION OF STATE, LOCAL OR FOREIGN TAX
LAW).
(VI)
ARRANGEMENT CONSTITUTING A PARTNERSHIP.
NEITHER CORPORATION IS SUBJECT TO ANY JOINT VENTURE, PARTNERSHIP OR OTHER
ARRANGEMENT OR CONTRACT THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL OR
APPLICABLE STATE INCOME TAX PURPOSES OR FOR ANY OTHER TAX PURPOSES.
(VII)
TAX ATTRIBUTES.
SUBJECT TO THE GENERAL
QUALIFICATION MADE IN SECTION 4.17(A) THAT NO REPRESENTATION WILL BE MADE AS THE
ACTUAL VALUE OF SUCH AMOUNTS, SCHEDULE 4.17(F)(VII) SETS FORTH THE ESTIMATED
AMOUNT OF ANY NET OPERATING LOSS, NET CAPITAL LOSS, UNUSED INVESTMENT, FOREIGN
TAX OR OTHER CREDIT, OR EXCESS CHARITABLE CONTRIBUTION ALLOCABLE TO EITHER
CORPORATION AS OF DECEMBER 31, 2004.
33
(F)
SINCE DECEMBER 31, 2004, THE CORPORATIONS
HAVE NOT:
(I)
MADE ANY ELECTION UNDER SECTION 85 OF
THE TAX ACT WITH RESPECT TO THE ACQUISITION OR DISPOSITION OF ANY PROPERTY;
(II)
MADE ANY ELECTION UNDER SECTION 83 OR 196
OF THE TAX ACT; OR
(III)
DISCONTINUED CARRYING ON ANY BUSINESS IN
RESPECT OF WHICH ANY UNUTILIZED NON-CAPITAL LOSSES WERE INCURRED.
(G)
THE CORPORATIONS HAVE MADE ALL ELECTIONS
REQUIRED TO BE MADE UNDER THE TAX ACT IN CONNECTION WITH ANY DISTRIBUTIONS BY IT
AND ALL SUCH ELECTIONS WERE TRUE AND CORRECT AND IN THE PRESCRIBED FORM AND WERE
MADE WITHIN THE PRESCRIBED TIME PERIODS;
(H)
THE YEAR END OF THE CORPORATIONS FOR INCOME
TAX PURPOSES IS DECEMBER 31;
(I)
THE SELLERS ARE EACH A NON-RESIDENT
PERSON WITHIN THE MEANING OF THE TAX ACT;
(J)
TRACE IS A TAXABLE CANADIAN CORPORATION
WITHIN THE MEANING OF THE TAX ACT.
SECTION 4.18
INSURANCE.
(A)
EXCEPT AS SET FORTH IN SCHEDULE 4.18(A), THE
CORPORATIONS HAVE MADE AVAILABLE TO BUYER ACCURATE AND COMPLETE COPIES OF:
(I)
ALL POLICIES OF INSURANCE (AND
CORRESPONDENCE RELATING TO COVERAGE THEREUNDER) TO WHICH ANY CORPORATION IS A
PARTY OR UNDER WHICH ANY CORPORATION IS OR HAS BEEN COVERED AT ANY TIME SINCE
DECEMBER 31, 2004;
(II)
ALL PENDING APPLICATIONS BY THE
CORPORATIONS FOR POLICIES OF INSURANCE; AND
(III)
ANY WRITTEN STATEMENT BY THE AUDITOR OF
TRACE'S FINANCIAL STATEMENTS OR ANY CONSULTANT OR RISK MANAGEMENT ADVISOR WITH
REGARD TO THE INADEQUACY OF THE CORPORATIONS' COVERAGE OR OF THE RESERVES FOR
CLAIMS RECEIVED BY THE CORPORATIONS SINCE JUNE 30, 2004.
(B)
EXCEPT AS SET FORTH IN SCHEDULE 4.18(B), THE
CORPORATIONS:
(I)
DO NOT HAVE ANY WRITTEN SELF-INSURANCE
ARRANGEMENT BY (OR THAT EXPRESSLY INVOLVES) THE CORPORATIONS, INCLUDING ANY
RESERVES ESTABLISHED THEREUNDER; AND
(II)
HAVE COMPLIED WITH ALL OBLIGATIONS OF THE
CORPORATIONS TO PROVIDE INSURANCE COVERAGE TO THIRD PARTIES (FOR EXAMPLE, UNDER
LEASES OR SERVICE AGREEMENTS).
(C)
EXCEPT AS SET FORTH IN SCHEDULE 4.18(C):
(I)
ALL POLICIES OF INSURANCE THAT PROVIDE
COVERAGE TO EITHER CORPORATION AND WHICH HAVE BEEN ESTABLISHED BY THE
CORPORATIONS:
34
(A)
ARE VALID, OUTSTANDING