AND (II) AUDITED
FINANCIAL STATEMENTS OF TRACE AS OF DECEMBER 31 OF EACH OF 2002, 2003 AND 2004,
AND SCHEDULE 4.6 WILL CONTAIN, WITHIN 20 DAYS AFTER THE DATE OF THIS AGREEMENT,
A TRUE AND CORRECT COPY OF AN UNAUDITED CONSOLIDATED BALANCE SHEET OF TRACE AT
JUNE 30, 2005, AND THE RELATED STATEMENTS OF INCOME, SHAREHOLDERS' EQUITY AND
CASH FLOWS FOR THE PERIOD THEN ENDED (THE FINANCIAL STATEMENTS DESCRIBED IN
CLAUSES (I), (II) AND (III) ABOVE ARE COLLECTIVELY REFERRED TO AS THE "FINANCIAL
STATEMENTS").
EXCEPT AS NOTED ON SCHEDULE 4.6 OR IN THE FINANCIAL STATEMENTS
AND EXCEPT FOR NORMAL YEAR-END ADJUSTMENTS, THE FINANCIAL STATEMENTS WERE
PREPARED IN ACCORDANCE WITH CANADIAN GAAP AND PRESENT FAIRLY, IN ALL MATERIAL
RESPECTS, THE FINANCIAL POSITION OF THE CORPORATIONS AT THE RESPECTIVE DATES
THEREOF AND THE OPERATING INCOME OF THE CORPORATIONS FOR THE RESPECTIVE PERIODS
THEN ENDED.
(B)
TRACE HAS NO DEBT EXCEPT AS SET FORTH IN THE
INTERIM CONSOLIDATED BALANCE SHEET OR THE ADJUSTED PURCHASE PRICE NOTICE (AS IT
MAY BE RE-CALCULATED PURSUANT TO SECTION 2.4).
SECTION 4.7
INVENTORIES.
The Corporations have no Inventories.
SECTION 4.8
REAL PROPERTY.
The Corporations do not own any fee simple interest in real property.
Schedule 4.8 lists and describes briefly all real property leased or subleased
to the Corporations.
The Corporations have made available to the Buyer correct
and complete copies of the leases and subleases listed in Schedule 4.8, each as
amended to date.
With respect to each lease and sublease listed in
Schedule 4.8, and any amendment thereto:
(A)
THE LEASE OR SUBLEASE, AND ANY AMENDMENT
THERETO, IS LEGAL, VALID, BINDING, ENFORCEABLE, AND IN FULL FORCE AND EFFECT;
(B)
THE LEASE OR SUBLEASE WILL (SUBJECT TO
LANDLORD APPROVAL, AS SET FORTH ON SCHEDULE 4.4 OR 4.8) CONTINUE TO BE LEGAL,
VALID, BINDING, ENFORCEABLE, AND IN FULL FORCE AND EFFECT ON THE SAME TERMS
FOLLOWING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY;
(C)
THE CORPORATIONS ARE NOT AND TO THE
KNOWLEDGE OF THE SELLERS, NO OTHER PARTY TO THE LEASE OR SUBLEASE IS, IN BREACH
OR DEFAULT, AND NO EVENT HAS OCCURRED WHICH, WITH NOTICE OR LAPSE OF TIME, WOULD
CONSTITUTE A BREACH OR DEFAULT OR PERMIT TERMINATION, MODIFICATION, OR
ACCELERATION THEREUNDER;
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(D)
THE CORPORATIONS HAVE NOT AND, TO THE
KNOWLEDGE OF THE SELLERS, NO OTHER PARTY TO THE LEASE OR SUBLEASE HAS,
REPUDIATED ANY PROVISION THEREOF;
(E)
THERE ARE NO DISPUTES, ORAL AGREEMENTS, OR
FORBEARANCE PROGRAMS IN EFFECT AS TO THE LEASE OR SUBLEASE;
(F)
WITH RESPECT TO EACH SUBLEASE, NEITHER THE
CORPORATIONS NOR ANY SELLER HAS TAKEN ANY ACTION THAT WOULD CAUSE THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 4.8(A) THROUGH 4.8(E) ABOVE
TO BE UNTRUE OR INCORRECT WITH RESPECT TO THE UNDERLYING LEASE;
(G)
THE CORPORATIONS HAVE NOT ASSIGNED,
TRANSFERRED, CONVEYED, MORTGAGED, DEEDED IN TRUST, OR ENCUMBERED ANY INTEREST IN
THE LEASEHOLD OR SUBLEASEHOLD; AND
(H)
ALL FACILITIES LEASED OR SUBLEASED
THEREUNDER ARE SUPPLIED WITH UTILITIES AND OTHER SERVICES NECESSARY FOR THE
OPERATION OF SAID FACILITIES AS CURRENTLY OPERATED BY THE