Representations Regarding Taxes. For purposes of this Section 2.33, the “Companies” include any Predecessor of the Companies and/or any entity that at any time has been a Subsidiary of a Company): 2.33.1 Except as set forth on Schedule 2.33.1, (a) each Company has duly and timely filed with the appropriate Tax authorities all Tax Returns it was required to file; (b) all such Tax Returns were true, correct and complete and all Taxes of the Companies (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid to the extent due and payable; (c) no Company is the beneficiary of any extension of time within which to file any Tax Return, nor has any Company waived the statute of limitation in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency; (d) each Company has maintained adequate provision for Taxes (excluding amounts deferred to take into account timing differences between book and tax) payable by such Company as of the Closing Date; (e) no claim has ever been made by a Governmental Authority in a jurisdiction where such Company does not currently file Tax Returns that such Company is or may be subject to taxation by that jurisdiction; and (f) there are no Encumbrances on any of the assets of any Company that arose in connection with any failure (or alleged failure) to pay any Tax, except for Encumbrances for Taxes not yet due. 2.33.2 Except as set forth on Schedule 2.33.2, there is no audit, examination, claim, assessment, levy, deficiency, administrative or judicial proceeding, lawsuit or refund action pending or threatened (either in writing or verbally, formally or informally) with respect to any Taxes for which any Company is or might otherwise be liable and no Governmental Authority has given notice (either in writing or verbally, formally or informally) of the commencement of any audit, examination or deficiency action with respect to any such Taxes, and no issue has been raised in any audit, examination or deficiency action by any Governmental Authority that could reasonably be expected to result in the proposal or assertion of a Tax deficiency for another year not so examined. 2.33.3 Except as set forth on Schedule 2.33.3, no Tax Return of any of the Companies has been audited, or is currently the subject of audit. The Sellers have made available to Buyer, Parent and/or their representatives correct and complete copies of all of the Companies’ federal, foreign, state and local Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by the Companies since their formation. No Company has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency. All private letter rulings and closing agreements issued by any taxing authority to the Companies (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 2.33.3, and there are no pending requests for any such rulings (or corresponding determinations). 2.33.4 Except as set forth on Schedule 2.33.4, no Company is a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes. No Company has entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction. No Company has acquired nor does it own any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103 of the Code. 2.33.5 No Company is a party to any Tax allocation or sharing agreement. No Company has liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), whether as a transferee or successor, as a withholding agent or collection agent, by contract or otherwise. 2.33.6 International Vapor is, and has been at all times since its formation, an S corporation as defined in Sections 1361(a)(1) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date, and each of Beach Wellness, LLC , South Beach Smoke, Inc., and Vapor Zone, Inc., is, and has been at all times since its formation, either an S corporation as defined in Sections 1361(a)(1) of the Code or a “qualified subchapter S subsidiary” as defined in Sections 1361(b)(3) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of International Vapor’s election to be treated as an S-corporation, which was timely filed with the Internal Revenue Service and any other Governmental Authority, and the current qualified subchapter S subsidiary election for each of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc. has not been superseded by any subsequent filing. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of all elections of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc., to be treated as an S-corporation or a qualified subchapter S subsidiary, which were timely filed with the Internal Revenue Service and any other Governmental Authority, and have indicated whether each such election has been superseded by any subsequent filing. The Internal Revenue Service has not sent any correspondence to the Sellers or the Owners questioning the status of any of the Companies as an S corporation or a qualified subchapter S subsidiary. None of the Companies will be liable for any Tax under Section 1374 of the Code. None of the Companies has, in the ten years prior to the Closing Date, acquired assets from another corporation 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. 2.33.7 Buyer will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) cash basis method of accounting or percentage of completion method of accounting; (iv) an election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law); (v) prepaid amount or deferred revenue received on or prior to the Closing Date, (vi) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of Tax law) or (vii) any adjustment under Section 481(a) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof). 2.33.8 No Company has distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years, and the stock of any Company has not been distributed in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years. 2.33.9 No taxing authority is asserting or threatening to assert a claim against any Company under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law. 2.33.10 Each Company has withheld and paid to the appropriate Governmental Authority all Taxes required to have been withheld and paid in connection with amounts allocable, paid or owing to any employee, independent contractor, creditor, member, partner, shareholder or other third party with respect to such Company. No Company has had a non-accountable expense reimbursement arrangement within the meaning of Treasury Regulation Section 1.62-2(c). 2.33.11 Each Company has collected all sales, use, value added and similar Taxes required to be collected, and has remitted, or will remit within the time and in the manner prescribed by Law, such amounts to the appropriate Governmental Authority and has furnished properly completed exemption certificates for all exempt transactions. 2.33.12 No Company is a foreign person within the meaning of Section 1445 of the Code. 2.33.13 No Company has entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Sections 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Tax Law). If any Company has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income tax within the meaning of Section 6662 of the Code, then it has either (i) substantial authority for the tax treatment of such transaction or (ii) disclosed on its Tax Return the relevant facts affecting the tax treatment of such transaction. 2.33.14 No Company is a stockholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign Law) and is not a stockholder in a “passive foreign investment company” within the meaning of Section 1297 of the Code. 2.33.15 No Company has or has ever had a permanent establishment in any foreign country as defined in any applicable Tax treaty or convention between the United States and such foreign country, and does not and has not engaged in a trade or business in any foreign country. 2.33.16 There is no contract, agreement, plan or arrangement covering any employee or former employee or independent contractor or former independent contractor of any Company that, individually or collectively, could give rise to the payment by a Company of any amount that would not be deductible by reason of Section 162(a)(1) or Section 280G of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law). 2.33.17 The unpaid Taxes of each Company (A) do not 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 and (B) do 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.
Appears in 1 contract
Representations Regarding Taxes. For purposes of this Section 2.33, the “Companies” include any Predecessor of the Companies and/or any entity that at any time has been a Subsidiary of a Company):
2.33.1 Except as set forth on provided in Schedule 2.33.18.01 attached hereto, InterDent represents and warrants to Purchaser as follows:
(a) each Company Each of the Dental Practices, Sellers and DCA has duly and timely filed with the appropriate Tax authorities all Tax Returns that it was required to file; (b) all . All such Tax Returns were true, correct and complete and in all respects. All Taxes owed by each of the Companies Dental Practices, Sellers and DCA (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid to paid. None of the extent due Dental Practices, Sellers and payable; (c) no Company DCA is currently the beneficiary of any extension of time within which to file any Tax Return, nor has any Company waived the statute of limitation in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency; (d) each Company has maintained adequate provision for Taxes (excluding amounts deferred to take into account timing differences between book and tax) payable by such Company as of the Closing Date; (e) no . No claim has ever been made against any Seller, DCA or to the Knowledge of InterDent any Dental Practice by a Governmental Authority taxing authority in a jurisdiction where such Company that Seller, DCA or that Dental Practice does not currently file Tax Returns that such Company it is or may be subject to taxation by that jurisdiction; and (f) there . There are no Encumbrances liens on any of the assets of any Company Seller, DCA or to the Knowledge of InterDent any Dental Practice that arose in connection with any failure (or alleged failure) to pay any Tax, except for Encumbrances liens for Taxes not yet due. None of Sellers, DCA or to the Knowledge of InterDent, the Dental Practices, has entered into any closing agreement with any federal, state, local or foreign taxing authority.
2.33.2 (b) Each of the Dental Practices, Sellers and DCA 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 or otherwise accrued such tax on its respective balance sheet.
(c) There is no dispute or claim concerning any Tax liability of any Seller, DCA or, to the Knowledge of InterDent, any Dental Practice 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 any Seller or DCA has actual knowledge (after reasonable investigation) based upon personal contact with any agent of such taxing authority. Pursuant to Section 5.14, Sellers shall provide Purchaser a list of, to the extent available to InterDent, all Federal, state, local and foreign income Tax Returns filed with respect to each of the Dental Practices and Sellers for each taxable period ending on or after December 31, 1996 and with respect to DCA for each DCA Tax Period, indicates those Tax Returns that have been audited and indicates those Tax Returns that currently are the subject of audit or in respect of which any written or unwritten notice of any audit or examination has been received by any Seller, DCA or any Dental Practice. Except as set forth on Schedule 2.33.2the aforementioned list, there is no audit, examination, claim, assessment, levy, deficiency, administrative or judicial proceeding, lawsuit or refund action pending or threatened (either issue relating to Taxes has been raised in writing by a taxing authority during any pending audit or verbally, formally or informally) with respect to any Taxes for which any Company is or might otherwise be liable and no Governmental Authority has given notice (either in writing or verbally, formally or informally) of the commencement of any audit, examination or deficiency action with respect to any such Taxesexamination, and no issue has been relating to Taxes was raised in writing by a taxing authority in any auditcompleted audit or examination, examination or deficiency action by any Governmental Authority that could reasonably can be expected to result recur in the proposal or assertion of a Tax deficiency for another year not so examined.
2.33.3 Except as set forth on Schedule 2.33.3, no Tax Return of any later taxable period. Each of the Companies has been auditedDental Practices, or is currently the subject of audit. The Sellers have made available and DCA shall deliver to Buyer, Parent and/or their representatives Purchaser pursuant to Section 5.14 correct and complete copies of all of the Companies’ federal, foreign, state and local federal income Tax Returns, examination reports, reports and statements of deficiencies assessed against, against or agreed to by it in respect of any period described in the Companies since their formation. No Company second preceding sentence.
(d) None of the Dental Practices, Sellers and DCA has waived any statute of limitations in respect of Taxes or agreed to any extension of time relating to a Tax assessment or deficiency with respect to any Tax assessment which such waiver or deficiency. All private letter rulings and closing agreements issued by any taxing authority extension is still in effect.
(e) None of Sellers, DCA and, to the Companies (and Knowledge of InterDent, the Dental Practices has filed a consent under Section 341(f) of the Code concerning collapsible corporations. None of Sellers, DCA or, to the Knowledge of InterDent, the Dental Practices has made any corresponding ruling payments, is obligated to make any payments or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 2.33.3, and there are no pending requests for any such rulings (or corresponding determinations).
2.33.4 Except as set forth on Schedule 2.33.4, no Company is a party to any joint venture, partnership or other arrangement or contract agreement that under certain circumstances could obligate it to make any payments that will not be treated as a partnership for Federal income tax purposes. No Company has entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction. No Company has acquired nor does it own any assets that directly or indirectly secure any debt the interest on which is tax exempt deductible under Section 103 280G of the Code.
2.33.5 No Company . None of the property of any of any Seller, DCA or, to the Knowledge of InterDent, the Dental Practices is tax-exempt use property within the meaning of Section 168(h) of the Code. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices has 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. Each of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices has disclosed on its Federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices has received a tax opinion with respect to any transaction relating to it other than a transaction in the ordinary course of business. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices is the direct or indirect beneficiary of a guaranty of tax benefits or any other arrangement that has the same economic effect with respect to any transaction or tax opinion relating to it. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices is a party to an understanding or arrangement described in Section 6111(d) or Section 6662(d)(2)(C)(iii) of the Code. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices is a party to a lease arrangement involving a defeasance of rent, interest or principal. None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices is a party to any Tax allocation or sharing agreement. No Company Except for being a member of an Affiliated Group of which InterDent is the common parent, none of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices (i) has been a member of an Affiliated Group filing a consolidated Federal income Tax Return or (ii) has any liability for the Taxes of any Person under Treasury Regulation regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), whether as a transferee or successor, as a withholding agent or collection agent, by contract or otherwise.
2.33.6 International Vapor is, and has been at all times since its formation, an S corporation as defined in Sections 1361(a)(1(f) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date, and each of Beach Wellness, LLC , South Beach Smoke, Inc., and Vapor Zone, Inc., is, and has been at all times since its formation, either an S corporation as defined in Sections 1361(a)(1) of the Code or a “qualified subchapter S subsidiary” as defined in Sections 1361(b)(3) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of International Vapor’s election to be treated as an S-corporation, which was timely filed with the Internal Revenue Service and any other Governmental Authority, and the current qualified subchapter S subsidiary election for each of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc. has not been superseded by any subsequent filing. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of all elections of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc., to be treated as an S-corporation or a qualified subchapter S subsidiary, which were timely filed with the Internal Revenue Service and any other Governmental Authority, and have indicated whether each such election has been superseded by any subsequent filing. The Internal Revenue Service has not sent any correspondence to the Sellers or the Owners questioning the status of any of the Companies as an S corporation or a qualified subchapter S subsidiary. None of the Companies will be liable for any Tax under Section 1374 of the Code. None of the Companies has, in the ten years prior to the Closing Date, acquired assets from another corporation 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.
2.33.7 Buyer will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) cash basis method of accounting or percentage of completion method of accounting; (iv) an election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law); (v) prepaid amount or deferred revenue received on or prior to the Closing Date, (vi) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of Tax law) or (vii) any adjustment under Section 481(a) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof).
2.33.8 No Company has distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years, and the stock of any Company has not been distributed in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years.
2.33.9 No taxing authority is asserting or threatening to assert a claim against any Company under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.
2.33.10 Each Company has withheld and paid to the appropriate Governmental Authority all Taxes required to have been withheld and paid in connection with amounts allocable, paid or owing to any employee, independent contractor, creditor, member, partner, shareholder or other third party with respect to such Company. No Company has had a non-accountable expense reimbursement arrangement within the meaning of Treasury Regulation Section 1.62-2(c).
2.33.11 Each Company has collected all sales, use, value added and similar Taxes required to be collected, and has remitted, or will remit within the time and in the manner prescribed by Law, such amounts to the appropriate Governmental Authority and has furnished properly completed exemption certificates for all exempt transactions.
2.33.12 No Company is a foreign person within the meaning of Section 1445 of the Code.
2.33.13 No Company has entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Sections 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Tax Law). If any Company has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income tax within the meaning of Section 6662 of the Code, then it has either (i) substantial authority for the tax treatment of such transaction or (ii) disclosed on its Tax Return the relevant facts affecting the tax treatment of such transaction.
2.33.14 No Company is a stockholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign Law) and is not a stockholder in a “passive foreign investment company” within the meaning of Section 1297 of the Code.
2.33.15 No Company has or has ever had a permanent establishment in any foreign country as defined in any applicable Tax treaty or convention between the United States and such foreign country, and does not and has not engaged in a trade or business in any foreign country.
2.33.16 There is no contract, agreement, plan or arrangement covering any employee or former employee or independent contractor or former independent contractor of any Company that, individually or collectively, could give rise to the payment by a Company of any amount that would not be deductible by reason of Section 162(a)(1) or Section 280G of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law).
2.33.17 The unpaid Taxes of each Company of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices (Ai) do not 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 most recent balance sheet (rather than in any notes thereto) and (Bii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the its past custom and practice of the Company in filing its Tax Returns.
(g) None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices shall be required to include in a taxable period ending after the Closing Date taxable income attributable to income that accrued in a prior taxable period but was not recognized in any prior taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code or any comparable provision of state, local or foreign tax law.
(h) None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices is a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership or as a disregarded entity for Federal income tax purposes.
(i) None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices has entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 (or similar provisions of foreign law) or any safe harbor lease transaction.
(j) None of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices has ever been an S corporation (within the meaning of Section 1361(a)(1) of the Code).
(k) All material elections with respect to Taxes affecting any of Sellers, DCA or, to the Knowledge of InterDent, the Dental Practices are disclosed in or attached to a Tax Return of such Seller, DCA or such Dental Practice.
(l) No private letter rulings have been issued by the Internal Revenue Service to any of Sellers, DCA and, to the Knowledge of InterDent, the Dental Practices, (and any corresponding ruling or determination of any state, local or foreign taxing authority), and there are no pending requests for any such rulings (or corresponding determinations).
(m) The transfer of the Shares to Purchaser pursuant to the terms of this Agreement will not result in any Tax liability to DCA 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 DCA by reason or as a result of deferred intercompany transactions, excess loss accounts or otherwise (other than by reason of an election under Section 338(h)(10) of the Code).
(n) DCA has not been the distributing corporation or the controlled corporation with respect to a transaction described in Section 355 of the Code (without regard to Section 355(d) or Section 355(e) of the Code) within the three-year period prior to the date of this Agreement.
(o) For purposes of this Article VIII, any reference to "each of the Dental Practices, Sellers and DCA" (or any subset thereof and regardless of the order in which those defined terms appear) shall be deemed to include a reference to each Dental Practice, to each Seller or to DCA, individually and collectively, and to any Dental Practice, any Seller or DCA, individually or collectively, and any reference or any statement with respect to "none of the Dental Practices, Sellers and DCA" (or any subset thereof and regardless of the order in which those defined terms appear) shall be deemed to include a reference or a statement that is not true, correct or otherwise applicable with respect to any Dental Practice, any Seller or DCA, individually or collectively. References in this Article VIII to a "Dental Practice" shall be deemed to refer, as the context requires, to the entity that owns the Dental Practice, and references in this Article VIII to a Tax payable by a Dental Practice shall be deemed to refer, as the context requires, to a Tax payable by that entity (or any other person) in connection with the Dental Practice as well as any Tax in connection with any taxable period that began before the Closing Date for which the Purchaser or any Affiliate thereof could become liable. Any representation or agreement in this Article VIII regarding a Seller shall apply only to the extent that Purchaser or DCA or any of their Affiliates could be or become liable for any Tax for which a Seller might be liable regardless of the period in which the liability for the Tax arose or in which any event giving rise or otherwise affecting the amount of the Tax occurred. Any representation in this Article 8.01 relating to DCA shall relate only to those taxable periods (including any time within any such period and any event occurring within any such period) in respect of which a Seller prepared or caused to be prepared (or otherwise was responsible (as the common parent (or its equivalent) of an Affiliated Group or otherwise) for the preparation of) a Tax Return (whether or not preparation of the Tax Return occurred) or otherwise materially participated (or should have participated) in the computation of a Tax liability (whether or not a Tax Return was filed or was required to be filed), and any period (or portion of a period) subsequent to the last such period through the Closing Date (a "DCA Tax Period"), and any such representation shall not be considered to be incorrect to the extent it is based on information provided by DCA to the Sellers. Any representation in this Article 8.01 relating to any Dental Practice for any taxable period from August 28, 2000 shall not be considered to be incorrect to the extent it is based on information provided by DCA to the Sellers.
(p) As used in this Agreement, "Affiliated Group" means any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of state, local or foreign law; "Code" means the Internal Revenue Code of 1986, as amended; "Tax" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, and whether liability is imposed directly or pursuant to 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 (including, without limitation, any liability imposed by reason of any election under Section 338(g) or Section 338(h)(10) of the Code or any similar provision of state, local or foreign law), including any interest, penalty or addition thereto, whether disputed or not, and "Taxes" means any or all of the foregoing collectively; and "Tax Return" means any return, declaration, report, claim for refund or information return or statement relating to any Tax or Taxes, including any schedule or attachment thereto and including any amendment thereof.
Appears in 1 contract
Samples: Purchase Agreement (Interdent Inc)
Representations Regarding Taxes. For purposes of this Section 2.33Seller represents and warrants to and agrees with Buyer, except as would not have been or would not reasonably be expected to be material to the “Companies” include any Predecessor of Company and the Companies and/or any entity that at any time has been Division Entities, taken as a Subsidiary of a Company):
2.33.1 Except whole, and except as set forth on in Section 8.01 of the Seller Disclosure Schedule 2.33.1(it being understood, however, that no representation and warranty is deemed to be given with respect to, or to apply to any information, circumstances, events or other matters to the extent related to, the Seller Excluded Businesses or any inventory subject to the Consignment Agreement), that:
(a) Company and each Company of its Subsidiaries has duly and timely filed with the appropriate Tax authorities all Tax Returns that it was required to file; (b) all such Tax Returns were true, correct . All Taxes due and complete owed by the Company and all Taxes any of the Companies its Subsidiaries (whether or not shown on any Tax Return and whether or not any Tax Return was required) under applicable law have been paid to the extent due and payable; (c) no Company is the beneficiary of any extension of time within which to file any Tax Return, nor has any Company waived the statute of limitation in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency; (d) each Company has maintained adequate provision for Taxes (excluding amounts deferred to take into account timing differences between book and tax) payable by such Company as of the Closing Date; (e) no claim has ever been made by a Governmental Authority in a jurisdiction where such Company does not currently file Tax Returns that such Company is or may be subject to taxation by that jurisdiction; and (f) there paid. There are no Encumbrances liens on any of the assets of the Company or any Company of its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, except for Encumbrances liens for Taxes not yet duedue or which are reflected on the Acquisition Balance Sheet.
2.33.2 Except as set forth on Schedule 2.33.2, there is no audit, examination, claim, assessment, levy, deficiency, administrative or judicial proceeding, lawsuit or refund action pending or threatened (either in writing or verbally, formally or informallyb) with respect to any Taxes for which any The Company is or might otherwise be liable and no Governmental Authority has given notice (either in writing or verbally, formally or informally) of the commencement of any audit, examination or deficiency action with respect to any such Taxes, and no issue has been raised in any audit, examination or deficiency action by any Governmental Authority that could reasonably be expected to result in the proposal or assertion of a Tax deficiency for another year not so examined.
2.33.3 Except as set forth on Schedule 2.33.3, no Tax Return of any of the Companies has been audited, or is currently the subject of audit. The Sellers have made available to Buyer, Parent and/or their representatives correct and complete copies of all of the Companies’ federal, foreign, state and local Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by the Companies since their formation. No Company has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency. All private letter rulings and closing agreements issued by any taxing authority to the Companies (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 2.33.3, and there are no pending requests for any such rulings (or corresponding determinations).
2.33.4 Except as set forth on Schedule 2.33.4, no Company is a party to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for Federal income tax purposes. No Company has entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction. No Company has acquired nor does it own any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103 of the Code.
2.33.5 No Company is a party to any Tax allocation or sharing agreement. No Company has liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), whether as a transferee or successor, as a withholding agent or collection agent, by contract or otherwise.
2.33.6 International Vapor is, and has been at all times since its formation, an S corporation as defined in Sections 1361(a)(1) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date, and each of Beach Wellness, LLC , South Beach Smoke, Inc., and Vapor Zone, Inc., is, and has been at all times since its formation, either an S corporation as defined in Sections 1361(a)(1) of the Code or a “qualified subchapter S subsidiary” as defined in Sections 1361(b)(3) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of International Vapor’s election to be treated as an S-corporation, which was timely filed with the Internal Revenue Service and any other Governmental Authority, and the current qualified subchapter S subsidiary election for each of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc. has not been superseded by any subsequent filing. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of all elections of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc., to be treated as an S-corporation or a qualified subchapter S subsidiary, which were timely filed with the Internal Revenue Service and any other Governmental Authority, and have indicated whether each such election has been superseded by any subsequent filing. The Internal Revenue Service has not sent any correspondence to the Sellers or the Owners questioning the status of any of the Companies as an S corporation or a qualified subchapter S subsidiary. None of the Companies will be liable for any Tax under Section 1374 of the Code. None of the Companies has, in the ten years prior to the Closing Date, acquired assets from another corporation 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.
2.33.7 Buyer will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) cash basis method of accounting or percentage of completion method of accounting; (iv) an election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law); (v) prepaid amount or deferred revenue received on or prior to the Closing Date, (vi) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of Tax law) or (vii) any adjustment under Section 481(a) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof).
2.33.8 No Company has distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years, and the stock of any Company has not been distributed in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years.
2.33.9 No taxing authority is asserting or threatening to assert a claim against any Company under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.
2.33.10 Each Company Subsidiaries has withheld and paid to the appropriate Governmental Authority applicable taxing authority all Taxes required to have been withheld and paid by it in connection with amounts allocable, paid or owing to any employee, independent contractor, creditor, member, partner, shareholder or member or other third party in accordance with respect applicable law.
(c) There is no dispute, claim, deficiency or proposed adjustment concerning any Tax liability of the Company or any of its Subsidiaries claimed, raised, asserted, assessed or threatened by any taxing authority, in each case, in writing.
(d) Neither the Company nor any of its Subsidiaries is a party to such Company. No any Tax allocation or sharing agreement.
(e) The Company has had not elected to be classified as an association taxable as a non-accountable expense reimbursement arrangement within the meaning of corporation pursuant to Treasury Regulation Section 1.62301.7701-2(c)3. The Company has, at all times since its formation, been treated as either an entity disregarded from its owner or as a partnership for federal income tax purposes.
2.33.11 Each (f) Section 8.01(f) of the Seller Disclosure Schedule sets forth all foreign jurisdictions in which the Company or any of its Subsidiaries is Tax resident, is engaged in business or has a permanent establishment. The Company has collected all sales, use, value added and similar Taxes required not entered into a gain recognition agreement pursuant to Treasury Regulation Section 1.367(a)-8. The Company has not transferred an intangible asset the transfer of which would be collected, and has remitted, or will remit within the time and in the manner prescribed by Law, such amounts subject to the appropriate Governmental Authority and has furnished properly completed exemption certificates for all exempt transactions.
2.33.12 No Company is a foreign person within the meaning rules of Section 1445 367(d) of the Code.
2.33.13 (g) No Company Subsidiary is, or at any time has entered into any transaction identified as been, a “reportable transaction” for purposes of Treasury Regulations Sections 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Tax Law). If any Company has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income tax within the meaning of Section 6662 of the Code, then it has either (i) substantial authority for the tax treatment of such transaction or (ii) disclosed on its Tax Return the relevant facts affecting the tax treatment of such transaction.
2.33.14 No Company is a stockholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign Law) and is not a stockholder in a “passive foreign investment company” company within the meaning of Section 1297 of the Code.
2.33.15 No (h) Neither the Company nor any of its Subsidiaries has or has ever had a permanent establishment participated in any foreign country as defined in any applicable Tax treaty or convention between reportable transaction within the United States and such foreign country, and does not and has not engaged in a trade or business in any foreign country.
2.33.16 There is no contract, agreement, plan or arrangement covering any employee or former employee or independent contractor or former independent contractor meaning of any Company that, individually or collectively, could give rise to the payment by a Company of any amount that would not be deductible by reason of Code Section 162(a)(1) or Section 280G of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law6707A(c)(1).
2.33.17 The unpaid (i) From the Balance Sheet Date to the date hereof, neither the Company nor any of the Division Entities has, other than in the ordinary course of business or as required by applicable Legal Requirements or as is consistent with past practice for such entity, made any elections with respect to Taxes or amended any material Tax Return, provided, however, that this Section 8.01(i) shall not apply to any Tax Return (whether separate, affiliated, consolidated, combined, unitary or otherwise) that includes Seller or any of each its Affiliates (other than a Tax Return that includes solely the Company or any of its Subsidiaries) or any election with respect thereto, unless such election affected only the Company or any of its Subsidiaries.
(Aj) do not exceed Seller has no current plan or intention of causing the reserve 1% Holder to liquidate or transfer its membership interests in the Company to Seller (or an entity treated as disregarded from Seller) for federal income tax purposes or of causing the 1% Holder to cease being treated as a corporation (or an entity treated as a corporation for federal income tax purposes).
(k) As used in this Agreement, “Code” means the Internal Revenue Code of 1986, as amended; “Tax” means any Federal, state, local, foreign or other income, gross receipts, payroll, employment, withholding, social security (or similar), unemployment, real property, personal property, environmental, excise, sales, or use or other tax, including any interest, penalty or addition thereto, whether disputed or not, it being understood that the foregoing will include any transferee or secondary liability for a Tax and any liability for Tax liability assumed or arising as a result of having been a member of any affiliated, combined, consolidated, unitary, or other group (rather than or being included or required to be included in any reserve for deferred Taxes established to reflect timing differences between book Tax Return relating thereto) or as a result of any Tax indemnity, Tax sharing, Tax allocation or similar contract or arrangement and Tax income) set forth on the face “Taxes” means any or all of the Most Recent Balance Sheet foregoing collectively; and (B) do not exceed “Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto and including any amendment thereof. It is agreed and understood that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of no representation or warranty is made by Seller or the Company in filing its respect of Tax Returnsmatters in any Section of this Agreement other than in this Section 8.01, and other than in Section 3.07 with respect to employee benefit matters.
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Representations Regarding Taxes. For purposes of this Section 2.333.9, the “CompaniesParent” include includes any Predecessor of the Companies Parent and/or any entity that at any time has been a Subsidiary of a Companythe Parent, including the Buyer):
2.33.1 3.9.1 Except as set forth on Schedule 2.33.13.9.1, (a) each Company Parent has duly and timely filed with the appropriate Tax authorities all Tax Returns it was required to file; (b) all such Tax Returns were true, correct and complete and all Taxes of the Companies Parent (whether or not shown on any Tax Return and whether or not any Tax Return was required) have been paid to the extent due and payable; (c) no Company Parent is not the beneficiary of any extension of time within which to file any Tax Return, nor has any Company Parent waived the statute of limitation in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency; (d) each Company Parent has maintained adequate provision for Taxes (excluding amounts deferred to take into account timing differences between book and tax) payable by such Company Parent as of the Closing Date; (e) no claim has ever been made by a Governmental Authority in a jurisdiction where such Company Parent does not currently file Tax Returns that such Company Parent is or may be subject to taxation by that jurisdiction; and (f) there are no Encumbrances on any of the assets of any Company the Parent that arose in connection with any failure (or alleged failure) to pay any Tax, except for Encumbrances for Taxes not yet due.
2.33.2 3.9.2 Except as set forth on Schedule 2.33.23.9.2, there is no audit, examination, claim, assessment, levy, deficiency, administrative or judicial proceeding, lawsuit or refund action pending or threatened (either in writing or verbally, formally or informally) with respect to any Taxes for which any Company Parent is or might otherwise be liable and no Governmental Authority has given notice (either in writing or verbally, formally or informally) of the commencement of any audit, examination or deficiency action with respect to any such Taxes, and no issue has been raised in any audit, examination or deficiency action by any Governmental Authority that could reasonably be expected to result in the proposal or assertion of a Tax deficiency for another year not so examined.
2.33.3 3.9.3 Except as set forth on Schedule 2.33.33.9.3, no Tax Return of any of the Companies has been audited, or is currently the subject of audit. The Sellers have made available to Buyer, Parent and/or their representatives correct and complete copies of all of the Companies’ federal, foreign, state and local Tax Returns, examination reports, and statements of deficiencies assessed against, or agreed to by the Companies since their formation. No Company has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency. All private letter rulings and closing agreements issued by any taxing authority to the Companies Parent (and any corresponding ruling or determination of any state, local or foreign taxing authority) have been disclosed on Schedule 2.33.33.9.3, and there are no pending requests for any such rulings (or corresponding determinations).
2.33.4 3.9.4 Except as set forth on Schedule 2.33.43.9.4, no Company Parent 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. No Company Parent has not entered into any sale leaseback or leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 2001-28 (or similar provisions of foreign Law) or any safe harbor lease transaction. No Company Parent has not acquired nor does it own any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103 of the Code.
2.33.5 No Company 3.9.5 Except as set forth on Schedule 3.9.5, Parent is not a party to any Tax allocation or sharing agreement. No Company Parent has no liability for the Taxes of any Person Person, other than its Affiliates, under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), whether as a transferee or successor, as a withholding agent or collection agent, by contract or otherwise.
2.33.6 International Vapor is, and has been at all times since its formation, an S corporation as defined in Sections 1361(a)(1) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date, and each of Beach Wellness, LLC , South Beach Smoke, Inc., and Vapor Zone, Inc., is, and has been at all times since its formation, either an S corporation as defined in Sections 1361(a)(1) of the Code or a “qualified subchapter S subsidiary” as defined in Sections 1361(b)(3) of the Code for federal and state income tax purposes and will retain such status up to and including the Closing Date. The Sellers have made available to the Buyer, 3.9.6 Parent and/or their representatives a copy of International Vapor’s election to be treated as an S-corporation, which was timely filed with the Internal Revenue Service and any other Governmental Authority, and the current qualified subchapter S subsidiary election for each of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc. has not been superseded by any subsequent filing. The Sellers have made available to the Buyer, Parent and/or their representatives a copy of all elections of Beach Wellness, LLC, South Beach Smoke, Inc., and Vapor Zone, Inc., to be treated as an S-corporation or a qualified subchapter S subsidiary, which were timely filed with the Internal Revenue Service and any other Governmental Authority, and have indicated whether each such election has been superseded by any subsequent filing. The Internal Revenue Service has not sent any correspondence to the Sellers or the Owners questioning the status of any of the Companies as an S corporation or a qualified subchapter S subsidiary. None of the Companies will be liable for any Tax under Section 1374 of the Code. None of the Companies has, in the ten years prior to the Closing Date, acquired assets from another corporation 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.
2.33.7 Buyer will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of any taxable period) after the Closing Date as a result of any (i) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law); (ii) installment sale or open transaction disposition occurring on or prior to the Closing Date; (iii) cash basis method of accounting or percentage of completion method of accounting; (iv) an election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law); (v) prepaid amount or deferred revenue received on or prior to the Closing Date, (vi) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of Tax law) or (vii) any adjustment under Section 481(a) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) by reason of a change in accounting method or otherwise for any taxable period (or portion thereof).
2.33.8 No Company has distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years, and the stock of any Company Parent has not been distributed in a transaction satisfying the requirements of Section 355 of the Code within the last five (5) years.
2.33.9 3.9.7 No taxing authority is asserting or threatening to assert a claim against any Company Parent under or as a result of Section 482 of the Code or any similar provision of any foreign, state or local Tax law.
2.33.10 Each Company 3.9.8 Parent has withheld and paid to the appropriate Governmental Authority all Taxes required to have been withheld and paid in connection with amounts allocable, paid or owing to any employee, independent contractor, creditor, member, partner, shareholder or other third party with respect to such CompanyParent. No Company Parent has not had a non-accountable expense reimbursement arrangement within the meaning of Treasury Regulation Section 1.62-2(c).
2.33.11 Each Company 3.9.9 Parent has collected all sales, use, value added and similar Taxes required to be collected, and has remitted, or will remit within the time and in the manner prescribed by Law, such amounts to the appropriate Governmental Authority and has furnished properly completed exemption certificates for all exempt transactions.
2.33.12 No Company is a foreign person within the meaning of Section 1445 of the Code.
2.33.13 No Company 3.9.10 Parent has not entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Sections 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Tax Law). If any Company Parent has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income tax within the meaning of Section 6662 of the Code, then it has either (i) substantial authority for the tax treatment of such transaction or (ii) disclosed on its Tax Return the relevant facts affecting the tax treatment of such transaction.
2.33.14 No Company 3.9.11 Parent is not a stockholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign Law) and is not a stockholder in a “passive foreign investment company” within the meaning of Section 1297 of the Code.
2.33.15 No Company 3.9.12 Parent does not have nor has or has it ever had a permanent establishment in any foreign country as defined in any applicable Tax treaty or convention between the United States and such foreign country, and does not and has not engaged in a trade or business in any foreign country.
2.33.16 3.9.13 There is no contract, agreement, plan or arrangement covering any employee or former employee or independent contractor or former independent contractor of any Company Parent that, individually or collectively, could give rise to the payment by a Company Parent of any amount that would not be deductible by reason of Section 162(a)(1) or Section 280G of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law).
2.33.17 3.9.14 The unpaid Taxes of each Company Parent (A) do not 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 balance sheet of the Parent as of March 31, 2014 and (B) do 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 Parent in filing its Tax Returns.
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