Representations and Obligations Regarding Taxes. The Sellers jointly and severally represent and warrant to and agree with the Buyer as follows, in each case except to the extent set forth on Schedule 9 (and for purposes of this Section 9, the “Company” includes any corporation or other entity that at any time has been a Subsidiary of the Company (although certain representations are made in respect of the status of Subsidiaries as qualified subchapter S subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code): 9.1.1 The Company has timely filed all Tax Returns that it was required to file. All of those Tax Returns were correct and complete in all material respects. Schedule 9.1.1 lists all Federal, state, local and foreign Tax Returns filed with respect to the Company for taxable periods ending after December 31, 2001. The Company has delivered to the Buyer correct and complete copies of all Federal income Tax Returns and all state and local income or franchise Tax returns for each taxable period ending after December 31, 2001. All material elections with respect to Taxes affecting the Company are disclosed on or attached to a Tax Return of the Company. 9.1.2 Except as set forth in the second succeeding sentence, all Taxes owed by the Company (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid, and the Company has made adequate accrual in its Financials for all Taxes through the date hereof not yet due and payable and will have made adequate accrual in the Closing Balance Sheet for all Taxes through the Closing Date not yet due and payable. The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns. 9.1.3 The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. All private letter rulings issued by the IRS to the Company (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 9.1.3, and there are no pending requests for any rulings (or corresponding determinations). There is no power of attorney with respect to any Tax executed or filed with any taxing authority. 9.1.4 There are no liens on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax, except for liens for Taxes not yet due. The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency which waiver or extension has not since expired. Schedule 9.1.4 lists those Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 2001 that have been audited or that have been the subject of any written or unwritten notice of any audit, examination, investigation or other proceeding. The Company has delivered to the Buyer correct and complete copies of all audit, examination, revenue agent’s and other reports of, and any closing agreements with, any taxing jurisdiction with respect to taxable periods ended on or after December 31, 2001. No issue relating to Taxes has been raised in writing by a taxing authority during any pending audit or examination, and no issue relating to Taxes was raised in writing by a taxing authority in any completed audit or examination, that reasonably can be expected to recur in a later taxable period. Except as noted on Schedule 9.1.4, there is no dispute or claim concerning any Tax liability of the Company either (i) claimed or raised by any taxing authority in writing or (ii) as to which any of the directors or officers (or employees responsible for Tax matters) of the Company has knowledge. No claim has ever been made by a taxing authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or that it satisfies or may satisfy the nexus requirements to be subject to taxation by that jurisdiction. Except to the extent set forth on Schedule 9.1.4, no director or officer (or employee responsible for Tax matters) of the Company has any reason to believe that any taxing authority will assert liability for any additional Taxes for any period for which Tax Returns have been filed. 9.1.5 The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under section 280G of the Code or that would give rise to any obligation to indemnify any Person for any excise tax payable pursuant to section 4999 of the Code. The Company has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 or Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction, and the Company is not a lessor or lessee of any tangible property located outside the United States. None of the property of the Company is tax-exempt use property within the meaning of section 168(h) of the Code, is property that is required to be treated as being owned by any other Person pursuant to the safe harbor lease provisions of former section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or is property that directly or indirectly secures any debt the interest on which is exempt from federal income tax pursuant to section 103 of the Code. The Company does not own any property that is subject to a “section 467 rental agreement” as defined in section 467 of the Code. The Company has not distributed the stock of another entity, or had its stock distributed by another entity, in a transaction that was intended to be or that purported to be governed in whole or in part by section 355 or section 361 of the Code. No indebtedness of the Company consists of “corporate acquisition indebtedness” within the meaning of section 279 of the Code. The Company does not have a non-accountable expense reimbursement arrangement within the meaning of Treasury regulation section 1.62-2(c). The Company has not made any consent to the application of section 341(f)(2) with respect to any asset held or to be acquired by the Company. 9.1.6 The Company has not been a United States real property holding corporation within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code. The Company does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable income tax treaty to which the United States and the foreign country are parties or under the Law of the foreign country. The Company does not have an overall foreign loss within the meaning of section 904(f) of the Code. 9.1.7 The Company is not a party to any Tax allocation or sharing agreement. The Company (i) has not been a member of an Affiliated Group filing a consolidated Federal income Tax Return and (ii) has no liability for the Taxes of any Person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise. The Company is not a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes. 9.1.8 The Company has not been and will not be subject to any penalty under section 6662 of the Code with respect to its Tax Returns. The Company has not engaged in any “listed transaction” or “reportable transaction” within the meaning of section 6707A(c) of the Code or Treasury regulation section 1.6011-4(b) or any transaction (i) that was marketed to the Company in writing as a transaction that is intended to generate substantial Tax benefits and (ii) with respect to which the Company has paid a promoter of the transaction total fees in excess of $100,000. 9.1.9 The Company has been a validly electing S corporation (within the meaning of sections 1361 and 1362 of the Code) at all times since September 1, 1986, and any corporate Subsidiary of the Company has been a qualified subchapter S subsidiary within the meaning of Section 1361(b)(3)(B) of the Code at all times the Company has owned any of its shares. Schedule 9.1.9 identifies each Subsidiary that is a qualified subchapter S subsidiary. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past ten years, (A) acquired any asset from another corporation in a transaction in which the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation that is a qualified subchapter S subsidiary. 9.1.10 The Company will not be required (and no taxing authority is proposing that the Company be required) to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date (and no taxing authority has proposed any change in method of accounting), (ii) intercompany transactions or any excess loss account described in Treasury regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (iii) installment sale or open transaction disposition made on or prior to the Closing Date, (iv) a closing agreement as described in section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (v) the use of the cash method of accounting; or (vi) any prepaid amount received on or prior to the Closing Date. 9.1.11 The transfer of the Shares to the Buyer pursuant to the terms of this Agreement will not result in any Tax liability to the Company or result in a reduction of the amount of any net operating loss, net operating loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax credit carryover, excess charitable contribution or basis of property that otherwise would be available to the Company by reason or as a result of any deferred intercompany transaction, excess loss account or otherwise. 9.1.12 Each Seller has delivered to the Buyer as of the Closing Date a certificate substantially in the form of Exhibit 9.1.12, signed under penalties of perjury and notarized, stating that for U.S. federal income tax purposes and specifically for purposes of sections 897 and 1445 of the Code that such Seller is not a nonresident alien. 9.1.13 Each Seller, and each Person who was a shareholder of the Company as of the Closing, has delivered to the Buyer an IRS Form 8023 and all other forms required of such Seller or Person in respect of making a Section 338(h)(10) Election in all jurisdictions in which any such election may be made, as contemplated by Section 9.2.3 of this Agreement, each completely and properly filled out and executed by such Seller or Person.
Appears in 1 contract
Representations and Obligations Regarding Taxes. The Each of the Sellers jointly and severally represent represents and warrant warrants to and agree agrees with the Buyer Buyers as follows:
(a) Except as set forth in SCHEDULE 10.01(a), in each case except (i) all returns and reports, including without limitation, information and withholding returns and reports ("Tax Returns") of or relating to any foreign, federal, state or local tax assessment or other governmental charge (all herein referred to collectively as "Taxes" or singularly as a "Tax") that are required to be filed by or with respect to the extent set forth on Schedule 9 (and for purposes of this Section 9income, the “Company” includes any corporation business, operations or other entity that at any time has been a Subsidiary property of the Company have been duly and timely filed, (although certain representations are made ii) all items of income, gain, loss, deduction and credit or other items required to be included in respect of the status of Subsidiaries as qualified subchapter S subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code):
9.1.1 The Company has timely filed all such Tax Returns that it was required to file. All of those have been so included, (iii) all information provided in such Tax Returns were is true, correct and complete complete, (iv) all Taxes that have become due with respect to the taxable years covered by such Tax Returns have been timely paid in full, (v) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax, and (vi) all withholding Tax requirements imposed on the Company for all taxable periods have been satisfied in full in all material respects. Schedule 9.1.1 lists all Federal.
(b) There is no claim against the Company with respect to any Taxes and no assessment, state, local and foreign deficiency or adjustment has been asserted or proposed with respect to any Tax Returns filed Return of or with respect to the Company for taxable periods ending after December 31or either Seller, 2001. The Company has delivered other than those disclosed (and to the Buyer correct which are attached true and complete copies of all Federal income Tax Returns and all state and local income audit or franchise Tax returns for each taxable period ending after December 31, 2001. All material elections with respect to Taxes affecting the Company are disclosed on or attached to a Tax Return of the Companysimilar reports) in SCHEDULE 10.01(b).
9.1.2 (c) Except as set forth in the second succeeding sentenceSCHEDULE 10.01(c), all Taxes owed by the Company (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid, and the Company has made adequate accrual in its Financials for all Taxes through the date hereof not yet due and payable and will have made adequate accrual in the Closing Balance Sheet for all Taxes through the Closing Date not yet due and payable. The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.
9.1.3 The Company there is not currently the beneficiary of any extension of time within which to file any Tax Return. All private letter rulings issued by the IRS to the Company (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 9.1.3, and there are no pending requests for any rulings (or corresponding determinations). There is no power of attorney with respect to any Tax executed or filed with any taxing authority.
9.1.4 There are no liens on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax, except for liens for Taxes not yet due. The Company has not waived any statute of limitations in respect of Taxes or agreed to force any extension of time with respect to a the date on which any Tax assessment Return of or deficiency which waiver or extension has not since expired. Schedule 9.1.4 lists those Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 2001 that either Seller is due to be or have been audited filed, or that have been the subject of any written waivers or unwritten notice of any audit, examination, investigation agreements by or other proceeding. The Company has delivered to the Buyer correct and complete copies of all audit, examination, revenue agent’s and other reports of, and any closing agreements with, any taxing jurisdiction with respect to taxable periods ended on the Company or after December 31, 2001. No issue relating to Taxes has been raised in writing by a taxing authority during either Seller of or for any pending audit extension of time for the assessment or examination, and no issue relating to Taxes was raised in writing by a taxing authority in payment of any completed audit or examination, that reasonably can be expected to recur in a later taxable period. Tax.
(d) Except as noted on Schedule 9.1.4set forth in SCHEDULE 5.08(b), there is no dispute the total amounts set up as liabilities for Taxes in the Financial Statements are sufficient to cover the payment of all Taxes, including any penalties or claim concerning any Tax liability interest thereon and whether or not assessed or disputed, which are, or are hereafter found to be, or to have been, due with respect to the conduct of the business of the Company either for the taxable periods covered thereby.
(ie) claimed or raised by any taxing authority in writing or (ii) as to which any The consummation of the directors or officers (or employees responsible for Tax matters) of the Company has knowledge. No claim has ever been made by a taxing authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or that it satisfies or may satisfy the nexus requirements to be subject to taxation by that jurisdiction. Except to the extent set forth on Schedule 9.1.4, no director or officer (or employee responsible for Tax matters) of the Company has any reason to believe that any taxing authority will assert liability for any additional Taxes for any period for which Tax Returns have been filed.
9.1.5 The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under section 280G of the Code or that would give rise to any obligation to indemnify any Person for any excise tax payable pursuant to section 4999 of the Code. The Company has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 or Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction, and the Company is not a lessor or lessee of any tangible property located outside the United States. None of the property of the Company is tax-exempt use property within the meaning of section 168(h) of the Code, is property that is required to be treated as being owned by any other Person pursuant to the safe harbor lease provisions of former section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or is property that directly or indirectly secures any debt the interest on which is exempt from federal income tax pursuant to section 103 of the Code. The Company does not own any property that is subject to a “section 467 rental agreement” as defined in section 467 of the Code. The Company has not distributed the stock of another entity, or had its stock distributed by another entity, in a transaction that was intended to be or that purported to be governed in whole or in part by section 355 or section 361 of the Code. No indebtedness of the Company consists of “corporate acquisition indebtedness” within the meaning of section 279 of the Code. The Company does not have a non-accountable expense reimbursement arrangement within the meaning of Treasury regulation section 1.62-2(c). The Company has not made any consent to the application of section 341(f)(2) with respect to any asset held or to be acquired by the Company.
9.1.6 The Company has not been a United States real property holding corporation within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code. The Company does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable income tax treaty to which the United States and the foreign country are parties or under the Law of the foreign country. The Company does not have an overall foreign loss within the meaning of section 904(f) of the Code.
9.1.7 The Company is not a party to any Tax allocation or sharing agreement. The Company (i) has not been a member of an Affiliated Group filing a consolidated Federal income Tax Return and (ii) has no liability for the Taxes of any Person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise. The Company is not a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes.
9.1.8 The Company has not been and will not be subject to any penalty under section 6662 of the Code with respect to its Tax Returns. The Company has not engaged in any “listed transaction” or “reportable transaction” within the meaning of section 6707A(c) of the Code or Treasury regulation section 1.6011-4(b) or any transaction (i) that was marketed to the Company in writing as a transaction that is intended to generate substantial Tax benefits and (ii) with respect to which the Company has paid a promoter of the transaction total fees in excess of $100,000.
9.1.9 The Company has been a validly electing S corporation (within the meaning of sections 1361 and 1362 of the Code) at all times since September 1, 1986, and any corporate Subsidiary of the Company has been a qualified subchapter S subsidiary within the meaning of Section 1361(b)(3)(B) of the Code at all times the Company has owned any of its shares. Schedule 9.1.9 identifies each Subsidiary that is a qualified subchapter S subsidiary. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past ten years, (A) acquired any asset from another corporation in a transaction in which the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation that is a qualified subchapter S subsidiary.
9.1.10 The Company will not be required (and no taxing authority is proposing that the Company be required) to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date (and no taxing authority has proposed any change in method of accounting), (ii) intercompany transactions or any excess loss account described in Treasury regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (iii) installment sale or open transaction disposition made on or prior to the Closing Date, (iv) a closing agreement as described in section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (v) the use of the cash method of accounting; or (vi) any prepaid amount received on or prior to the Closing Date.
9.1.11 The transfer of the Shares to the Buyer pursuant to the terms of this Agreement Merger will not result in any Tax liability to the Surviving Corporation or any Buyer arising from the business operations of the Company prior to the Merger.
(f) The Company has not at any time consented to have the provisions of section 341(f)(2) of the Code apply with respect to a sale of its stock.
(g) None of the Shareholders nor the Company has taken or will take any action which could result in a reduction deemed election under section 338 of the Code with respect to the Merger.
(h) The Sellers shall allow each Buyer or its designees access at all reasonable times to all of their books and records (including tax workpapers and returns and correspondence with tax authorities) insofar as they relate to the operations of the Company, including the right to take extracts therefrom and make copies thereof, to the extent such books and records relate to taxable periods ending on or prior to or that include the Closing Date. Buyers shall (i) allow Sellers access at all reasonable times to all of the Company's books and records (including tax workpapers and returns and correspondence with tax authorities), including the right to take extracts therefrom and make copies thereof, to the extent that such books and records relate to taxable periods ending on or prior to or that include the Closing Date, and (ii) otherwise cooperate with the Sellers in connection with any audit of Taxes that relate to the business of the Company prior to Closing.
(i) The Company has been duly qualified as, and has maintained at all times since its organization, a valid "S" corporation status under the Code.
(j) After the Closing Date, the individual Shareholders shall prepare and file Federal "S" corporation income Tax Returns (and, if applicable, State income Tax Returns) on behalf of the Company reflecting all items of income, gain, loss, deduction or other items required to be included in such Tax Returns for the periods prior to the Closing Date (collectively, the "Short-Year Tax Returns"). All income Taxes due with respect to the Short- Year Tax Returns shall be borne by the Shareholders. The Short-Year Tax Returns shall be subject to approval by Magicworks, which approval shall not be unreasonably withheld or delayed.
(k) Notwithstanding the foregoing, any Tax assessed against the value of Assets owned by the Company for the taxable period that includes the Closing Date shall be borne by Sellers (and paid by Sellers to Magicspace at or after Closing for payment by Magicspace to the applicable taxing authority when due) to the extent of the amount determined by multiplying the amount of any net operating losssuch Tax for the entire taxable year by a fraction, net operating loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax credit carryover, excess charitable contribution or basis the numerator of property that otherwise would be available which is the number of days in such taxable period up to the Company by reason or as a result of any deferred intercompany transaction, excess loss account or otherwise.
9.1.12 Each Seller has delivered to the Buyer as of an including the Closing Date a certificate substantially in the form of Exhibit 9.1.12, signed under penalties of perjury and notarized, stating that for U.S. federal income tax purposes and specifically for purposes of sections 897 and 1445 of the Code that such Seller is not a nonresident alien.
9.1.13 Each SellerDate, and each Person who was a shareholder the denominator of which is the Company as total number of the Closing, has delivered to the Buyer an IRS Form 8023 and all other forms required of days in such Seller or Person in respect of making a Section 338(h)(10) Election in all jurisdictions in which any such election may be made, as contemplated by Section 9.2.3 of this Agreement, each completely and properly filled out and executed by such Seller or Persontaxable period.
Appears in 1 contract
Representations and Obligations Regarding Taxes. The Sellers Company and each Seller jointly and severally represent and warrant to and agree with the Buyer as follows, in each case except to the extent :
(a) Except as set forth on in Schedule 9 8.01(a), (i) all returns and for purposes reports, including without limitation, information and withholding returns and reports ("Tax Returns") of this Section 9or relating to any foreign, the “Company” includes any corporation federal, state or local tax assessment or other entity governmental charge (all herein referred to collectively as "Taxes" or singularly as a "Tax") that at any time has been a Subsidiary of the Company (although certain representations are made in respect of the status of Subsidiaries as qualified subchapter S subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code):
9.1.1 The Company has timely filed all Tax Returns that it was required to file. All of those Tax Returns were correct and complete in all material respects. Schedule 9.1.1 lists all Federal, state, local and foreign Tax Returns be filed on or before the Closing Date by or with respect to the income, business, operations or property of the Company have been duly and timely filed, (ii) all items of income, gain, loss, deduction and credit or other items required to be included in such Tax Returns have been so included, (iii) all information provided in such Tax Returns is true, correct and complete, (iv) all Taxes that have become due with respect to the taxable years covered by such Tax Returns have been timely paid in full, (v) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax, and (vi) all withholding Tax requirements imposed on the Seller for all taxable periods ending after December 31through the close of business on the Closing Date have been satisfied in full in all respects.
(b) There is no claim against the Company with respect to any Taxes and no assessment, 2001. The Company deficiency or adjustment has delivered been asserted or proposed with respect to any Tax Return of or with respect to the Buyer correct Company, other than those disclosed (and to which are attached true and complete copies of all Federal income Tax Returns and all state and local income audit or franchise Tax returns for each taxable period ending after December 31, 2001. All material elections with respect to Taxes affecting the Company are disclosed on or attached to a Tax Return of the Companysimilar reports) in Schedule 8.01(b).
9.1.2 (c) Except as set forth in the second succeeding sentenceSchedule 8.01(c), all Taxes owed by the Company (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid, and the Company has made adequate accrual in its Financials for all Taxes through the date hereof not yet due and payable and will have made adequate accrual in the Closing Balance Sheet for all Taxes through the Closing Date not yet due and payable. The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.
9.1.3 The Company there is not currently the beneficiary of any extension of time within which to file any Tax Return. All private letter rulings issued by the IRS to the Company (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 9.1.3, and there are no pending requests for any rulings (or corresponding determinations). There is no power of attorney with respect to any Tax executed or filed with any taxing authority.
9.1.4 There are no liens on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax, except for liens for Taxes not yet due. The Company has not waived any statute of limitations in respect of Taxes or agreed to force any extension of time with respect to a the date on which any Tax assessment Return of or deficiency which waiver or extension has not since expired. Schedule 9.1.4 lists those Tax Returns filed with respect to the Company for taxable periods ended on is due to be or after December 31, 2001 that have been audited filed, or that have been the subject of any written waivers or unwritten notice of any audit, examination, investigation agreements by or other proceeding. The Company has delivered to the Buyer correct and complete copies of all audit, examination, revenue agent’s and other reports of, and any closing agreements with, any taxing jurisdiction with respect to taxable periods ended on the Company of or after December 31for any extension of time for the assessment or payment of any Tax.
(d) The total amounts set up as liabilities for Taxes in the Financial Statements are sufficient to cover the payment of all Taxes, 2001. No issue relating including any penalties or interest thereon and whether or not assessed or disputed, which are, or are hereafter found to Taxes has been raised in writing by a taxing authority during any pending audit be, or examinationto have been, and no issue relating due with respect to Taxes was raised in writing by a taxing authority in any completed audit or examination, that reasonably can be expected to recur in a later taxable period. Except as noted on Schedule 9.1.4, there is no dispute or claim concerning any Tax liability the conduct of the business of the Company either for the taxable periods covered thereby.
(ie) claimed The Company and each Seller shall grant to Buyer or raised by any taxing authority in writing or its designees access at all reasonable times to all of its books and records (ii) as including tax workpapers and returns and correspondence with tax authorities), including the right to which any of the directors or officers (or employees responsible for Tax matters) of the Company has knowledge. No claim has ever been made by a taxing authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or that it satisfies or may satisfy the nexus requirements to be subject to taxation by that jurisdiction. Except take extracts therefrom and make copies thereof, to the extent set forth on Schedule 9.1.4, no director or officer (or employee responsible for Tax matters) of the Company has any reason such books and records relate to believe that any taxing authority will assert liability for any additional Taxes for any period for which Tax Returns have been filed.
9.1.5 The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under section 280G of the Code or that would give rise to any obligation to indemnify any Person for any excise tax payable pursuant to section 4999 of the Code. The Company has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 or Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction, and the Company is not a lessor or lessee of any tangible property located outside the United States. None of the property of the Company is tax-exempt use property within the meaning of section 168(h) of the Code, is property that is required to be treated as being owned by any other Person pursuant to the safe harbor lease provisions of former section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or is property that directly or indirectly secures any debt the interest on which is exempt from federal income tax pursuant to section 103 of the Code. The Company does not own any property that is subject to a “section 467 rental agreement” as defined in section 467 of the Code. The Company has not distributed the stock of another entity, or had its stock distributed by another entity, in a transaction that was intended to be or that purported to be governed in whole or in part by section 355 or section 361 of the Code. No indebtedness of the Company consists of “corporate acquisition indebtedness” within the meaning of section 279 of the Code. The Company does not have a non-accountable expense reimbursement arrangement within the meaning of Treasury regulation section 1.62-2(c). The Company has not made any consent to the application of section 341(f)(2) with respect to any asset held or to be acquired by the Company.
9.1.6 The Company has not been a United States real property holding corporation within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code. The Company does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable income tax treaty to which the United States and the foreign country are parties or under the Law of the foreign country. The Company does not have an overall foreign loss within the meaning of section 904(f) of the Code.
9.1.7 The Company is not a party to any Tax allocation or sharing agreement. The Company (i) has not been a member of an Affiliated Group filing a consolidated Federal income Tax Return and (ii) has no liability for the Taxes of any Person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise. The Company is not a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes.
9.1.8 The Company has not been and will not be subject to any penalty under section 6662 of the Code with respect to its Tax Returns. The Company has not engaged in any “listed transaction” or “reportable transaction” within the meaning of section 6707A(c) of the Code or Treasury regulation section 1.6011-4(b) or any transaction (i) that was marketed to the Company in writing as a transaction that is intended to generate substantial Tax benefits and (ii) with respect to which the Company has paid a promoter of the transaction total fees in excess of $100,000.
9.1.9 The Company has been a validly electing S corporation (within the meaning of sections 1361 and 1362 of the Code) at all times since September 1, 1986, and any corporate Subsidiary of the Company has been a qualified subchapter S subsidiary within the meaning of Section 1361(b)(3)(B) of the Code at all times the Company has owned any of its shares. Schedule 9.1.9 identifies each Subsidiary that is a qualified subchapter S subsidiary. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past ten years, (A) acquired any asset from another corporation in a transaction in which the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation that is a qualified subchapter S subsidiary.
9.1.10 The Company will not be required (and no taxing authority is proposing that the Company be required) to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period periods ending on or prior to or that include the Closing Date Date. Buyer shall (i) grant to each Seller access at all reasonable times to all of its books and no taxing authority has proposed any change in method of accounting), records (iiincluding tax workpapers and returns and correspondence with tax authorities) intercompany transactions or any excess loss account described in Treasury regulations under Section 1502 insofar as they relate to the operations of the Code (or any corresponding or similar provision of stateCompany, local or foreign Tax Law)including the right to take extracts therefrom and make copies thereof, (iii) installment sale or open transaction disposition made to the extent that such books and records relate to taxable periods ending on or prior to or that include the Closing Date, and (ivii) a closing agreement as described otherwise cooperate with Sellers in section 7121 connection with any audit of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (v) the use of the cash method of accounting; or (vi) any prepaid amount received on or prior Taxes that relate to the Closing Date.
9.1.11 The transfer of the Shares to the Buyer pursuant to the terms of this Agreement will not result in any Tax liability to the Company or result in a reduction of the amount of any net operating loss, net operating loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax credit carryover, excess charitable contribution or basis of property that otherwise would be available to the Company by reason or as a result of any deferred intercompany transaction, excess loss account or otherwise.
9.1.12 Each Seller has delivered to the Buyer as of the Closing Date a certificate substantially in the form of Exhibit 9.1.12, signed under penalties of perjury and notarized, stating that for U.S. federal income tax purposes and specifically for purposes of sections 897 and 1445 of the Code that such Seller is not a nonresident alien.
9.1.13 Each Seller, and each Person who was a shareholder business of the Company as of the prior to Closing, has delivered to the Buyer an IRS Form 8023 and all other forms required of such Seller or Person in respect of making a Section 338(h)(10) Election in all jurisdictions in which any such election may be made, as contemplated by Section 9.2.3 of this Agreement, each completely and properly filled out and executed by such Seller or Person.
Appears in 1 contract
Representations and Obligations Regarding Taxes. The Sellers jointly and severally represent and warrant to and agree with the Buyer as follows, in each case except to the extent set forth on Schedule 9 (and for purposes of this Section 9, the “Company” includes any corporation or other entity that at any time has been a Subsidiary Each of the Company (although certain representations are made in respect of the status of Subsidiaries as qualified subchapter S subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code):
9.1.1 The Company has timely filed all Tax Returns that it was required to file. All of those Tax Returns were correct Companies represents, warrants and complete in all material respects. Schedule 9.1.1 lists all Federal, state, local and foreign Tax Returns filed agrees with respect to itself, and each of the Company for taxable periods ending after December 31Shareholders individually represents, 2001. The Company has delivered to the Buyer correct warrants and complete copies of all Federal income Tax Returns and all state and local income or franchise Tax returns for each taxable period ending after December 31, 2001. All material elections agrees with respect to Taxes affecting itself and, to the Company are disclosed on or attached best of its knowledge, with respect to a Tax Return each of the Company.Companies in which its owns capital stock, to and with Parent as follows:
9.1.2 (a) Except as set forth in Schedule 9.1(a), (i) all returns and reports, including without limitation, information and withholding returns and reports ("Tax Returns") of or relating to any foreign, federal, state or local tax assessment or other governmental charge (all herein referred to collectively as "Taxes" or singularly as a "Tax") that are required to be filed by or with respect to the second succeeding sentenceincome, business, operations or property of any of the Lxxxxxx Entities have been duly and timely filed, (ii) all items of income, gain, loss, deduction and credit or other items required to be included in each such Tax Return have been so included, (iii) all information provided in each such Tax Return is true, correct and complete, (iv) all Taxes owed that have become due with respect to the taxable years covered by the Company each such Tax Returns (whether or not shown on any Tax Return and whether or not any Tax Return was requiredReturn) have been paidtimely paid in full, (v) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax, and (vi) all withholding Tax requirements imposed on any of the Company has made adequate accrual in its Financials Lxxxxxx Entities for all Taxes through the date hereof not yet due and payable and will have made adequate accrual in the Closing Balance Sheet for all Taxes through the Closing Date not yet due and payable. The Company has withheld and paid all Taxes required to taxable periods have been withheld and paid satisfied in connection with amounts paid or owing to any employeefull in all respects. Schedule 9.1(a) lists all federal, independent contractor, creditor, stockholder or other third party. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.
9.1.3 The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. All private letter rulings issued by the IRS to the Company (and any corresponding ruling or determination of any state, local and foreign income Tax Returns filed with respect to each of the Lxxxxxx Entities for taxable periods ended on or foreign taxing authority) after December 31, 1993, indicates those Tax Returns that have been disclosed on Schedule 9.1.3audited and indicates those Tax Returns that currently are the subject of the audit. The Shareholders shall deliver to the Parent correct and complete copies of all federal income Tax Returns, examination reports and there are no pending requests for statements of deficiencies assessed against or agreed to by any rulings of the Lxxxxxx Entities since December 31, 1993.
(or corresponding determinations). b) There is no power claim against any of attorney the Lxxxxxx Entities with respect to any Taxes and no assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax executed Return of or filed with respect to any of the Lxxxxxx Entities, other than those disclosed (and to which are attached true and complete copies of all audit or similar reports) in Schedule 9.1(b). No claim has ever been made by any taxing authority.
9.1.4 authority in a jurisdiction where any of the Lxxxxxx Entities does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no liens security interests on any of the Assets assets of any of the Lxxxxxx Entities that arose in connection with any failure (or alleged failure) to pay any Tax.
(c) Except as set forth in Schedule 9.1(c), except for liens for Taxes there is not yet duein force any extension of time with respect to the date on which any Tax Return of or with respect to any of the Lxxxxxx Entities is to be filed. The Company None of the Lxxxxxx Entities has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency deficiency.
(d) Except as set forth in Schedule 9.1(d), the total amounts set up as liabilities for Taxes in the Financial Statements for each of the Lxxxxxx Entities are sufficient to cover the payment of all Taxes, including any related penalties, interest or other amounts and whether or not assessed or disputed, which waiver are, or extension has not since expired. Schedule 9.1.4 lists those Tax Returns filed are hereafter found to be, or to have been, due with respect to the Company conduct of the business of such Lxxxxxx Entity for the taxable periods ended on or after December 31, 2001 that have been audited or that have been the subject of any written or unwritten notice of any audit, examination, investigation or other proceeding. The Company has delivered to the Buyer correct and complete copies of all audit, examination, revenue agent’s and other reports of, and any closing agreements with, any taxing jurisdiction with respect to taxable periods ended on or after December 31, 2001. No issue relating to Taxes has been raised in writing by a taxing authority during any pending audit or examination, and no issue relating to Taxes was raised in writing by a taxing authority in any completed audit or examination, that reasonably can be expected to recur in a later taxable period. covered thereby.
(e) Except as noted on Schedule 9.1.4, there is no dispute or claim concerning any Tax liability of the Company either (i) claimed or raised by any taxing authority in writing or (ii) as to which any of the directors or officers (or employees responsible for Tax matters) of the Company has knowledge. No claim has ever been made by a taxing authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or that it satisfies or may satisfy the nexus requirements to be subject to taxation by that jurisdiction. Except to the extent set forth on Schedule 9.1.49.1(e), no director the consummation of the Mergers will not result in any Tax liability to the Parent or officer any of the Subs arising from the business operations of any of the Lxxxxxx Entities prior to the Mergers.
(or employee responsible for Tax mattersf) None of the Lxxxxxx Entities has at any time consented to have the provisions of section 341(f) of the Company Code apply with respect to its stock. None of the Lxxxxxx Entities has any reason to believe that any taxing authority will assert liability for any additional Taxes for any period for which Tax Returns have been filed.
9.1.5 The Company has not made any payments, is not obligated to make any payments and or is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under section 280G of the Code or that would give rise to any obligation to indemnify any Person for any excise tax payable pursuant to section 4999 of the Codess. The Company has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 or Revenue Procedure 2001-28 280G.
(or similar provisions of foreign Lawg) or any safe harbor lease transaction, and the Company is not a lessor or lessee of any tangible property located outside the United States. None of the property Shareholders of the Company is tax-exempt use property within the meaning of section 168(h) of the Code, is property any Lxxxxxx Entity that is required to be treated as being owned by any other Person pursuant to the safe harbor lease provisions of former section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or is property that directly or indirectly secures any debt the interest on which is exempt from federal income tax pursuant to section 103 of the Code. The Company does not own any property that is subject to a “section 467 rental agreement” as defined in section 467 of the Code. The Company has not distributed the stock of another entity, or had its stock distributed by another entity, in a transaction that was intended to be or that purported to be governed in whole or in part by section 355 or section 361 of the Code. No indebtedness of the Company consists of “corporate acquisition indebtedness” within the meaning of section 279 of the Code. The Company does not have a non-accountable expense reimbursement arrangement within the meaning of Treasury regulation section 1.62-2(c). The Company has not made any consent to the application of section 341(f)(2) with respect to any asset held or to be acquired by the Company.
9.1.6 The Company has not been a United States real property holding corporation within the meaning of section 897(c)(2Code ss. 897 (c) of the Code (2) during the applicable period specified in section 897(c)(1)(A)(iiCode ss. 897 (c) (1) (A) (ii) is a foreign person subject to the withholding of tax pursuant to Code ss. 1445.
(h) None of the Code. The Company does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable income tax treaty to which the United States and the foreign country are parties or under the Law of the foreign country. The Company does not have an overall foreign loss within the meaning of section 904(f) of the Code.
9.1.7 The Company Lxxxxxx Entities is not a party to any Tax allocation or sharing agreement. The Company None of the Lxxxxxx Entities (ia) has not been a member of an Affiliated Group affiliated group filing a consolidated Federal federal income Tax Return and or (iib) has no any liability for the Taxes of any Person person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Lawlaw), as a transferee or successor, by contract contract, or otherwise. The Company is not a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes.
9.1.8 The Company (i) None of the Lxxxxxx Entities nor the Shareholders has not been and taken or will not be subject to take any penalty action which could result in a deemed election under section 6662 338 of the Code with respect to its Tax Returns. The Company has not engaged in any “listed transaction” or “reportable transaction” within the meaning of section 6707A(c) of the Code or Treasury regulation section 1.6011-4(b) or any transaction (i) that was marketed to the Company in writing as a transaction that is intended to generate substantial Tax benefits and (ii) with respect to which the Company has paid a promoter of the transaction total fees in excess of $100,000Lxxxxxx Entities.
9.1.9 The Company has been a validly electing S corporation (within the meaning of sections 1361 and 1362 of the Code) at all times since September 1, 1986, and any corporate Subsidiary of the Company has been a qualified subchapter S subsidiary within the meaning of Section 1361(b)(3)(B) of the Code at all times the Company has owned any of its shares. Schedule 9.1.9 identifies each Subsidiary that is a qualified subchapter S subsidiary. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past ten years, (A) acquired any asset from another corporation in a transaction in which the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation that is a qualified subchapter S subsidiary.
9.1.10 The Company will not be required (and no taxing authority is proposing that the Company be required) to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date (and no taxing authority has proposed any change in method of accounting), (ii) intercompany transactions or any excess loss account described in Treasury regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (iii) installment sale or open transaction disposition made on or prior to the Closing Date, (iv) a closing agreement as described in section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (v) the use of the cash method of accounting; or (vi) any prepaid amount received on or prior to the Closing Date.
9.1.11 The transfer of the Shares to the Buyer pursuant to the terms of this Agreement will not result in any Tax liability to the Company or result in a reduction of the amount of any net operating loss, net operating loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax credit carryover, excess charitable contribution or basis of property that otherwise would be available to the Company by reason or as a result of any deferred intercompany transaction, excess loss account or otherwise.
9.1.12 Each Seller has delivered to the Buyer as of the Closing Date a certificate substantially in the form of Exhibit 9.1.12, signed under penalties of perjury and notarized, stating that for U.S. federal income tax purposes and specifically for purposes of sections 897 and 1445 of the Code that such Seller is not a nonresident alien.
9.1.13 Each Seller, and each Person who was a shareholder of the Company as of the Closing, has delivered to the Buyer an IRS Form 8023 and all other forms required of such Seller or Person in respect of making a Section 338(h)(10) Election in all jurisdictions in which any such election may be made, as contemplated by Section 9.2.3 of this Agreement, each completely and properly filled out and executed by such Seller or Person.
Appears in 1 contract
Representations and Obligations Regarding Taxes. The Sellers Shareholders jointly and severally represent and warrant to and agree with the Buyer as follows, in each case except to the extent :
(a) Except as set forth on in Schedule 9 8.01(a), (i) all returns and for purposes reports, including without limitation, information and withholding returns and reports ("Tax Returns") of this Section 9or relating to any foreign, the “Company” includes any corporation federal, state or local tax assessment or other entity governmental charge (all herein referred to collectively as "Taxes" or singularly as a "Tax") that at any time has been a Subsidiary of the Company (although certain representations are made in respect of the status of Subsidiaries as qualified subchapter S subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code):
9.1.1 The Company has timely filed all Tax Returns that it was required to file. All of those Tax Returns were correct and complete in all material respects. Schedule 9.1.1 lists all Federal, state, local and foreign Tax Returns be filed on or before the Closing Date by or with respect to the income, business, operations or property of the Company have been duly and timely filed, (ii) all items of income, gain, loss, deduction and credit or other items required to be included in such Tax Returns have been so included, (iii) all information provided in such Tax Returns is true, correct and complete, (iv) all Taxes that have become due with respect to the taxable years covered by such Tax Returns have been timely paid in full, (v) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax, and (vi) all withholding Tax requirements imposed on the Company for all taxable periods ending after December 31through the close of business on the Closing Date have been satisfied in full in all respects.
(b) There is no claim against the Company with respect to any Taxes and no assessment, 2001. The Company deficiency or adjustment has delivered been asserted or proposed with respect to any Tax Return of or with respect to the Buyer correct Company, other than those disclosed (and to which are attached true and complete copies of all Federal income Tax Returns and all state and local income audit or franchise Tax returns for each taxable period ending after December 31, 2001. All material elections with respect to Taxes affecting the Company are disclosed on or attached to a Tax Return of the Companysimilar reports) in Schedule 8.01(b).
9.1.2 (c) Except as set forth in the second succeeding sentenceSchedule 8.01(c), all Taxes owed by the Company (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid, and the Company has made adequate accrual in its Financials for all Taxes through the date hereof not yet due and payable and will have made adequate accrual in the Closing Balance Sheet for all Taxes through the Closing Date not yet due and payable. The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party. The unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.
9.1.3 The Company there is not currently the beneficiary of any extension of time within which to file any Tax Return. All private letter rulings issued by the IRS to the Company (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 9.1.3, and there are no pending requests for any rulings (or corresponding determinations). There is no power of attorney with respect to any Tax executed or filed with any taxing authority.
9.1.4 There are no liens on any of the Assets that arose in connection with any failure (or alleged failure) to pay any Tax, except for liens for Taxes not yet due. The Company has not waived any statute of limitations in respect of Taxes or agreed to force any extension of time with respect to a the date on which any Tax assessment Return of or deficiency which waiver or extension has not since expired. Schedule 9.1.4 lists those Tax Returns filed with respect to the Company for taxable periods ended on is due to be or after December 31, 2001 that have been audited filed, or that have been the subject of any written waivers or unwritten notice of any audit, examination, investigation agreements by or other proceeding. The Company has delivered to the Buyer correct and complete copies of all audit, examination, revenue agent’s and other reports of, and any closing agreements with, any taxing jurisdiction with respect to taxable periods ended on the Company or after December 31the Shareholders of or for any extension of time for the assessment or payment of any Tax.
(d) The total amounts set up as liabilities for Taxes in the Financial Statements are sufficient to cover the payment of all Taxes, 2001. No issue relating including any penalties or interest thereon and whether or not assessed or disputed, which are, or are hereafter found to Taxes has been raised in writing by a taxing authority during any pending audit be, or examinationto have been, and no issue relating due with respect to Taxes was raised in writing by a taxing authority in any completed audit or examination, that reasonably can be expected to recur in a later taxable period. Except as noted on Schedule 9.1.4, there is no dispute or claim concerning any Tax liability the conduct of the business of the Company either (i) claimed or raised by any taxing authority in writing or (ii) as to which any of for the directors or officers (or employees responsible for Tax matters) of the Company has knowledge. No claim has ever been made by a taxing authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction or that it satisfies or may satisfy the nexus requirements to be subject to taxation by that jurisdiction. Except to the extent set forth on Schedule 9.1.4, no director or officer (or employee responsible for Tax matters) of the Company has any reason to believe that any taxing authority will assert liability for any additional Taxes for any period for which Tax Returns have been filedtaxable periods covered thereby.
9.1.5 The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under section 280G of the Code or that would give rise to any obligation to indemnify any Person for any excise tax payable pursuant to section 4999 of the Code. The Company has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 or Revenue Procedure 2001-28 (or similar provisions of foreign Lawe) or any safe harbor lease transaction, and the Company is not a lessor or lessee of any tangible property located outside the United States. None of the property of the Company is tax-exempt use property within the meaning of section 168(h) of the Code, is property that is required to be treated as being owned by any other Person pursuant to the safe harbor lease provisions of former section 168(f)(8) of the Internal Revenue Code of 1954, as amended, or is property that directly or indirectly secures any debt the interest on which is exempt from federal income tax pursuant to section 103 of the Code. The Company does not own any property that is subject to a “section 467 rental agreement” as defined in section 467 of the Code. The Company has not distributed the stock of another entity, or had its stock distributed by another entity, in a transaction that was intended to be or that purported to be governed in whole or in part by section 355 or section 361 of the Code. No indebtedness of the Company consists of “corporate acquisition indebtedness” within the meaning of section 279 of the Code. The Company does not have a non-accountable expense reimbursement arrangement within the meaning of Treasury regulation section 1.62-2(c). The Company has not made any consent to the application of section 341(f)(2) with respect to any asset held or to be acquired by the Company.
9.1.6 The Company has not been a United States real property holding corporation within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code. The Company does not have, and has not had, a permanent establishment in any foreign country, as defined in any applicable income tax treaty to which the United States and the foreign country are parties or under the Law of the foreign country. The Company does not have an overall foreign loss within the meaning of section 904(f) of the Code.
9.1.7 The Company is not a party to any Tax allocation or sharing agreement. The Company (i) has not been a member of an Affiliated Group filing a consolidated Federal income Tax Return and (ii) has no liability for the Taxes of any Person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise. The Company is not a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes.
9.1.8 The Company has not been and will not be subject to any penalty under section 6662 of the Code with respect to its Tax Returns. The Company has not engaged in any “listed transaction” or “reportable transaction” within the meaning of section 6707A(c) of the Code or Treasury regulation section 1.6011-4(b) or any transaction (i) that was marketed to the Company in writing as a transaction that is intended to generate substantial Tax benefits and (ii) with respect to which the Company has paid a promoter of the transaction total fees in excess of $100,000.
9.1.9 The Company has been a validly electing an S corporation (within the meaning of sections as defined in Section 1361 and 1362 of the Code) at all times since September January 1, 1986, and any corporate Subsidiary of the Company has been a qualified subchapter 1995 pursuant to an election to be treated as an S subsidiary within the meaning of Section 1361(b)(3)(B) of the Code at all times the Company has owned any of its shares. Schedule 9.1.9 identifies each Subsidiary that is a qualified subchapter S subsidiary. Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past ten years, (A) acquired any asset from another corporation in a transaction in which properly made by the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation that is a qualified subchapter S subsidiary.
9.1.10 The Company will not be required (and no taxing authority is proposing that the Company be requiredf) to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any Buyer shall (i) change in method of accounting for a taxable period ending on or prior grant to the Closing Date Shareholders access at all reasonable times to all of its books and records (including tax workpapers and no taxing authority has proposed any change in method of accounting), (iireturns and correspondence with tax authorities) intercompany transactions or any excess loss account described in Treasury regulations under Section 1502 insofar as they relate to the operations of the Code (or any corresponding or similar provision of stateCompany, local or foreign Tax Law)including the right to take extracts therefrom and make copies thereof, (iii) installment sale or open transaction disposition made to the extent that such books and records relate to taxable periods ending on or prior to the Closing Date, and (ivii) a closing agreement as described otherwise cooperate with Shareholders in section 7121 connection with any audit of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (v) the use of the cash method of accounting; or (vi) any prepaid amount received on or prior Taxes that relate to the Closing Date.
9.1.11 The transfer of the Shares to the Buyer pursuant to the terms of this Agreement will not result in any Tax liability to the Company or result in a reduction of the amount of any net operating loss, net operating loss carryover, net capital loss, net capital loss carryover, Tax credit, Tax credit carryover, excess charitable contribution or basis of property that otherwise would be available to the Company by reason or as a result of any deferred intercompany transaction, excess loss account or otherwise.
9.1.12 Each Seller has delivered to the Buyer as of the Closing Date a certificate substantially in the form of Exhibit 9.1.12, signed under penalties of perjury and notarized, stating that for U.S. federal income tax purposes and specifically for purposes of sections 897 and 1445 of the Code that such Seller is not a nonresident alien.
9.1.13 Each Seller, and each Person who was a shareholder business of the Company as of the prior to Closing, has delivered to the Buyer an IRS Form 8023 and all other forms required of such Seller or Person in respect of making a Section 338(h)(10) Election in all jurisdictions in which any such election may be made, as contemplated by Section 9.2.3 of this Agreement, each completely and properly filled out and executed by such Seller or Person.
Appears in 1 contract
