CONTRIBUTION AND SHARE PURCHASE AGREEMENT

Exhibit 2.1

EXECUTION VERSION

CONTRIBUTION

AND

SHARE PURCHASE AGREEMENT

by and among

PANTHER II TRANSPORTATION, INC.

PTHR HOLDINGS, INC.

PANTHER ACQUISITION, INC.

and

THE SHAREHOLDERS NAMED HEREIN

Dated as of May 22, 2005

Table of Contents

 

 

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CONTRIBUTION AND SHARE PURCHASE AGREEMENT

This CONTRIBUTION AND SHARE PURCHASE AGREEMENT (“ Agreement ”) is made and entered into this 22nd day of May, 2005, by and among Panther II Transportation, Inc., an Ohio corporation (the “ Company ”), PTHR Holdings, Inc. a Delaware corporation (“ Holdings ”), Panther Acquisition, Inc., an Ohio corporation (the “ Purchaser ”) and Ellen A. Amato, as trustee of the Amato FLIT Trust U/A/D 12/31/03 (the “ Amato FLIT ”), Craig T. Amato (“ Amato ”), individually and as trustee of the 1999 Craig T. Amato Grantor Retained Annuity Trust (the “ GRAT ” and together with the Amato FLIT, the “ Amato Trusts ”) and Daniel K. Sokolowski (“ Sokolowski ”), individually and as trustee of the Daniel K. Sokolowski Revocable Trust U/A/D 2/16/98 (the “ Sokolowski Revocable Trust ”) (Amato, the Amato Trusts, Sokolowski and the Sokolowski Revocable Trust are sometimes collectively referred to herein as the “ Shareholders ”).

RECITALS

WHEREAS, the Company provides ground expedite and for charter services (the “ Business ”) through its distribution centers in Medina, Ohio, Toledo, Ohio, Chicago, Illinois and Charlotte, North Carolina;

WHEREAS, Holdings owns 100% of the issued and outstanding capital stock of the Purchaser;

WHEREAS, the Shareholders are the record and beneficial owners of all of the outstanding shares of capital stock of the Company which consist of 1,010 shares of Class A no par voting shares and 9,090 shares of class B no par common nonvoting shares (the “ Shares ”);

WHEREAS, Amato or Members of the Immediate Family of Amato are beneficiaries of the Amato Trusts and whereas, by virtue of such interest in the Amato Trusts, Amato will benefit from payment of the Total Purchase Price, and the other covenants and agreements of the Purchaser, pursuant to this Agreement;

WHEREAS, Sokolowski or Members of the Immediate Family of Sokolowski are beneficiaries of the Sokolowski Revocable Trust and whereas, by virtue of such interest in the Sokolowski Revocable Trust will benefit from the payment of the Total Purchase Price, and the other covenants and agreements of the Purchaser, pursuant to this Agreement;

WHEREAS, on the date hereof, Fenway Partners Capital Fund II, L.P. and the Shareholders are entering into a Limited Guaranty in the form attached hereto as Exhibit A .

WHEREAS, the Sokolowski Revocable Trust (the “ Rollover Shareholder ”) desires to contribute the Shares set forth on Schedule A hereto (the “ Rollover Shares ”) to Holdings in exchange for shares of common stock, $0.01 par value, of Holdings (the “ Holdings Common Stock ”) and shares of 12% Cumulative Preferred Stock, $0.01 par value, of Holdings (the “ Holdings Preferred Stock ” and together with the Holdings Common Stock the “ Holdings Stock ”) as set forth on Schedule A hereto (the “ Stock Consideration ”) and, immediately thereafter, Holdings desires to cause the contribution of the Rollover Shares to the Purchaser (such transactions, collectively, the “ Rollover ”);

WHEREAS, the Purchaser desires to purchase from the Shareholders, and the Shareholders desire to sell to the Purchaser, all of the Shares owned by the Shareholders other than the Rollover Shares (the “ Purchased Shares ”) upon the terms and conditions set forth in this Agreement;

WHEREAS, prior to the contribution of the Rollover Shares to Holdings, Fenway Panther Holdings, LLC (the “ Holdings Shareholder ”) proposes to contribute approximately $76,000,000 to the capital of Holdings (the “ Holdings Contribution ”), which will in turn be contributed by Holdings to the Purchaser, in order to finance, in part, the purchase of the Purchased Shares and, immediately following the Holdings Contribution and the Rollover, the Holdings Shareholder and the Rollover Shareholder shall beneficially own not less than 90% of each class of outstanding shares of capital stock of Holdings;

WHEREAS, the contribution of the Rollover Shares to Holdings that is contemplated by this Agreement is intended to qualify as tax-free under Section 351 of the Code to the extent permitted under applicable law; and

WHEREAS, certain capitalized terms used in this Agreement are defined in Section 1.1 of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained herein, the Parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1 Defined Terms . When used in this Agreement, the following terms shall have the meanings set forth below:

“ Accounting Standards ” has the meaning set forth in Section 2.6(a).

“ Affiliate ” means with respect to any specified Person (i) a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person, including each Subsidiary of such specified Person (including, in the case of the Company and its Subsidiary, their respective shareholders, directors, officers and employees), (ii) a Member of the Immediate Family of any of the foregoing Persons and (iii) each Affiliate (as defined in clauses (i) and (ii) above) of each of the foregoing Persons described in clauses (i) and (ii) above). For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through ownership of voting securities or by contract, credit arrangement or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agreement ” has the meaning set forth in the preamble.

 

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“ Alternative Transaction ” means, with respect to the Company and its Subsidiary, any transaction or series of related transactions involving (a) the sale of all or substantially all of the assets of the Company and its Subsidiary, (b) the sale of Shares of the Company or its Subsidiary, (c) a merger, consolidation, recapitalization or similar transaction involving the Company or its Subsidiary or (d) any similar transaction or alternative to the transactions contemplated hereby.

“ Amato ” has the meaning set forth in the preamble.

“ Amato FLIT ” has the meaning set forth in the preamble.

“ Amato Trusts ” has the meaning set forth in the preamble.

“ Balance Sheet Date ” means December 31, 2004.

“ Breach ” means any inaccuracy in or breach of, or any failure to perform or comply with, a representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement.

“ Business ” has the meaning set forth in the Recitals.

“ Business Day ” shall mean any day of the year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in New York, New York.

“ Cash Purchase Price ” has the meaning set forth in Section 2.4(a).

“ Closing ” has the meaning set forth in Section 2.3.

“ Closing Balance Sheet ” has the meaning set forth in Section 2.6(c).

“ Closing Date ” has the meaning set forth in Section 2.3.

“ Closing Debt Payment Amount ” has the meaning set forth in Section 2.4(b)(2).

“ Closing Payment Certificate ” has the meaning set forth in Section 2.4(c).

“ Closing Reserve Amount ” has the meaning set forth in Section 2.7(c).

“ Code ” means the United States Internal Revenue Code of 1986, as amended.

“ Commitment Letter ” has the meaning set forth in Section 5.5.

“ Company ” has the meaning set forth in the preamble.

“ Company Benefit Plans ” means all Employee Benefit Plans sponsored, contributed to or maintained by the Company or its Subsidiary for the benefit of current or former employees of the Company or its Subsidiary or with respect to which the Company or its Subsidiary could reasonably be expected to have any liability (contingent or otherwise).

 

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“ Company Disclosure Schedule ” means the Disclosure Schedule delivered by the Company to Purchaser simultaneously with the execution and delivery of this Agreement.

“ Company Intellectual Property ” means Company Software and all other Intellectual Property used in the conduct of the business of the Company or its Subsidiary.

“ Company Material Adverse Effect ” means any change in or effect on the business, results of operations or condition (financial or otherwise) of the Company that has had, or would reasonably be expected to have, a material adverse effect on the business, results of operations or condition (financial or otherwise) of the Company and its Subsidiary, taken as a whole.

“ Company Software ” means Owned Software and Licensed Software.

“ Company Tax Return ” has the meaning set forth in Section 8.8(b)(3).

“ Confidentiality Agreement ” has the meaning set forth in Section 8.1.

“ Contract ” means any written or oral note, bond, mortgage, indenture, lease, contract, agreement, obligation or commitment.

“ Current Insurance Policies ” has the meaning set forth in Section 3.17.

“ D&O Indemnitee ” has the meaning set forth in Section 7.1(a).

“ Debt ” means all obligations (including all obligations in respect of principal, accrued interest, penalties, fees and premiums) (a) for borrowed money (including overdraft facilities), (b) evidenced by notes, bonds, debentures or similar contractual obligations, (c) for the deferred purchase price of property, goods or services (other than trade payables or accruals incurred in the Ordinary Course of Business), (d) under capital leases (in accordance with GAAP), (e) in respect of letters of credit and bankers’ acceptances, (f) for contractual obligations relating to interest rate protection, swap agreements and collar agreements and (g) in the nature of guarantees of the obligations described in clauses (a) through (f) above of any other Person or entity. For the avoidance of doubt, Debt does not include any Liabilities of the Company relating to payments made in escrow to the Company by owner operators with respect to the Qualcomm equipment and insurance premiums and interest thereon, which are each included in the definition of Working Capital as accounts payable insurance, Qualcomm escrow account and accrued escrow interest, as the case may be.

“ Dispute Notice ” has the meaning set forth in Section 2.6(d).

“ Employee Benefit Plan ” means each plan, program, policy, payroll practice, contract, agreement or other arrangement, whether or not subject to ERISA, whether formal or informal, oral or written, providing for compensation, severance, termination pay, performance awards, profit sharing, bonus stock option, stock purchase, restricted stock, equity-based compensation, deferred compensation, change-in-control, pension, retirement, medical, dental, life insurance, disability, education reimbursement, vacation, sick pay, paid time off, fringe benefits or other

 

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employee benefits of any kind, including, without limitation, each “employee benefit plan”, within the meaning of Section 3(3) of ERISA.

“ Environmental Laws ” means any law, regulation, or other applicable requirement relating to: (a) releases or threatened release of a Hazardous Substance; (b) pollution or protection of employee health or safety, public health or the environment; or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Substances.

“ Environmental Matters ” means any matters arising out of or relating to health and safety, or pollution or protection of the environment or workplace, including, without limitation, any of the foregoing relating to the use, generation, transport, treatment, storage, or disposal of any Hazardous Substances.

“ Environmental Permits ” has the meaning set forth in Section 3.14(b).

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Estimated Closing Balance Sheet ” has the meaning set forth in Section 2.6(a).

“ Estimated Closing Reserve Amount ” has the meaning set forth in Section 2.7(a).

“ Estimated Working Capital Statement ” has the meaning set forth in Section 2.6(a).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Financin g” has the meaning set forth in Section 5.5.

“ Final Working Capital Statement ” has the meaning set forth in Section 2.6(e).

“ Financial Statements ” means the audited balance sheet, statement of income and statement of shareholders equity for the Company for the years ended December 31, 2002 (on a tax-accounting basis) and December 31, 2003 and December 31, 2004 (each on a GAAP-accounting basis) and the unaudited balance sheet dated as of March 31, 2005 and the statement of income and statement of shareholders equity for the period ended March 31, 2005.

“ Fusion ” has the meaning set forth in Section 9.3(m)(1).

“ GAAP ” means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.

“ Governmental Entity ” means any government or any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, federal, state, local or foreign.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity.

 

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“ GRAT ” has the meaning set forth in the preamble.

“ Hazardous Substance ” means any pollutant, contaminant or toxic or hazardous material (including toxic mold), substance or waste, or petroleum or any fraction thereof.

“ Holdings ” has the meaning set forth in the preamble.

“ Holdings Common Stock ” has the meaning set forth in the Recitals.

“ Holdings Contribution ” has the meaning set forth in the Recitals.

“ Holdings Preferred Stock ” has the meaning set forth in the Recitals.

“ Holdings Shareholder ” has the meaning set forth in the Recitals.

“ Holdings Stock ” has the meaning set forth in the Recitals.

“ HSR Act ” has the meaning set forth in Section 3.4.

“ Insurance Policies ” has the meaning set forth in Section 3.17.

“ Intellectual Property ” means all embodiments of, and the entire right, title and interest in and to all proprietary rights of every kind and nature in, including all rights and interests pertaining to or deriving from, any of: (i) patents, copyrights, mask work rights, technology, know-how, processes, trade secrets, algorithms, inventions, works, proprietary data, databases, formulae, research and development data and Software; (ii) trademarks, trade names, service marks, service names, brands, trade dress and logos, and the goodwill associated therewith; (iii) domain names, rights of privacy and publicity, moral rights, and proprietary rights of any kind or nature, however denominated, throughout the world in all media now known or hereafter created; and (iv) any and all registrations, applications, recordings, licenses, common-law rights and Contracts relating to any of the foregoing.

“ IRS ” means the Internal Revenue Service.

“ knowledge of the Company ” means the actual knowledge after due inquiry of Craig T. Amato, Daniel K. Sokolowski, John Sliter, Ed Wadel and Rick Buffington.

“ Liabilities ” means any and all debts, liabilities, losses, costs, expenses and damages, including those arising under any law, Proceeding or Governmental Order and those arising under any Contract.

“ Licensed Software ” means all Software that is owned by any third party and that is licensed to and used by the Company or its Subsidiary in the conduct of their businesses, excluding any off-the-shelf shrink wrapped or click-wrap software other than open source software.

“ Lien ” means any charge, claim, community or other marital property interest, condition, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way,

 

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easement, encroachment, servitude, right of first offer or first refusal, buy/sell agreement and any other restriction or covenant with respect to, or condition governing the use, construction, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

“ Material Contracts ” has the meaning set forth in Section 3.12.

“ Members of the Immediate Family ” means, with respect to any individual, (a) such individual’s spouse, (b) each parent, brother, sister or child of such individual or such individual’s spouse, (c) the spouse of any Person described in clause (b) above, (d) each child of any Person described in clauses (a), (b) or (c) above, (e) each trust created solely for the benefit of one or more of the Persons described in clauses (a) through (d) above and (f) each custodian or guardian of any property of one or more of the Persons described in clauses (a) through (e) above in his capacity as such custodian or guardian.

“ OGCL ” means the Ohio General Corporation Law.

“ Ordinary Course of Business ” means an action taken by any Person in the ordinary course of such Person’s business which is consistent with the past customs and practices of such Person (including past practice with respect to quantity, amount, magnitude and frequency, standard employment and payroll policies and past practice with respect to management of working capital) which is taken in the ordinary course of the normal day-to-day operations of such Person.

“ Organizational Documents ” has the meaning set forth in Section 3.1.

“ Other Filings ” means any filings required to be filed by the Company or Purchaser with any Governmental Entity under the Securities Act, the Exchange Act, any stock exchange rule or any other federal, state, local or foreign laws in connection with the transactions contemplated hereby other than HSR Act.

“ Owned Software ” means all Software used by the Company and its Subsidiary in the conduct of their businesses that is owned or purported to be owned by the Company or its Subsidiary.

“ Panther II ” has the meaning set forth in Section 3.1.

“ Party ” means Company, Purchaser, Holdings, the Shareholders’ Representative, or any Shareholder as the case may be.

“ Per Share Consideration ” means an amount equal to (A) the Total Purchase Price less the sum of the amounts payable pursuant to Section 2.4(b)(1)(A) and 2.4(b)(1)(B) divided by (B) the aggregate number of Shares issued and outstanding on the Closing Date.

“ Permit ” means any license, franchise, permit, consent, concession, order, approval, authorization or registration from, of or with a Governmental Entity.

 

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“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies not yet delinquent or the amount or validity of which is being challenged in good faith by appropriate proceedings and for which adequate reserves are maintained on the financial statements of the Company and its Subsidiary as of the Closing Date; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other similar liens arising in the Ordinary Course of Business securing obligations that are not overdue or which are being contested in good faith by appropriate proceedings (and for which adequate reserves are maintained on the financial statements of the Company and its Subsidiary as of the Closing Date in conformity with GAAP); (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the Ordinary Course of Business, (e) all survey exceptions and matters of record, including, without limitation, UCC financing statements, mortgages, easements, reciprocal easement agreements and other encumbrances on title to real property, (f) all applicable zoning, entitlement, conservation restrictions and other land use and environmental regulations and (g) all exceptions, restrictions, easements, charges, rights-of-way and other Liens set forth in any Permits, Governmental Orders or any law, regulation or ordinance of any Governmental Entity applicable to the Company or its Subsidiary or any of their respective properties.

“ Person ” means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a Governmental Entity.

“ Pre-Closing Period ” means any Taxable Period ending on or before the Closing Date.

“ Pro Rata Share ” means, with respect to any Shareholder, a percentage equal to the quotient of (i) the number of Shares owned by such Shareholder divided by (ii) the aggregate number of Shares outstanding, in each case as of the date hereof and as of immediately prior to the Closing as set forth in Section 3.2(a) of the Company Disclosure Schedule.

“ Proceeding ” means any claim, action, cause of action or suit (whether in contract or tort or otherwise), litigation (whether at law or in equity, whether civil or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding to, from, by or before any Governmental Authority.

“ Purchased Shares ” has the meaning set forth in the Recitals.

“ Purchaser ” has the meaning set forth in the preamble.

“ Purchaser Parties ” has the meaning set forth in Article V.

“ Real Property ” means the real property leased by the Company or its Subsidiary, as tenant, together with, to the extent leased by the Company or its Subsidiary, all buildings and other structures, facilities or improvements currently located thereon, all fixtures, systems and equipment attached or appurtenant thereto.

 

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“ Reserve Deductio n” has the meaning set forth in Section 2.7(b).

“ Retention Period ” has the meaning set forth in Section 8.8(h).

“ Rollover ” has the meaning set forth in the Recitals.

“ Rollover Shares ” has the meaning set forth in the Recitals.

“ Rollover Shareholder ” has the meaning set forth in the Recitals.

“ S Corporate Return ” has the meaning set forth in Section 8.8(b)(1).

“ Scheduled Intellectual Property ” has the meaning set forth in Section 3.11(a).

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Shares ” has the meaning set forth in the Recitals.

“ Shareholders ” has the meaning set forth in the preamble.

“ Shareholders’ Representative ” means Sokolowski and Amato, acting jointly, as representative for the Shareholders.

“ Software ” means computer software or firmware in any form, including but not limited to computer instructions, commands, programs, modules, routines, procedures, rules, libraries, macros, algorithms, tools, and scripts, and all documentation of or for any of the foregoing.

“ Sokolowski ” has the meaning set forth in the preamble.

“ Sokolowski Revocable Trust ” has the meaning set forth in the preamble.

“ Stock Consideration ” has the meaning set forth in the Recitals.

“ Straddle Period ” means any Taxable Period that begins before and ends after the Closing Date.

“ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, joint venture, or other legal entity of which such Person owns, directly or indirectly (including through or together with any other Subsidiary), more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

“ Tax ” means any net income, gains, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, withholding, payroll, employment, excise, severance, stamp, capital stock, occupation, property, environmental or windfall profits tax, or other like assessment or charge of any kind whatsoever,

 

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together with any interest, penalty, addition to tax or additional amount imposed by any tax authority responsible for the imposition of any such tax (domestic or foreign).

“ Tax Controversy ” has the meaning set forth in Section 8.8(g).

“ Tax Return ” means any return, declaration or information return relating to Tax, including any schedule or attachment thereto, and including any amendment thereto, required to be filed with any tax authority.

“ Taxable Period ” means any taxable year or any other period that is treated as a taxable year (or other period, in the case of a Tax imposed with respect to such other period; e.g., a quarter) (including a Straddle Period) with respect to which any Tax may be imposed under any applicable statute, rule or regulation.

“ Termination Date ” means July 14, 2005.

“ Total Purchase Price ” has the meaning set forth in Section 2.4(a).

“ Transaction Expenses ” means the fees and expenses of the Company, its Subsidiary and the Shareholders incurred in connection with the negotiation and the consummation of the transactions contemplated hereby that have not been paid prior to the Closing.

“ Transfer Taxes ” has the meaning set forth in Section 2.5.

“ Working Capital ” means the current assets of the Company (consisting of the cash and cash equivalents, prepaid truck insurance, Panther employee advance, employee advance, advances-comcheck, accounts receivable (net of allowance for doubtful accounts), and accounts receivable - fuel surcharge line item accounts set forth on Schedule 2.6(a)(3)) less the current liabilities of the Company (consisting of the accounts payable - operations, accounts payable - insurance, Qualcomm escrow account, accrued escrow interest, accrued franchise tax, accrued pension/profit sharing, accrued personal property taxes, unrendered services - brokers, accrued wages, fuel surcharge payable, bank overdraft and accrued income taxes line item accounts set forth on Schedule 2.6(a)(3)), in each case as determined in accordance with the Accounting Standards. For the avoidance of doubt, none of (i) the IBNR insurance accrual, (ii) the current portion of Debt paid pursuant to Section 2.4(b)(2) or (iii) Transaction Expenses paid pursuant to Section 2.4(b)(1)(A), will be treated as a current liability for purposes of the definition or calculation of Working Capital.

“ Working Capital Referee ” has the meaning set forth in Section 2.6(e).

“ Working Capital Statemen t” has the meaning set forth in Section 2.6(c).

“ Zurich ” means Zurich American Insurance Company.

Section 1.2 Interpretation . Meanings specified in this Agreement shall be applicable to both the singular and plural forms of such terms and to the masculine, feminine and neuter genders, as the context requires and the words “include”, “includes” or “including” shall be deemed to be followed by the words “without limitation”. In the event an ambiguity or question

 

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of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

ARTICLE II.

PURCHASE AND SALE OF SHARES

Section 2.1 Contribution of Rollover Shares . At the Closing, subject to the terms and conditions of this Agreement, the Rollover Shareholder will contribute to Holdings the Rollover Shares held by such Rollover Shareholder free and clear of all Liens, accompanied by certificates evidencing such Rollover Shares duly endorsed (or accompanied by duly executed stock transfer powers), and Holdings will accept from the Rollover Shareholder, all of the Rollover Shares. At the Closing, as consideration for the Rollover Shares, Holdings will issue to the Rollover Shareholder certificates representing the Stock Consideration, to which the parties assign an aggregate value of $11,000,000.

Section 2.2 Purchase and Sale of Purchased Shares . Subject to compliance with all the terms and conditions of this Agreement and in reliance on the representations, warranties and covenants set forth herein, the Shareholders will sell, transfer and deliver to the Purchaser, and the Purchaser will purchase from the Shareholders free and clear of all Liens, all of the Purchased Shares in exchange for the Cash Purchase Price (as defined below).

Section 2.3 The Closing . Unless this Agreement is sooner terminated as provided in Article X, upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “ Closing ”) shall take place at the offices of Dorsey & Whitney, LLP, 250 Park Avenue, New York, New York at a mutually convenient time on the later to occur of (i) June 9, 2005 and (ii) the date that is three Business Days following the satisfaction of the conditions set forth in Article IX, or at such other time or date as the Parties hereto may agree. The date on which the Closing shall occur is hereinafter referred to as the “ Closing Date ”.

Section 2.4 Payment of the Purchase Price .

(a) Total Purchase Price . The aggregate consideration for all of the outstanding capital stock of the Company will be $142,000,000 less the Closing Debt Payment Amount (the “ Total Purchase Price ”), consisting of (i) $131,000,000, less the Closing Debt Payment Amount, payable in cash (the “ Cash Purchase Price ”) and (ii) the Stock Consideration. The Total Purchase Price and the Cash Purchase Price shall be subject to adjustment as set forth in Sections 2.6 and 2.7.

(b) Payment of Cash . At the Closing, against delivery to the Purchaser of certificates evidencing the Purchased Shares duly endorsed (or accompanied by duly executed stock transfer powers), the Purchaser will pay, by wire transfer of immediately available funds:

(1) the Cash Purchase Price, as follows:

(A) to such account or accounts as the Shareholders’ Representative specifies to the Purchaser in the Closing Payment Certificate, the aggregate amount required to pay and satisfy in full the Transaction Expenses;

 

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(B) to such account or accounts as the Shareholders’ Representative specifies to the Purchaser in the Closing Payment Certificate, the aggregate amount required to pay and satisfy in full all change of control, profit-sharing or other payments due or otherwise payable at the Closing in the amount and to the Persons identified on Schedule 2.4(b)(1)(B); and

(C) to such account or accounts as the Shareholders’ Representative specifies to the Purchaser in the Closing Payment Certificate, to each Shareholder, an amount equal to the Per Share Consideration multiplied by the number of Shares owned by such Shareholder which are Purchased Shares; and

(2) to such account or accounts as the Shareholders’ Representative specifies to the Purchaser in the Closing Payment Certificate in accordance with instructions provided to the Company by holders of Debt of the Company and its Subsidiary, the aggregate amount necessary to satisfy and extinguish all Debt of the Company and its Subsidiary identified on Schedule 2.4(b)(2), including all principal, accrued interest, penalties and premiums thereon through the date on which such Debt is satisfied and extinguished, as set forth on the Closing Payment Certificate (the “ Closing Debt Payment Amount ”).

Notwithstanding anything in the foregoing to the contrary, prior to the Closing, the Purchaser and the Shareholders will, each acting reasonably and in good faith, determine jointly the amount, if any, of any withholding Taxes required under the Code or any applicable law to be deducted and withheld from the Cash Purchase Price at Closing and the Purchaser will thereupon be entitled to deduct and withhold from the Cash Purchase Price any such amounts. To the extent that any such amounts are so deducted or withheld, such amounts will be treated for all purposes of this Agreement as having been paid to the Shareholder or other Person in respect of which such deduction and withholding was made.

(c) Closing Payment Certificate . Not later than two Business Days prior to the Closing, the Shareholders’ Representative will furnish to the Purchaser a certificate, in form and substance reasonably satisfactory to the Purchaser (the “ Closing Payment Certificate ”), signed by the Company, the Shareholders’ Representative and each of the Shareholders, dated the Closing Date, that sets forth each party entitled to a payment pursuant to Section 2.4(b) and the amount of the cash payment due to such Person, the aggregate amount of which shall not exceed the Cash Purchase Price, as adjusted pursuant to Section 2.6(b) and Section 2.7(b), plus the Closing Debt Payment Amount. Holdings and the Purchaser will be entitled to rely conclusively on the amounts set forth in the Closing Payment Certificate.

Section 2.5 Transfer Taxes . Purchaser, on the one hand, and the Shareholders, jointly and severally, on the other, shall each assume liability for, and shall each pay, one-half of the aggregate amount of all sales, use, transfer, real property transfer, documentary, recording, stock transfer and similar Taxes and fees, and any deficiency, interest or penalty asserted with respect

 

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thereof (collectively, “ Transfer Taxes ”) arising out of or in connection with the transactions effected pursuant to this Agreement. The Company, or other party required by law, shall timely file all necessary documentation and Tax Returns with respect to such Transfer Taxes.

Section 2.6 Working Capital Adjustments .

(a) Estimated Balance Sheet . The Company will, in consultation with the Purchaser and in good faith, prepare or cause to be prepared and delivered to the Purchaser not later than three Business Days prior to the Closing Date, an estimated consolidated balance sheet of the Company as of immediately prior to the Closing (the “ Estimated Closing Balance Sheet ”), together with a written statement setting forth in reasonable detail its estimate of the Working Capital as of immediately prior to the Closing as reflected on the Estimated Closing Balance Sheet (the “ Estimated Working Capital Statement ”). The Estimated Closing Balance Sheet and the Estimated Working Capital Statement will be (i) subject to the approval of the Purchaser (which approval shall not be unreasonably withheld or delayed), and (ii) prepared in accordance with (A) GAAP as in effect on the date hereof and (B) the accounting methodologies set forth on Schedule 2.6(a)(1) (clauses (A) and (B) collectively, the “ Accounting Standards ”), and will be prepared in a form and manner in and on a basis consistent with the form and manner in and basis on which the Sample Closing Balance Sheet and Sample Working Capital Statement attached hereto as Exhibit 2.6(a)(2) and Exhibit 2.6(a)(3) , respectively (which, solely for illustrative purposes, assume that the Closing occurred on March 31, 2005), were prepared.

(b) Adjustment to Cash Purchase Price . If the Working Capital reflected on the Estimated Working Capital Statement is less than $12,750,000, the Cash Purchase Price payable at Closing pursuant to Section 2.4 shall be reduced by the amount of such shortfall on a dollar-for-dollar basis. If the Working Capital reflected on the Estimated Working Capital Statement is greater than $12,750,000, the Cash Purchase Price payable at Closing pursuant to Section 2.4 shall be increased by the amount of such excess on a dollar-for-dollar basis.

(c) Closing Balance Sheet . As promptly as reasonably practicable and in any event within forty-five days after the Closing Date, Holdings will prepare or cause to be prepared, and will provide to the Shareholders’ Representative, a consolidated balance sheet of the Company as of immediately prior to the Closing Date (the “ Closing Balance Sheet ”), together with a written statement setting forth in reasonable detail its determination of the Working Capital as of immediately prior to the Closing Date as reflected on the Closing Balance Sheet (the “ Working Capital Statement ”). The Closing Balance Sheet and the Working Capital Statement will be prepared in accordance with the Accounting Standards and in a manner and on a basis consistent with the manner in and basis on which the Estimated Closing Balance Sheet and the Estimated Working Capital Statement were prepared by the Company and approved by the Purchaser (the “ Accounting Standards ”). The Shareholders’ Representative will have reasonable access to the work papers and related books and records used by the Purchaser in the preparation of the Closing Balance Sheet and the Working Capital Statement.

(d) Dispute Notice . The Closing Balance Sheet and the Working Capital Statement will be final, conclusive and binding on the parties (and will be deemed to constitute a “Final Working Capital Statement” pursuant to Section 2.6(e)) unless the Shareholders’ Representative provides a written notice (a “ Dispute Notice ”) to the Purchaser no later than the fifteenth Business Day after delivery of the Working Capital Statement setting forth in

 

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reasonable detail (a) any item on the Closing Balance Sheet and/or the Working Capital Statement that the Shareholders’ Representative believes has not been prepared in accordance with the Accounting Standards and (b) the correct amount of such item in accordance with the Accounting Standards. Any item or amount as to which no dispute is raised in the Dispute Notice will be final, conclusive and binding on the parties.

(e) Resolution of Disputes . The Company and the Shareholders’ Representative will attempt to resolve the matters raised in a Dispute Notice in good faith. Ten Business Days after delivery of the Dispute Notice, either the Company or the Shareholder’ Representative may provide written notice to the other that it elects to submit the disputed items to PricewaterhouseCoopers, or another nationally recognized independent accounting firm chosen jointly by the Company and the Shareholders’ Representative (the “ Working Capital Referee ”). The Working Capital Referee will promptly, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, review only those items and amounts specifically set forth and objected to in the Dispute Notice and resolve the dispute with respect to each such specific item and amount in accordance with the Accounting Standards. The final consolidated balance sheet of the Company as of the Closing Date and the related statement of the Working Capital on the Closing Date as reflected on such balance sheet as so determined by the Working Capital Referee shall be referred to as the “ Final Working Capital Statement .” The fees and expenses of the Working Capital Referee will be shared equally by the Shareholders and the Purchaser, and the decision of the Working Capital Referee with respect to the items of the Closing Balance Sheet and the Working Capital Statement submitted to it will be final, conclusive and binding on the parties. Each of the Parties to this Agreement agrees to use its commercially reasonable efforts to cooperate with the Working Capital Referee, including granting the Working Capital Referee access to such books and records as the Working Capital Referee shall reasonably request, and to cause the Working Capital Referee to resolve any dispute no later than thirty Business Days after the appointment of the Working Capital Referee.

(f) Working Capital Adjustment . Promptly, and in any event no later than the fifth Business Day after determination of the Final Working Capital Statement pursuant to Section 2.6(d) or 2.6(e):

(1) if the Working Capital reflected on the Final Working Capital Statement is less than the Working Capital reflected on the Estimated Working Capital Statement, then each Shareholder shall be obligated, on a several basis, to pay to the Company its Pro Rata Share of the amount of such shortfall by wire transfer of immediately available funds.

(2) if the Working Capital reflected on the Final Working Capital Statement is greater than the Working Capital reflected on the Estimated Working Capital Statement, then the Company will pay to each Shareholder its Pro Rata Share of the amount of such excess by wire transfer of immediately available funds.

Section 2.7 Reserve Adjustments .

(a) Estimated Reserve Adjustment Calculation . The Company will cause Zurich to prepare and deliver to the Purchaser not later than three Business Days prior to the Closing Date, (i) a listing of all historical auto liability losses, including loss expenses, by policy

 

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year for the Company’s large deductible program period from December 31, 2000 through the Closing Date, including for each claim, paid loss, paid expense, outstanding loss, and outstanding expense and (ii) a listing of the number of trucks/trailers covered by the Company’s large deductible program from December 31, 2000 through the Closing Date by policy year. The Company will also cause Zurich to prepare and will deliver to the Purchaser not later than three Business Days prior to the Closing Date, an exhibit showing the estimated large deductible loss and expense reserves for the Company’s auto liability exposures as of the Closing Date by policy year. For each policy year, the estimated closing reserve amount will be the aggregate reserves, limited to the Company’s deductible retention, by policy year from the loss listing provided by Zurich (policy year case reserves as of the Closing Date) multiplied by the applicable policy year IBNR factor as of the Closing Date as set forth in Schedule 2.7 hereto (the aggregate amount of the estimated closing reserve amount for all applicable policy years, determined in accordance with this Section 2.7(a), shall be referred to as the “ Estimated Closing Reserve Amount ”). The Estimated Closing Reserve Amount will be subject to the approval of the Purchaser (which approval shall not be unreasonably withheld or delayed).

(b) Adjustment to Cash Purchase Price . The Cash Purchase Price payable at Closing pursuant to Section 2.4 shall be reduced by the greater of (i) the Estimated Closing Reserve Amount or (ii) $1,125,000 (the amount of such reduction shall be referred to as the “ Reserve Deduction ”).

(c) Post-Closing Reserve Adjustment Calculation . Within 15 Business Days following February 15, 2006, the Company will cause Zurich to prepare and deliver to the Shareholders’ Representative, (i) a listing of all historical auto liability losses, including loss expenses, by policy year for the Company’s large deductible program period from December 31, 2000 through the Closing Date valued as of February 15, 2006, including for each claim, paid loss, paid expense, outstanding loss, and outstanding expense, and (ii) a listing of the number of trucks/trailers covered by the Company’s large deductible program from December 31, 2000 through the Closing Date by policy year updated as of February 15, 2006. The Company will also cause Zurich to prepare, and will deliver to the Shareholders’ Representative, an exhibit showing the estimated large deductible loss and expense reserves for the Company’s auto liability exposures as of the Closing Date, including for each claim, paid loss, paid expense, outstanding loss, and outstanding expense, based on losses valued as of February 15, 2006 by policy year. For each policy year, the closing reserve amount will be the aggregate reserves, limited to the Company’s deductible retention, by policy year from the loss listing provided by Zurich valued as of February 15, 2006 (policy year case reserves as of February 15, 2006) multiplied by the applicable policy year IBNR factor as of February 15, 2006 as set forth in Schedule 2.7 (the aggregate amount of the closing reserve amount for all applicable policy years, determined in accordance with this Section 2.7(c), shall be referred to as the “ Closing Reserve Amount ”). The Shareholders will have reasonable access to the work papers used by the Company in the calculation of the Closing Reserve Amount.

(d) Purchase Price Adjustment . Promptly, and in any event no later than the fifth Business Day, after determination of the Closing Reserve Amount pursuant to Section 2.7(c):

(1) if the Closing Reserve Amount exceeds the Reserve Deduction, then each Shareholder shall be obligated, on a several basis, to pay to the Company its Pro Rata Share of the amount of such excess by wire transfer of immediately available funds.

 

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(2) if the Closing Reserve Amount is less than the Reserve Deduction, then the Company will pay to each Shareholder its Pro Rata Share of the amount of such shortfall by wire transfer of immediately available funds.

Section 2.8 Subsequent Merger . As soon as practicable after the Closing, upon the filing of a certificate of merger as provided in Section 1702.43 of the OGCL and pursuant to resolutions of the boards of directors of the Purchaser and the Company, the Purchaser will be merged with and into the Company, the separate organizational existence of the Purchaser will cease and the Company will continue as the surviving corporation and as a wholly-owned Subsidiary of Holdings.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

The Shareholders hereby jointly and severally represent and warrant to Holdings and the Purchaser as follows:

Section 3.1 Organization and Qualification . The Company is duly formed, validly existing and in good standing under the laws of the State of Ohio, has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and is in good standing and duly qualified to do business in each jurisdiction in which the transaction of its business makes such qualification necessary, except where the failure to be so organized, existing, qualified and in good standing or to have such power or authority would not have a Company Material Adverse Effect. The Company does not have any Subsidiaries except for Panther II, Inc. (“ Panther II ”) which is wholly owned by the Company and employs individuals who perform services for the Company. Panther II has no assets and conducts no activities other than the employment of the individuals indicated. Except as disclosed in Section 3.1 of the Company Disclosure Schedule, the Company’s ownership of the shares of Panther II is free and clear of all Liens. True and complete copies of the articles of incorporation and codes of regulations (collectively, the “ Organizational Documents ”) of the Company and its Subsidiary, each as amended to date and currently in full force and effect, have been made available to Purchaser.

Section 3.2 Capitalization .

(a) The authorized capital stock of the Company consists of 10,100 Shares. As of the date of this Agreement, 10,100 Shares are issued and outstanding, of which 1,010 shares are Class A no par common voting shares and 9,090 are Class B no par common nonvoting shares, and no Shares are held in treasury. All outstanding Shares are validly issued, fully paid and nonassessable and are not subject to preemptive rights except as provided in the Close Corporation Agreement between the Shareholders which will be terminated before the Closing Date. Section 3.2(a) of the Company Disclosure Schedule sets forth a list, as of the date hereof, of the Shareholders and the number of Shares held by each such Shareholder. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding

 

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subscriptions, options, warrants, calls, rights, commitments or any other agreements to which the Company is a party or by which the Company is bound which obligate the Company to (i) issue, deliver or sell or cause to be issued, delivered or sold any additional Shares or any other capital stock of the Company or any other securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for, any such Shares or any other capital stock of the Company or (ii) purchase, redeem or otherwise acquire any Shares or any other capital stock of the Company. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there are no voting trusts, shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares.

(b) Except for Panther II and as set forth in Section 3.2(b) of the Company Disclosure Schedule, the Company does not have any Subsidiaries nor does it presently own, directly or indirectly, any capital stock or other proprietary interest in any Person. Except as set forth in Section 3.2(b) of the Company Disclosure Schedule all such interests are owned by the Company and are held free and clear of all Liens.

Section 3.3 Authorization and Validity of Agreement . The Company has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof. The Company has duly authorized the execution, delivery and performance of this Agreement and no other proceedings on the part of the Company are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

Section 3.4 Consents and Approvals . Neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will require on the part of the Company any consent, approval, authorization or permit of, or filing with, or notification to, any Governmental Entity, except (a) for any applicable filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) or (b) as set forth in Section 3.4 of the Company Disclosure Schedule.

Section 3.5 No Violations . Except as set forth in Section 3.5 of the Company Disclosure Schedule, neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (a) conflict with or violate the Organizational Documents of the Company or its Subsidiary, (b) result in a violation or breach of, constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination, cancellation or acceleration of, or result in the imposition of any Lien, on any assets or property of the Company pursuant to, any Material Contract to which the Company is a party or by which the Company or any of its assets or properties are bound or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or its Subsidiary or any of their respective assets and properties.

Section 3.6 Financial Statements Undisclosed Liabilities . The Financial Statements have been previously made available to Purchaser. Each of the balance sheets included in the

 

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Financial Statements (including any related notes and schedules thereto) fairly presents, in all material respects, the financial position of the Company as of its date, and each of the statements of income included in the Financial Statements (including any related notes and schedules thereto) fairly presents, in all material respects, the results of operations of the Company for the periods set forth therein, in each case in accordance with the books and records of the Company and GAAP (except that such Financial Statements which are unaudited do not contain all of the footnotes required under GAAP and are subject to year-end adjustments and the Financial Statements for the year ended December 31, 2002 were prepared on a tax-accounting basis). Neither the Company nor its Subsidiary has any liability, as of the date of this Agreement, whether absolute, accrued, contingent or otherwise, which is required to be disclosed on a balance sheet prepared in accordance with GAAP, other than (i) liabilities shown on the audited balance sheet for the Company for the year ended December 31, 2004, and (ii) liabilities incurred in the Ordinary Course of Business since the Balance Sheet Date.

Section 3.7 Compliance with Law. Except as set forth in Section 3.7 of the Company Disclosure Schedule, the Company and its Subsidiary are currently conducting their business and have at all times since January 1, 2001 conducted their business in compliance in all material respects with all laws, statutes, rules, regulations of any Governmental Entity applicable to them, their business and operations and their properties and have not received any notices alleging any failure to comply with any such laws, statutes, rules or regulations. Except as set forth in Section 3.7 of the Company Disclosure Schedule or as contemplated or permitted by this Agreement, the Company and its Subsidiary hold all Permits necessary for the conduct of their business as now being conducted. Except as disclosed on Section 3.7 of the Company Disclosure Schedule, (a) the Permits are valid and in full force and effect, (b) neither the Company nor its Subsidiary is in material breach or violation of, or default under, any such Permit, and, to the knowledge of the Company, no basis exists which, with notice or lapse of time or both, would constitute any such breach, violation or default and (c) the Permits will continue to be valid and in full force and effect, on identical terms immediately following the consummation of the transactions contemplated hereby.

Section 3.8 Litigation . Except as disclosed in Section 3.8 of the Company Disclosure Schedule, there are no Proceedings pending or, to the knowledge of Company, threatened in writing against the Company or its Subsidiary or, to the knowledge of the Company, any basis therefor. The Company and its Subsidiary are not subject to any outstanding and unsatisfied order, writ, judgment, injunction or decree or settlement or consent agreement by or with a Governmental Entity.

Section 3.9 Employee Benefit Matters .

(a) Section 3.9(a) of the Company Disclosure Schedule contains a true and complete list of all material Company Benefit Plans. True and complete copies of each of the following items have been provided or made available to Purchaser with respect to the Company Benefit Plans to the extent they have been documented: (1) Plan and trust documents and all other funding arrangements (including without limitation insurance policies and annuity contracts), (2) the most recent determination letter received from the Internal Revenue Service with respect to each Company Benefit Plan that is intended to be qualified under Section 401 of the Code, (3) the most recent summary plan description, (4) employee handbook, (5) any materials relating to government investigation or audit or voluntary compliance procedures.

 

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(b) Except as set forth in Section 3.9(b) of the Company Disclosure Schedule, the Company Benefit Plans have been administered in all material respects in accordance with their terms and comply with the requirements of ERISA and the Code. Any Company Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified or has been submitted to the IRS to obtain such a determination within the applicable remedial amendment period, as defined in Treas. Reg. § 1.401 (b)-(c) and there is no fact or circumstance that would reasonably be expected to result in the revocation of such letter or the failure of the IRS to issue a favorable determination letter, as the case may be.

(c) There are no pending, nor, to the knowledge of the Company are there any threatened, claims against the Company or its Subsidiary involving any of the Company Benefit Plans, other than routine claims for benefits.

(d) Neither the Company nor any entity aggregated with the Company or any Subsidiary under Section 414 of the Code or 4001(14) of ERISA has ever maintained or contributed to any Employee Benefit Plan subject to Title IV of ERISA, including without limitation any single employer plan (within the meaning of Section 4001(a)(15) of ERISA or any multi-employer plan (within the meaning of Section 4001(a)(3) of ERISA), and neither the Company nor any Subsidiary has any liability (contingent or otherwise, and direct or indirect) to or in respect of a Company Benefit Plan that has not been satisfied in full or incurred in the Ordinary Course of Business and accrued on the Company’s books and records. Neither the Company nor its Subsidiary has incurred, nor have events occurred or do circumstances exist that would be reasonably expected to result in the Company or its Subsidiary incurring any liability under Title IV of ERISA.

(e) No current or former employee, director or independent contractor will be entitled to any additional payments or benefits under any Company Benefit Plan or to accelerated payments or vesting of any benefits under any Company Benefit Plan or other agreement that will result in the payment of any “parachute payments” within the meaning of Section 280G of the Code in connection with the transactions contemplated by this Agreement.

(f) With respect to each of the Company Benefit Plans, all (employee or employer) contributions or premium payments with respect to periods on or before the Closing have been timely made, or to the extent not presently due and payable, have been appropriately accrued on the Company’s financial statements in accordance with GAAP.

(g) Except as set forth in Section 3.9(g) of the Company Disclosure Schedule, the Company has not engaged in any transactions in violation of Section 406 of ERISA that could subject the Company or its Subsidiary to any material taxes, penalties or other liabilities under Code Section 4975 or ERISA Section 501(i), or that would give rise to material liability to the Company under Section 4976 of the Code or Section 409 of ERISA.

(h) No Company Benefit Plan that is a non-qualified deferred compensation plan subject to Section 409A of the Code (“ 409A ”) has been materially modified (as defined under IRS Notice 2005-1) on or after October 3, 2004 and, to the knowledge of the Company, all such non-qualified deferred compensation plans have been operated and administered in good faith compliance with 409A and IRS Notice 2005-1 from the period beginning on January 1, 2005 though the date hereof.

 

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(i) Each person providing services to the Company or its Subsidiary who have been classified by the Company or its Subsidiary as an “independent contractor” has been appropriately classified as such, and there is no fact or circumstance that could reasonably be expected to give rise to the reclassification of such person as an employee of the Company or its Subsidiary.

Section 3.10 Taxes . Except as set forth in Section 3.10 of the Company Disclosure Schedule: (i) all Tax Returns required to be filed by or on behalf of the Company and its Subsidiary have been filed (taking into account any extension of time to file) and all Taxes required to be paid by them (whether or not shown on any Tax Return) have been paid, (ii) there are no pending written proposed, outstanding or assessed deficiencies or adjustments or other written claims for unpaid Taxes that have been received by the Company or its Subsidiary, (iii) all Taxes that the Company and its Subsidiary are required to withhold or collect have been duly withheld or collected and have been paid over, as required, to the appropriate taxing authority, and the Company and its Subsidiaries have fully complied with all associated reporting and recordkeeping requirements, (iv) there are no audits, examinations or administrative or judicial proceedings pending or in progress with respect to Taxes of the Company or its Subsidiary, (v) no waivers of statutes of limitations or extension of time for any Tax assessments or deficiencies have been given with respect to any Taxes with respect to the Company and its Subsidiary, which waivers or extensions are currently in effect; (vi) there are no liens for Taxes on any assets of the Company or its Subsidiary other than liens for Taxes not yet due and payable; (vii) since January 1, 2003, no claim has been made by an authority in a jurisdiction where the Company or its Subsidiary does not file Tax Returns that the Company or its Subsidiary is or may be required to file Tax Returns by that jurisdiction; (viii) the Company and its Subsidiary have provided to the Purchaser true, correct and complete copies of all Tax Returns, examination reports, and statements of deficiencies filed, assessed against, or agreed to by the Company or any Subsidiary since December 31, 1998; (ix) no closing agreements, private letter rulings, advance pricing agreement, technical advice memoranda or other agreements or rulings relating to Taxes have been entered into or issued by any governmental or taxing authority with or in respect of the Company or its Subsidiary; (x) neither the Company nor any Subsidiary is a party to any Tax sharing, allocation or indemnification agreement or arrangement or has any liability for the Taxes of any Person (other than the Company and its Subsidiary) under Treasury Regulation Section 1.1502-6, as a transferee or successor, by contract or otherwise; (xi) neither the Company nor its Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted, or would result, separately or in the aggregate, in an “excess parachute payment” within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law); (xii) neither the Company nor any Subsidiary is or has been required to make any adjustment pursuant to Code Section 481(a) (or any predecessor provision) or any similar provision of state, local or foreign tax law by reason of any change in any accounting methods and there is no application pending with any Governmental Authority requesting permission for any changes in any of its accounting methods for Tax purposes; (xiii) neither the Company nor its Subsidiary has participated in any “reportable transaction” within the meaning of U.S. Treasury Regulation Section 1.6011-4 or any “tax shelter” within the meaning of Sections 6111 or 6662 of the Code; (xiv) neither the Company nor its Subsidiary has been a “distributing corporation” or a “controlled corporation” in a transaction intended to qualify under Code Section 355; (xv) the Company has been a validly electing S corporation, within the meaning of Code Sections 1361 and 1362 and for state Tax law purposes, except in those states which do not recognize S corporation status, at all times since January 1, 1999, and has filed all forms and

 

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taken all actions necessary to maintain such status; and (xvi) Panther II has been a “disregarded entity” for U.S. federal and state Tax law purposes at all times since January 1, 2000.

Section 3.11 Intellectual Property .

(a) Section 3.11(a) of the Company Disclosure Schedule lists all Company Intellectual Property owned or purported to be owned by the Company or its Subsidiary that are (i)&nb