EXHIBIT 2.1
AMENDED AND RESTATED EQUITY
PURCHASE AGREEMENT
This AMENDED AND RESTATED EQUITY
PURCHASE AGREEMENT (this “ Agreement ”) is
made and entered into as of October 31, 2006, by and among
(i) Electronics For Imaging, Inc. , a Delaware
corporation (“ Parent ”), (ii)
Electronics For Imaging, International , an indirect
wholly-owned subsidiary of Parent organized under the laws of the
Cayman Islands (“ Purchaser ”), (iii)
Jetrion LLC , a Michigan limited liability company (the
“ Company ”), and (iv) Flint Group
North America Corporation (f/k/a Flint Ink North America
Corporation), a Michigan corporation (“ Seller
”). Capitalized terms used herein without definition shall
have the respective meanings set forth in Section 9.2
hereof.
WHEREAS , Parent, Purchaser, the Company and Seller are
parties to that certain Asset Purchase Agreement (the “
Prior Agreement ”) dated as of September 27, 2006
(the “ Agreement Date ”).
WHEREAS , Parent, Purchaser, the Company and Seller
desire to amend and restate in its entirety the Prior Agreement in
accordance with the terms of this Agreement herein.
WHEREAS , Seller owns 100% of the membership interests
in the Company (the “ Membership Interests
”);
WHEREAS , Seller wishes to sell the Membership Interests
to Purchaser on the terms set forth in this Agreement;
and
WHEREAS , upon consummation of the Closing, Purchaser
shall become a Substitute Member (as defined in the Operating
Agreement) of the Company, comprising the sole Member (as defined
in the Operating Agreement) of the Company.
NOW, THEREFORE
, in consideration of the foregoing
and the mutual covenants and agreements herein contained and
intending to be legally bound hereby, Parent, Purchaser, the
Company and Seller hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE MEMBERSHIP
INTERESTS
1.1 Sale and Purchase of the
Membership Interests . At the Closing, Seller shall sell,
assign, transfer and deliver the Membership Interests to Purchaser,
free and clear of all Liens, and Purchaser shall purchase the
Membership Interests from Seller, on the terms and subject to the
conditions set forth in this Agreement.
1.2 Closing . The closing of
the sale of the Membership Interests to Purchaser (the “
Closing ”) shall occur at a place and on a date to be
mutually agreed upon by Purchaser and Seller, which shall be no
later than the third business day after the satisfaction or waiver
of the conditions set forth in Article 6. For purposes of this
Agreement, “ Closing Date ” shall mean the time
and date as of which the Closing actually takes place.
1.3 Purchase Price . The
aggregate purchase price payable by Purchaser for the Membership
Interests (the “ Purchase Price ”) shall be
$40,000,000, subject to adjustment as set forth in
Section 1.4. At the Closing,
Confidential treatment has been requested for
portions of this exhibit. The copy filed herewith omits the
information subject to the confidentiality request. Omissions are
designated as [*]. A complete version of this exhibit has been
filed separately with the Securities and Exchange
Commission.
(a) Purchaser shall deliver to the
Escrow Agent an amount equal to (i) the Purchase Price, less
(ii) an amount equal to the Contribution Credit, [*]
(iii) the Closing Date Adjustment by wire transfer of
immediately available funds, which funds shall be deposited into
the closing escrow account established pursuant to the Closing
Escrow Agreement (the “ Closing Payment
”);
(b) The Escrow Agent shall deduct
from the Closing Payment $2,000,000 (the “ Escrow
Funds ”), which the Escrow Agent shall deposit into the
indemnity escrow account established pursuant to the Indemnity
Escrow Agreement; and
(c) The Escrow Agent shall deduct
from the Closing Payment an amount equal to $4,511,122.14 (the
“ LTI Amount ”), which funds shall be deposited
into the closing escrow account, for distribution to the Employee
Indemnitors pursuant to the Closing Escrow Agreement.
Notwithstanding the fact that the LTI Amount shall be deducted from
the Closing Payment, neither Parent nor Purchaser is assuming any
liability associated therewith.
1.4 Closing Net Working Capital
Adjustment .
(a) Estimated Closing Net Working
Capital . Seller shall provide to Parent at least five business
days prior to the Closing Date (i) an estimated balance sheet
of the Company as of the Closing prepared in a manner consistent
with past practices of the Company’s management in conformity
with the calculations on Exhibit G and
(ii) Seller’s good-faith estimate of Closing Net Working
Capital calculated from such estimated balance sheet (“
Estimated Closing Net Working Capital” ). The Purchase
Price payable at the Closing pursuant to Section 1.3 shall be
[*] reduced by the amount, if any, that the Working Capital
Target exceeds the Estimated Closing Net Working Capital [*]
(such adjustment, the “ Closing Date Adjustment
”). The Estimated Closing Net Working Capital determined by
Seller and delivered to Parent shall be binding on the parties for
purposes of calculating the Purchase Price payable at the Closing
pursuant to Section 1.3, but shall be subject to adjustment
following the Closing in accordance with the provisions of this
Section 1.4. All calculations performed in connection with
this Section 1.4 shall be as of the close of business on the
Closing Date.
(b) Calculation . As promptly
as practicable, but in no event later than 60 days following the
Closing Date, Parent shall prepare and deliver to Seller a balance
sheet of the Company as of the Closing (the “ Closing
Balance Sheet ”) and Parent’s calculation of
Closing Net Working Capital calculated from the Closing Balance
Sheet (“ Closing Date Schedule ”). Parent shall
prepare the Closing Balance Sheet and calculate the Closing Net
Working Capital in a manner consistent with the practice of the
Company’s management in calculating the estimated balance
sheet and Estimated Closing Net Working Capital pursuant to
Section 1.4(a).
(c) Review; Disputes
.
(i) From and after the Closing Date,
each of Parent, Purchaser, the Company and Seller shall provide one
another and their respective accountants and advisors with full
access to the books and records of the other party for the purposes
of: (A) enabling Parent, Purchaser and their respective
accountants and advisors to prepare the Closing Balance Sheet and
calculate Closing Net Working Capital; (B) enabling Seller to
review the Closing Balance Sheet and Parent’s calculation of
Closing Net Working Capital; and (C) identifying any dispute
related to the Closing Balance Sheet or the calculation of Closing
Net Working Capital.
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[*]
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Certain
information on this page has been redacted and filed separately
with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
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(ii) If Seller disputes any item of
the Closing Balance Sheet or the calculation of Closing Net Working
Capital delivered by Parent pursuant to Section 1.4(b), then
Seller shall deliver a written notice (a “ Dispute
Notice ”) to Parent during the 30-day period commencing
upon receipt by Seller of the Closing Balance Sheet and calculation
of Closing Net Working Capital delivered by Parent pursuant to
Section 1.4(b) (the “ Review Period ”). The
Dispute Notice shall set forth the principal basis for the dispute
for each disputed item of such calculation and Seller’s
calculation of Closing Net Working Capital.
(iii) If Seller does not deliver a
Dispute Notice to Parent prior to the expiration of the Review
Period, Parent’s calculation of Closing Net Working Capital
set forth in the Closing Date Schedule shall be deemed final and
binding on Seller, Parent and Purchaser for all purposes of this
Agreement.
(iv) If Seller delivers a Dispute
Notice to Parent prior to the expiration of the Review Period, then
Seller and Parent shall use commercially reasonable efforts to
reach agreement on Closing Net Working Capital. If Seller and
Parent are unable to reach agreement on Closing Net Working Capital
within 20 days after the end of the Review Period, either party
shall have the right to refer such dispute to a national accounting
firm mutually selected by Parent and Seller (such firm, or any
successor thereto, being referred to herein as the “
Designated Accounting Firm ”). In connection with the
resolution of any such dispute by the Designated Accounting Firm:
(A) Seller, Parent and Purchaser may meet with the Designated
Accounting Firm in the presence of the other parties; (B) the
Designated Accounting Firm shall determine Closing Net Working
Capital in accordance with the provisions of this Agreement within
30 days of such referral and upon reaching such determination shall
deliver a copy of its calculation to Seller, Parent and Purchaser;
and (C) the determination of Closing Net Working Capital made
by the Designated Accounting Firm shall be final and binding on
Seller, Parent and Purchaser for all purposes of this Agreement,
absent manifest error. In calculating the Closing Working Capital
Amount, (1) the Designated Accounting Firm shall be limited to
addressing only those particular disputed items referred to in the
Dispute Notice, and (2) such calculation of Closing Net
Working Capital shall be no greater than the amount calculated by
Seller and no lower than the amount calculated by Parent. The fees
and expenses of the Designated Accounting Firm shall be borne
equally by Seller and Parent.
(d) Adjustment of Purchase
Price . If Closing Net Working Capital, as finally determined
in accordance with this Section 1.4, is less than the
Estimated Closing Net Working Capital, then Seller shall, no later
than three business days after such determination, cause to be paid
to Purchaser by wire transfer of immediately available funds the
amount by which Closing Net Working Capital is less than Estimated
Closing Net Working Capital. If Closing Net Working Capital, as
finally determined in accordance with this Section 1.4, is
greater than the Estimated Closing Net Working Capital, then
Purchaser shall, no later than three business days after such
determination, cause to be paid to Seller by wire transfer of
immediately available funds the amount by which Closing Net Working
Capital is greater than Estimated Closing Net Working
Capital.
1.5 Repayment of Indebtedness;
Release of Liens . Prior to the Closing, Seller shall repay in
full and retire all of the Indebtedness of the Company. At the
Closing, Seller shall deliver or cause to be delivered to Parent
documentation reasonably satisfactory to Parent evidencing any such
repayment. The Seller acknowledges that neither Parent nor
Purchaser is (directly or by virtue of the acquisition of the
Company) assuming any Indebtedness of the Company or Seller. At or
prior to the Closing, Seller shall also have provided documentation
reasonably satisfactory to Parent that all Liens on the
Company’s assets shall have been released.
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1.6 Allocation of Purchase
Price .
(a) During the Pre-Closing Period,
Seller will submit to Purchaser a good faith allocation of the
Purchase Price among the assets of the Company, subject to
Purchaser’s reasonable satisfaction (the “
Allocation ”). The Allocation will be made in
accordance with Section 1060 of the Code and the Treasury
regulations promulgated thereunder.
(b) Seller and Purchaser agree to
(i) be bound by the Allocation, (ii) act in accordance
with the Allocation in the preparation of financial statements and
filing of all Tax Returns (including filing Form 8594 with their
United States federal income Tax Return for the taxable year that
includes the date of the Closing) and in the course of any Tax
audit, Tax review or Tax litigation relating thereto, and
(iii) take no position and cause their Affiliates to take no
position inconsistent with the Allocation for income Tax purposes,
including United States federal and state income Tax and foreign
income Tax. Not later than thirty (30) days prior to the
filing of their respective Forms 8594 (and analogous state law
forms) relating to this transaction, each party shall deliver to
the other party a copy of its Form 8594 (and any analogous state
law forms).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
SELLER
Seller hereby represents and
warrants to Parent and Purchaser, as of the Agreement Date as
follows, subject to such exceptions as are set forth in the
schedule of disclosures and exceptions to the representations and
warranties made by Seller in this Agreement attached hereto (the
“ Disclosure Schedule ”). Each exception set
forth in the Disclosure Schedule shall be deemed to qualify each
representation and warranty set forth in this Agreement that is
specifically identified (by cross-reference or otherwise) in the
Disclosure Schedule as being qualified by such exception and each
other representation and warranty to which the applicability of
such exception is readily apparent from the Disclosure Schedule.
[ *]
2.1 Organization
(a) The Company is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of Michigan and has all
requisite power and authority to carry on its business as presently
conducted and as presently contemplated to be conducted. The
Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect on the Company. The Company
has all requisite power and authority to own and operate its
properties and assets, to execute and deliver this Agreement and
the Related Agreements, and to perform its obligations under, and
carry out the provisions of, this Agreement and the Related
Agreements. The Company is classified as an entity disregarded from
its owner (a “disregarded entity”) (i) for state
Tax purposes in accordance with applicable law in any states in
which the Company has business operations (to the extent a limited
liability company may be recognized as a disregarded entity for Tax
purposes in those states under applicable law), and (ii) for
federal income Tax purposes in accordance with Treasury regulations
Section 301.7701-2(c)(2), and the Company has never made any
election pursuant to Treasury regulations Section 301.7701-3
or any analogous provision of state law. The Company has delivered
to Parent true and complete copies of all of the Organizational
Documents of the Company in effect.
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[*]
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Certain
information on this page has been redacted and filed separately
with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
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(b) Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Michigan. Seller has all requisite corporate power and
authority to own and operate its properties and assets, to execute
and deliver this Agreement, to carry out the provisions of this
Agreement and those of the Related Agreements to which it is a
party, and to perform its respective obligations under, and carry
out the provisions of, this Agreement and such Related Agreements,
and to carry on its business as presently conducted and as
presently proposed to be conducted. Seller is duly qualified to
transact business and is in good standing in each jurisdiction
where such qualification is required and in which failure to so
qualify would have a Material Adverse Effect on Seller.
2.2 Capitalization
.
(a) There are no outstanding
options, warrants, instruments, rights (including conversion or
preemptive rights and rights of first refusal), proxy or membership
agreements, or other agreements or instruments of any kind,
including convertible debt instruments, for the purchase or
acquisition from the Company of any of its Securities. The Company
is not a party or subject to any agreement or understanding and
there is no agreement or understanding between any other persons,
which affects or relates to the voting or giving of written
consents with respect to any security or by the manager of the
Company.
(b) All of the Securities of the
Company (i) have been duly authorized and validly issued and
are fully paid and nonassessable, and (ii) were issued in
compliance with all applicable state and federal laws concerning
the issuance of securities.
(c) Seller is the sole
Securityholder of the Company and owns 100% of the Securities of
the Company, which are comprised solely of the Membership
Interests. At the Closing, Purchaser will acquire good and valid
title to all of the Membership Interests, free and clear of any
Liens.
2.3 Subsidiaries . The
Company does not own or control, directly or indirectly, any
interest in any other corporation, association, partnership,
limited liability company or other business entity. The Company is
not a participant in any joint venture or similar
arrangement.
2.4 Authorization; Governmental
Authorization; Noncontravention .
(a) The execution, delivery and
performance by the Company and Seller of this Agreement and all
Related Agreements to which either of them is a party, and the
consummation of the Contemplated Transactions, are within their
respective powers and have been duly authorized by all necessary
action on the part of the Company and Seller. This Agreement
constitutes a valid and binding agreement of Seller and the
Company.
(b) The execution, delivery and
performance by the Company and Seller of this Agreement and the
consummation of the Contemplated Transactions require no action by
or in respect of, or filing with, any Governmental
Authority.
(c) The execution, delivery and
performance by the Company and Seller of this Agreement and the
consummation of the Contemplated Transactions do not and will not
(i) violate the Organizational Documents of the Company or
Seller, (ii) violate any applicable Law, (iii) require
any consent or other action by any Person under, constitute a
default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the
Company or Seller or to a loss of any benefit to which the Company
or Seller is entitled under any provision of any agreement or other
instrument binding upon the Company or Seller or (iv) result
in the creation or imposition of any Lien on any asset of the
Company or Seller.
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2.5 Financial Statements
.
(a) The Company has made available
to Parent, and included in the Disclosure Schedule are, unaudited
financial statements (including balance sheet, income statement and
statement of cash flows) as of and for the year ended
December 31, 2005 and as of and for the eight month period
ended August 31, 2006 (collectively, the “ Financial
Statements ”). The Financial Statements are complete and
correct in all material respects and have been prepared in a manner
consistent with past practice of the Company’s management.
The Financial Statements fairly present the financial condition of
the Company as of the dates and during the periods indicated
therein, subject to normal year-end audit adjustments which are
neither individually nor in the aggregate material. The Company
maintains and will continue to maintain a standard system of
accounting established and administered in accordance with the past
practice of the Company’s management.
(b) The accounting books and records
of the Company, in reasonable detail, accurately and fairly reflect
the activities of the Company in connection with its business. The
Company has not engaged in any material transaction or used any
material amount of corporate funds, except for transactions or
funds which have been and are reflected in the normally maintained
accounting books and records. The Company’s securities
records and minute books have been made available to Parent and
accurately and fairly reflect all minutes of meetings, resolutions
and other material actions and proceedings of such entities and
their members and board of managers and all committees thereof and
all issuances, transfers and redemptions of Securities of the
Company.
2.6 Absence of Certain
Changes . Between December 31, 2005 and the Agreement
Date, the business of the Company has been conducted in the
ordinary course consistent with past practices and there has not
been:
(a) any event, occurrence,
development or state of circumstances or facts that has had or
could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or the proposed
transaction;
(b) any amendment of the
Organizational Documents (whether by merger, consolidation or
otherwise) of the Company;
(c) any splitting, combination or
reclassification of any Securities of the Company or declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, securities or property or any combination
thereof) in respect of the Securities of the Company, or
redemption, repurchase or other acquisition or offer to redeem,
repurchase, or otherwise acquire any Securities;
(d) (i) any issuance, delivery
or sale, or authorization of the issuance, delivery or sale of, any
Securities, or (ii) amendment of any term of any Security (in
each case, whether by merger, consolidation or
otherwise);
(e) any incurrence of any capital
expenditures or any Liabilities in respect thereof by the Company
in excess of $50,000 above the amount provided in the
Company’s budget as disclosed to Parent prior to the
Agreement Date;
(f) any acquisition (by merger,
consolidation, acquisition of securities or assets or otherwise),
directly or indirectly, by the Company of any assets, securities,
properties, interests or businesses, other than supplies in the
ordinary course of business of the Company in a manner that is
consistent with past practice;
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(g) any sale, lease or other
transfer, or creation or incurrence of any Lien on, any assets,
securities, properties, interests or businesses of the Company,
other than sales of inventory in the ordinary course of business
consistent with past practice;
(h) the making by the Company of any
loans, advances or capital contributions to, or investments in, any
other Person, other than in the ordinary course of business
consistent with past practice;
(i) the creation, incurrence,
assumption or sufferance to exist by the Company of any
Indebtedness;
(j) any material damage, destruction
or other casualty loss (whether or not covered by insurance)
affecting the business or assets of the Company;
(k) (i) the entering into of
any agreement or arrangement that limits or otherwise restricts in
any material respect the Company or any of its Affiliates or any
successor thereto or that could, after the Closing Date, limit or
restrict in any material respect the Company, Purchaser or any of
their respective Affiliates, from engaging or competing in any line
of business, in any location or with any Person or (ii) the
entering into, amendment or modification in any material respect or
termination of any Material Contract required to be disclosed by
Section 2.8 or waiver, release or assignment of any material
rights, claims or benefits of the Company;
(l) (i) the grant or increase
of any severance or termination pay to (or amend any existing
arrangement with) any director, officer or employee of the Company,
(ii) any increase in benefits payable under any existing
severance or termination pay policies or employment agreements,
(iii) the entering into of any employment, deferred
compensation or other similar agreement (or amendment of any such
existing agreement) with any director, officer, employee of the
Company, or employee of Seller or Affiliate of Seller who
principally works for or with respect to the Company, (iv) the
establishment, adoption or amendment (except as required by
applicable Law) of any collective bargaining, bonus,
profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, option, restricted stock or other benefit plan or
arrangement covering any director, officer, employee of the
Company, or employee of Seller or Affiliate of Seller who
principally works for or with respect to the Company or
(v) any increase in compensation, bonus or other benefits
payable to any director, officer, employee of the Company, or
employee of Seller or Affiliate of Seller who principally works for
or with respect to the Company, except in each case, any such items
that relate to persons who are employed by Seller or an Affiliate
of Seller, other than the Company, and who serve as directors or
officers of the Company and for which the Company has no payment
obligation;
(m) any labor dispute, other than
routine individual grievances, or any activity or proceeding by a
labor union or representative thereof to organize any employees of
the Company, or employees of Seller or any Affiliate of Seller who
principally works for, or with respect to, the Company, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by
or with respect to such employees;
(n) any change in the
Company’s methods of accounting, except for changes in
accounting methods required by GAAP;
(o) any settlement, or offer or
proposal to settle, (i) any material Legal Proceeding or other
claim involving or against the Company, (ii) any Legal
Proceeding or dispute against the Company or any of its officers or
board of managers or (iii) any Legal Proceeding or dispute
that relates to the Contemplated Transactions;
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(p) any (i) payment, discharge
or satisfaction of any Liabilities, except in the ordinary course
of business consistent with past practice and in accordance with
their terms, (ii) acceleration or delay of collection of notes
or accounts receivable in advance of or beyond their regular due
dates or the dates when the same would have been collected in the
ordinary course of business consistent with past practice,
(iii) delay or acceleration of payment of any account payable
in advance of its due date or the date such Liability would have
been paid in the ordinary course of business consistent with past
practice, or (iv) variation of the Company’s inventory
practices in any material respect from the Company’s past
practices; or
(q) any Tax election made or
changed, any annual Tax accounting period made or changed, any
method of Tax accounting adopted or changed, any Tax Returns
amended or claims for Tax refunds filed, any closing agreement
entered into, any Tax claim made or amended or Tax audit begun, any
Tax claim, audit or assessment settled, any right to claim a Tax
refund, offset or other reduction in Tax Liability surrendered, any
Tax sharing or Tax allocation agreement or similar arrangement
entered into, or any waiver or extension of the period of
limitations applicable to any Taxes granted.
2.7 No Undisclosed
Liabilities . There are no Liabilities of the Company of any
kind whatsoever, and there is no existing condition, situation or
set of circumstances which could reasonably be expected to result
in such a Liability, other than:
(a) Liabilities provided for in the
balance sheet for December 31, 2005 included in the Financial
Statements; and
(b) other undisclosed Liabilities
incurred in the ordinary course of business since December 31,
2005 which, individually or in the aggregate, are not material to
the Company, taken as a whole.
2.8 Material Contracts
.
(a) The Company is neither a party
to nor bound by (any exceptions to this Section 2.8 shall be
the “ Material Contracts ”):
(i) any lease (whether of real or
personal property) providing for annual rentals of $50,000 or
more;
(ii) any agreement for the purchase
of materials, supplies, goods, services, equipment or other assets
providing for either (A) annual payments by the Company of
$50,000 or more or (B) aggregate payments by the Company of
$50,000 or more;
(iii) any sales, distribution or
other similar agreement providing for the sale by the Company of
materials, supplies, goods, services, equipment or other assets
that provides for either (A) annual payments to the Company of
$50,000 or more or (B) aggregate payments to the Company of
$50,000 or more;
(iv) any partnership, joint venture
or other similar agreement or arrangement;
(v) any agreement relating to the
acquisition or disposition of any business (whether by merger, sale
of securities, sale of assets or otherwise);
(vi) any agreement relating to
Indebtedness except any such agreement with an aggregate
outstanding principal amount not exceeding $100,000 and which may
be prepaid on not more than 30 days’ notice without the
payment of any penalty;
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(vii) any option, license, franchise
or similar agreement, including agreements relating to Intellectual
Property Rights;
(viii) any agency, dealer, sales
representative, marketing or other similar agreement;
(ix) any agreement that
(A) limits the freedom of the Company to compete in any line
of business or with any Person or in any area or which would so
limit the freedom of the Company after the Closing Date or
(B) provides for pricing or other contract terms on a
“most favored nations” or similar basis;
(x) any agreement with any director
or officer of the Company or with any “associate” or
any member of the “immediate family” (as such terms are
respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act)
of any such director or officer;
(xi) any indemnification agreements,
other than in connection with commercial transactions in the
ordinary course of business;
(xii) any contract with a
Governmental Authority;
(xiii) powers of attorney from the
Company;
(xiv) confidentiality and
non-disclosure agreements (whether the Company is the beneficiary
or the obligated party thereunder), other than those related to
(A) commercial transactions in the ordinary course of business
that are not individually material and (B) the sale or
disposition of the assets of the Company that do not adversely
affect the Contemplated Transactions or the operation of the
Company by Purchaser after the Closing Date assuming that Purchaser
operates the Company in a manner substantially similar to the
manner in which the Company has been operated prior to the Closing
Date; or
(xv) any other agreement,
commitment, arrangement or plan not made in the ordinary course of
business that is material to the Company.
(b) Each agreement, contract, plan,
lease, arrangement or commitment disclosed in any Schedule to this
Agreement or required to be disclosed pursuant to this Section is a
valid and binding agreement of the Company, and is in full force
and effect, and neither the Company, nor any other party thereto is
in default or breach in any material respect under the terms of any
such agreement, contract, plan, lease, arrangement or commitment,
and no event or circumstance has occurred that, with notice or
lapse of time or both, would constitute any event of default
thereunder. True and complete copies of each such agreement,
contract, plan, lease, arrangement or commitment have been
delivered to Parent.
(c) Section 2.8(c) of the
Disclosure Schedule sets forth the names of the ten suppliers and
ten customers to whom the Company paid or received the greatest sum
of money in respect of services, products or materials provided to
or from the Company since December 31, 2005. Since
December 31, 2005, none of the suppliers or customers listed
in Section 2.8(c) of the Disclosure Schedule has notified the
Company in writing that it is canceling, reducing or otherwise
terminating or that it intends to cancel, reduce or otherwise
terminate its relationship with the Company. There is no pending or
threatened material dispute with any of the Company’s
suppliers or customers. There are no undisclosed vendor
commitments, including rebates, take or pay arrangements or the
like.
(d) Section 2.8(d) of the
Disclosure Schedule sets forth an accurate and complete list of
material services provided by Seller or its Affiliates to the
Company.
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2.9 Litigation . There is no
Legal Proceeding pending against, or threatened against or
affecting the Company or any of its properties before any
arbitrator or any Governmental Authority which, individually or in
the aggregate, if determined or resolved adversely in accordance
with the plaintiff’s demands, could reasonably be expected to
(a) result in a loss to the Company, individually or in the
aggregate, in excess of $50,000, (b) have a Material Adverse
Effect on the Company, or (c) in any manner challenge or seek
to prevent, enjoin, alter or materially delay the Contemplated
Transactions. Neither the Company nor Seller has received any
notice of any such Legal Proceeding. There is no Legal Proceeding
or investigation by the Company currently pending or that the
Company intends to initiate.
2.10 Compliance with Laws and
Court Order . The Company is not in violation of, and has not
violated, and is not under investigation with respect to and has
not been threatened to be charged with or given notice of any
violation of, any applicable Law.
2.11 Foreign Corrupt Practices
Act . Neither the Company nor any agent, employee or other
Person associated with or acting on behalf of the Company has,
directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity, made any unlawful payment to
foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds,
violated any provision of the Foreign Corrupt Practices Act of
1977, as amended.
2.12 Export Control Laws .
Seller has provided the Purchaser an accurate and complete list of
all destinations to which the Company’s products have been
shipped.
2.13 Products . Each of the
products produced or sold by the Company is, and at all times up to
and including the sale thereof has been, in compliance with all
material applicable Laws and conforms to any promises or
affirmations of fact made on the container or label for such
product or in connection with its sale. The value of the
refurbished inventory of the Company is recorded at net realizable
value and is saleable to customers.
2.14 Properties .
(a) The Company has good and marketable, indefeasible, fee
simple title to, or in the case of leased property and assets has
good and valid leasehold interests in, all property and assets
(whether real, personal, tangible or intangible) reflected on the
August 31, 2006 balance sheet and for all property and assets
acquired since such date, except for properties and assets sold
since such date in the ordinary course of business consistent with
past practices. None of such property or assets is subject to any
Lien, except:
(i) Liens for Taxes or governmental
assessments, charges or claims arising in the ordinary course of
business the payment of which is not yet due or for taxes which are
being contested in good faith (and for which adequate accruals or
reserves have been established on the August 31, 2006 balance
sheet);
(ii) statutory Liens of landlords
and Liens of carriers, warehousemen, mechanics, materialmen and
other similar Persons and other Liens imposed by law incurred in
the ordinary course of business for sums not yet delinquent or
immaterial in amount (and for which adequate accruals or reserves
have been established on the August 31, 2006 balance sheet);
or
(iii) Liens which do not materially
detract from the value or materially interfere with any present or
intended use of such property or assets (clauses (i) –
(iii) of this Section 2.14 are, collectively, the “
Permitted Liens ”).
10
(b) There are no developments
affecting any such property or assets pending or threatened, which
might materially detract from the value, materially interfere with
any present or intended use or materially adversely affect the
marketability of any such property or assets.
(c) All leases of such real property
and personal property are in good standing and are valid, binding
and enforceable in accordance with their respective terms, the
Company has not given or received any notice of termination or
cancellation with respect to any of such lease, and there does not
exist under any such lease any default or any event which with
notice or lapse of time or both would constitute a default, or
permit the termination or modification of any such lease or the
modification or acceleration by the other party thereto of rent or
any other obligation under any such lease.
(d) No security deposit or portion
thereof deposited with respect to any such lease has been applied
in respect of a breach of or default under such lease that has not
been redeposited in full.
(e) The plants, buildings,
structures and equipment owned by the Company have no material
defects, are in good operating condition and repair and have been
reasonably maintained consistent with standards generally followed
in the industry (giving due account to the age and length of use of
same, ordinary wear and tear excepted), are adequate and suitable
for their present uses and, in the case of plants, buildings and
other structures (including the roofs thereof), are structurally
sound.
(f) The plants, buildings and
structures leased by the Company currently have access to
(i) public roads or valid easements over private streets or
private property for such ingress to and egress from all such
plants, buildings and structures and (ii) water supply, storm
and sanitary sewer facilities, telephone, gas and electrical
connections, fire protection, drainage and other public utilities,
in each case as is necessary for the conduct of the business of the
Company as currently conducted.
(g) Such real property, and its
continued use, occupancy and operation as currently used, occupied
and operated, does not constitute a nonconforming use under all
applicable building, zoning, subdivision and other land use and
similar applicable Law.
(h) There are no material disputes
with respect to any of the leases.
(i) The Company has not subleased,
licensed or otherwise granted any person the right to use or occupy
any leased real property or any portion thereof.
(j) Except for any asset leased
under a lease described in Section 5.10 of the Disclosure
Schedule or any asset owned or leased by Seller or an Affiliate of
Seller and used to provide any service listed in
Section 2.8(d) of the Disclosure Schedule, the property and
assets owned or leased by the Company, or which it otherwise has
the right to use, constitute all of the property and assets used or
held for use in connection with the business of the Company and are
adequate to conduct such business as currently
conducted.
2.15 Intellectual Property
.
(a) Section 2.15(a)(i) of the
Disclosure Schedule contains a true and complete list of each of
the registrations and applications for registrations included in
the Owned Intellectual Property Rights. Section 2.15(a)(ii) of
the Disclosure Schedule contains a true and complete list of all
computer software incorporated in, provided with or otherwise
necessary to use, support and maintain the Company’s
products, including all computer software that the Company provides
or makes available to its customers (except for any software
licensed under agreements excluded pursuant to the parenthetical in
the following sentence and any software owned or licensed by Seller
and used to provide any of the services
11
listed in Section 2.8(d) of the Disclosure
Schedule). Section 2.15(a)(iii) of the Disclosure Schedule
contains a true and complete list of all material agreements
(whether written or otherwise, including license agreements,
research agreements, development agreements, distribution
agreements, settlement agreements, consent to use agreements and
covenants not to sue, but excluding “click-wrap” or
“shrink-wrap” licenses for off-the-shelf personal
computer software that is made generally commercially available on
nondiscriminatory pricing terms and have an individual acquisition
cost of $500 per seat or less) to which the Company is a party or
otherwise bound, granting or restricting any right to use, exploit
or practice any Intellectual Property Rights.
Section 2.15(a)(iv) of the Disclosure Schedule sets forth all
material third party components, including hardware, firmware or
computer software, that are incorporated in or provided by the
Company with the Company’s products, or that are otherwise
necessary for the manufacture of the Company’s products
except for third party hardware, firmware or software or other
third party components that are (i) embedded or incorporated
by third party suppliers, not at the direction of the Company, into
the Company’s products, (ii) purchased by the Company in
connection with the development of products pursuant to the
development agreements listed in Section 2.15(a)(iii) of the
Disclosure Schedule on behalf of Crown Packaging Technology, Inc.,
Crown, Cork and Seal Technologies Corporation or Plastipak
Packaging, Inc. or (iii) combined to produce the
Company’s digital ink products.
(b) The software owned or used by
Seller to provide the services listed in Section 2.8(d) of the
Disclosure Schedule, the Intellectual Property Rights licensed in
by the Company (the “ Licensed Intellectual Property
Rights ”), the third party components listed or required
to be listed in Section 2.15(a)(ii) and (iii) of the
Disclosure Schedule and the Owned Intellectual Property Rights
together constitute all the Intellectual Property Rights and
components necessary to, or used or held for use in, the conduct of
the business of the Company as currently conducted, including the
design, manufacture, license and sale of products.
(c) The Company has not given to any
Person an indemnity in connection with any Intellectual Property
Right, other than indemnities contained in agreements listed in
Section 2.8 of the Disclosure Schedule or that are not
required to be disclosed in such section.
(d) The Company has not infringed,
misappropriated or otherwise violated any Intellectual Property
Right of any third person. There is no Legal Proceeding pending
against, or threatened against or affecting, the Company, any
present or former officer, director or employee of the Company
(i) based upon, or challenging or seeking to deny or restrict,
the rights of the Company in any of the Owned Intellectual Property
Rights or the Licensed Intellectual Property Rights,
(ii) alleging that the use of the Owned Intellectual Property
Rights or the Licensed Intellectual Property Rights or any services
provided, processes used or products manufactured, used, imported
or sold by the Company do or may conflict with, misappropriate,
infringe or otherwise violate any Intellectual Property Right of
any third party or (iii) alleging that the Company has
infringed, misappropriated or otherwise violated any Intellectual
Property Right of any third party. The Company has not received
from any third party an offer to license any Intellectual Property
Rights of such third party in connection with a dispute settlement
pertaining to Intellectual Property Rights that has been disclosed
to Parent.
(e) None of the Owned Intellectual
Property Rights or Licensed Intellectual Property Rights material
to the operation of the business of the Company has been adjudged
invalid or unenforceable in whole or part, and all such Owned
Intellectual Property Rights and Licensed Intellectual Property
Rights are valid and enforceable.
(f) The Company holds all right,
title and interest in and to all Owned Intellectual Property Rights
and all of the Company’s licenses under the Licensed
Intellectual Property Rights, free and clear of any Lien. Without
limiting the foregoing, the technology and the products that the
Company owns or
12
purports to own was (i) developed by
employees of the Company within the scope of their employment,
(ii) developed by independent contractors who have assigned
their rights to the Company pursuant to enforceable written
agreements, or (iii) otherwise acquired by the Company from
third parties that assigned all Intellectual Property Rights in
each such technology to the Company. In each case where a patent or
patent application, trademark registration or trademark
application, service mark registration or service mark application,
mask work registration or mask work application, or copyright
registration or copyright application included in the Owned
Intellectual Property Rights is held by assignment, the assignment
has been duly recorded with the Governmental Authority from which
the patent or applicable registration issued or before which the
application or application for registration is pending. The Company
has taken all actions necessary to maintain and protect all
material Owned Intellectual Property Rights and its rights in the
Licensed Intellectual Property Rights, including payment of
applicable maintenance fees and filing of applicable statements of
use.
(g) No Person has infringed,
misappropriated or otherwise violated any Owned Intellectual
Property Right or Licensed Intellectual Property Right. The Company
has taken reasonable steps in accordance with normal industry
practice to maintain the confidentiality of all confidential
Intellectual Property Rights, including any and all trade secrets
of the Company. None of the Intellectual Property Rights of the
Company that are material to the business or operation of the
Company and the value of which to the Company is contingent upon
maintaining the confidentiality thereof, has been disclosed other
than to employees, vendors, distributors, customers and agents of
the Company all of whom are bound by written confidentiality
agreements substantially in the form previously disclosed to
Parent. There has been no misappropriation of any trade secrets or
other confidential Intellectual Property Rights used in connection
with and material to the Company’s business by any person; no
employee, independent contractor or agent of the Company, Seller or
Affiliate of Seller who principally works for, or with respect to,
the Company has misappropriated any trade secrets of any other
person in the course of performance as an employee, independent
contractor or agent of the Company’s business; and no
employee, independent contractor or agent of the Company or Seller
or any Affiliate of Seller who principally works for, or with
respect to, the Company is in default or breach of any material
term of any employment agreement, nondisclosure agreement,
assignment of invention agreement or similar agreement or contract
relating in any way to the protection, ownership, development, use
or transfer of the Owned Intellectual Property Rights.
(h) The Company has taken reasonable
steps in accordance with normal industry practice to preserve and
maintain reasonably complete notes and records relating to the
Owned Intellectual Property Rights and the Licensed Intellectual
Property Rights.
(i) Except pursuant to license
agreements which are set forth in Section 2.15(a)(iii) of the
Disclosure Schedule, the Company has no obligation to compensate or
account to any Person for the use of any of the Company’s
Owned Intellectual Property Rights.
2.16 Licenses and Permits .
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being
conducted by it (the “ Permits ”). No suspension
or cancellation of any of the Permits is pending or
threatened.
2.17 Environmental, Zoning and
Safety Laws . (a) Neither the activities carried on by the
Company at the facilities, offices or properties leased or operated
by the Company, nor such facilities, offices or properties, are in
material violation of any Environmental Laws, or any other zoning,
health or safety law or regulation; (b) neither the Company
nor any operator of its past or present properties, is in
violation, or alleged violation, of, or has any Liability or
threatened Liability under, any Environmental Laws; (c) none
of the properties currently or formerly owned, leased or operated
by the Company (including soils and surface and ground waters) is
contaminated with any Hazardous Substance; (d) the
13
Company is not actually or allegedly liable for
any off-site contamination by Hazardous Substances; (e) the
Company is not liable under any Environmental Law and has received
no notice thereof; (f) the Company has all permits, licenses
and other authorizations required under any Environmental Law
(“ Environmental Permits ”); (g) the
Company is in material compliance with its Environmental Permits;
and (h) neither the execution of this Agreement nor the
consummation of the Contemplated Transactions will require any
investigation, remediation or other action with respect to
Hazardous Substances, or any notice to or consent of Governmental
Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit.
2.18 Insurance . The Company
owns no insurance policies. The Company is a covered insured under
insurance policies held by Seller or an affiliate of Seller that
are in full force and effect with extended coverage of the type and
in the amount shown in Section 2.18 of the Disclosure
Schedule. None of such policies will provide coverage to the
Company after the Closing. There has not been any claim (including
any claim for worker’s compensation) in excess of $25,000
made by Seller with respect to the Company or the assets primarily
used in the Company’s business under, or that has been made
against Seller or its Affiliates with respect to the Company or the
assets primarily used in the Company’s business and has been
paid or defended in accordance with the terms of any insurance
policy maintained by Seller or its Affiliates with respect to the
Company since January 1, 2005.
2.19 Employees . Seller has
provided Parent with a true and complete list of (a) the
names, titles, annual salaries and other compensation of all
employees of the Company, and employees of Seller or any Affiliate
of Seller who principally works for or with respect to the Company,
including their countries of residence and principal employment and
(b) the wage rates for non-salaried employees of the Company,
and non-salaried employees of Seller or any Affiliate of Seller who
principally works for or with respect to the Company (by
classification). All of such employees have the legal right to
perform services for the Company in accordance with local
immigration, work permit and similar applicable laws and
regulations.
2.20 Labor Matters . The
Company is not and has not been a party to any collective
bargaining agreement, and there is not and has not been any
association, works council or similar organization with respect to
which the Company has any obligation to negotiate or bargain
regarding the terms and conditions of employment of any employee of
the Company, or employee of Seller or any Affiliate of Seller who
principally works for or with respect to the Company. The Company
is in compliance with all currently applicable Laws respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair
labor practice, failure to comply with which or engagement in
which, as the case may be, would reasonably be expected to have a
Material Adverse Effect on the Company. There is no unfair labor
practice complaint pending or threatened against the Company before
the National Labor Relations Board. Copies of any collective
bargaining, works council or other employee organization agreement
have been furnished to Parent.
2.21 Employee Plans
.
(a) Section 2.21 of the
Disclosure Schedule contains a correct and complete list
identifying each material “employee benefit plan,” as
defined in Section 3(3) of ERISA, each employment, severance
or similar contract, plan, arrangement or policy and each other
plan or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, option or other securities related rights
or other forms of incentive or deferred compensation, vacation
benefits, insurance (including any self-insured arrangements),
health or medical benefits, employee assistance program, disability
or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health,
medical or life insurance benefits) which is maintained,
administered or contributed to by the Company, Seller, or any ERISA
Affiliate and covers
14
any employee, director, officer or consultant or
former employee, director, officer or consultant of the Company or
any employee, director, officer or consultant or former employee,
director, officer or consultant of Seller or any Affiliate of
Seller who principally works for, or with respect to, the Company,
or with respect to which the Company has any Liability. Copies of
such plans (and, if applicable, related trust or funding agreements
or insurance policies) and all amendments thereto and written
interpretations thereof have been furnished to Parent together with
the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto) and tax return (Form 990) prepared in
connection with any such plan or trust. Such plans are referred to
collectively herein as the “ Employee Plans
.”
(b) Section 2.21 of the
Disclosure Schedule discloses whether each Employee Plan that is an
“employee welfare benefit plan” (as defined in
Section 3(1) of ERISA (regardless of the applicability of
ERISA to such Employee Plan)) is (i) unfunded or self-insured,
(ii) funded through a “welfare benefit fund,” as
such term is defined in Section 419(e) of the Code (regardless
of whether the Code is applicable thereto), or other funding
mechanism or (iii) insured.
(c) As of December 31, 2005,
the fair market value of the assets of each Employee Plan subject
to Title IV of ERISA (other than a “multiemployer
plan,” as defined below) (a “ Title IV Plan
”) (excluding for these purposes any accrued but unpaid
contributions) exceeded the present value of all benefits accrued
under such Title IV Plan determined on a termination basis using
the assumptions established by the PBGC as in effect on such date.
No “accumulated funding deficiency,” as defined in
Section 412 of the Code, has been incurred with respect to any
Employee Plan subject to such Section 412, whether or not
waived. No “reportable event,” within the meaning of
Section 4043 of ERISA, other than a “reportable
event” that will not have a Material Adverse Effect on the
Company or Seller, and no event described in Sections 4062 or 4063
of ERISA, has occurred in connection with any Employee Plan. None
of the Company, Seller, or any ERISA Affiliate of the Company or
Seller has (i) engaged in, or is a successor or parent
corporation to a person or an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA or
(ii) incurred, or reasonably expects to incur prior to the
Closing Date, (A) any Liability under Title IV of ERISA
arising in connection with the termination of, or a complete or
partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA or (B) any Liability under Section 4971
of the Code that in either case could become a Liability of the
Company, Seller or Purchaser or any of its ERISA Affiliates after
the Closing Date.
(d) Neither the Company, Seller nor
any ERISA Affiliate nor any predecessor thereof contributes to, has
been obligated to contribute to, or has in the past contributed to,
any multiemployer plan, as defined in Section 3(37) of ERISA
(“ Multiemployer Plan ”) that could result in a
Liability to the Company or any of its Affiliates.
(e) Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter, and the Company and
Seller have no knowledge of any reason why any such determination
letter should be revoked or not be reissued. The Company has made
available to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such Employee
Plan. Each Employee Plan has been maintained in material compliance
with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including ERISA and the
Code, which are applicable to such Employee Plan. No material
events have occurred with respect to any Employee Plan that could
result in payment or assessment by or against the Company or Seller
of any material excise taxes under Sections 4972, 4975, 4976, 4977,
4979, 4980B, 4980D, 4980E or 5000 of the Code.
(f) The Company and Seller have no
current or projected Liability in respect of post-employment or
post-retirement health or medical or life insurance benefits for
any retired, former or current employee, director, officer or
consultant of the Company or any retired, former or
current
15
employee, director, officer or consultant of
Seller or any Affiliate of Seller who principally works for or with
respect to the Company, except as required to avoid excise tax
under Section 4980B of the Code. The Company and Seller comply
with the applicable requirements of Section 4980B(f) of the
Code or any similar applicable Law with respect to each applicable
Employee Plan.
(g) All contributions and payments
accrued under each Employee Plan, determined in accordance with
prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date,
will be discharged and paid on or prior to the Closing Date except
to the extent reflected as a Liability on the August 31, 2006
balance sheet.
(h) There is no contract, plan or
arrangement (written or otherwise) covering any employee or
director or former employee or director of the Company or any
employee or director, or former employee or director of Seller or
any Affiliate of Seller who principally works for, or with respect
to, the Company, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to
the terms of Sections 280G or 162(m) of the Code.
(i) Section 2.21 of the
Disclosure Schedule identifies each plan covering employees or
directors or former employees or directors of the Company or
employees or directors or former employees or directors of Seller
or any Affiliate of Seller who principally works for, or with
respect to, the Company in any foreign country which if maintained
or administered in or otherwise subject to the laws of the United
States would be described in Section 2.21(a).
(j) No employee or director or
former employee or director of the Company or employee or director
or former employee or director of Seller or any Affiliate of Seller
who principally works for, or with respect to, the Company will
become entitled to any bonus, retirement, severance, job security
or similar benefit, or the enhancement of any such benefit
(including acceleration of vesting or exercise of an incentive
award), as a result of the Contemplated Transactions.
(k) There are no outstanding loans
or other extensions of credit made by the Company or Seller to any
executive officer (as defined in Rule 3b-7 under the Exchange Act)
or director of the Company or any similar officer or director of
Seller or any Affiliate of Seller who principally works for, or
with respect to, the Company.
(l) There is no action, suit,
investigation, audit or proceeding pending against or involving or
threatened against or involving any Employee Plan before any
arbitrator or any Governmental Authority. No event has occurred and
no condition or circumstance exists that has resulted or could
result in any Employee Plan being ordered or required to be
terminated or wound-up in whole or in part or having its
registration under any Laws being refused or revoked or being
placed under the administration of any trustee or receiver or any
regulatory authority or being required to pay any material Taxes or
penalties under any Laws.
(m) The Company has materially
complied with its obligations under the Michigan Employment
Security Act Sections 421.1 et seq . (“ MCLA
”), and, as required under MCLA Section 421.15(g),
disclosed to Purchaser at least two (2) calendar days prior to
the Agreement Date on Form UIA 1027 the amount of the outstanding
unemployment Tax liability, unreported unemployment Tax liability
and the Tax payments, Tax rates and cumulative benefit charges for
the most recent five (5) years, a listing of all individuals
currently employed and a listing of all employees separated from
employment in the most recent twelve (12) months immediately
prior to the Agreement Date. The Company and Seller warrant and
represent the accuracy of this information, subject to the
penalties under Section 421.15(g) of the MCLA, in addition to
any other remedies Purchaser may have under this
Agreement
16
(n) All Employee Plans have been
materially administered in accordance with their terms, there are
no outstanding defaults or violations by the Company or Seller of
any obligation required to be performed by it in connection with
any Employee Plan and no order has been made or notice given
pursuant to any Laws requiring (or proposing to require) the
Company to take (or refrain from taking) any action in respect of
any Employee Plan.
(o) All returns, filings, reports
and disclosures relating to the Employee Plans required to be filed
or distributed, pursuant to the terms of the Employee Plans, Laws
or any regulatory authority, have been filed or distributed in
accordance with all requirements, all filing fees and levies
imposed on the Employee Plans by regulatory authorities or Laws
have been made on a timely basis and the funds of the Employee
Plans are not exposed to any late filing fees that have not been
remitted.
(p) The Company has no Liability,
including any obligations under any Employee Plans, with respect to
any misclassification of a Person performing services for the
Company as an independent contractor rather than as an
employee.
(q) All amounts owing in respect of
employee payroll withholding obligations, remittances, premiums,
contributions and assessments under provincial or federal statutes
or employee benefit plans have been fully accrued in the books and
records of the Company and wages, vacation pay, holiday pay and
employee benefits of the employees of the Company, Seller or
Affiliate of Seller who principally work for, or with respect to,
the Company have been accrued in the Company’s books and
records and reflected as such in the Financial Statements
consistent with past practices of the Company’s
management.
(r) No payment pursuant to any
Employee Plans or other arrangement to any “service
provider” (as such term is defined in Section 409A of
the Code and the United States Treasury regulations and Internal
Revenue Service ((“ IRS ”) guidance thereunder),
would subject the Company or the managers, directors, employees,
consultants or contractors of the Company to tax pursuant to
Section 409A(1) of the Code, whether pursuant to the
transactions contemplated by this Agreement or
otherwise.
2.22 Taxes .
(a) The Company has duly and timely
filed, or Seller has duly and timely filed on the Company’s
behalf, with the appropriate Taxing Authorities all Tax Returns
required to be filed. All such Tax Returns are complete and
accurate in all respects. All Taxes due and owing by the Company or
with respect to the Company, its business, its assets or the
Membership Interests (whether or not shown on any Tax Return) have
been paid. Neither the Company nor Seller currently is the
beneficiary of any extension of time within which to file any Tax
Return with respect to the Company, its business, its assets or the
Membership Interests. No claim has ever been made by an authority
in a jurisdiction where the Company does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction or that
its assets, its business or the Membership Interests are or may be
subject to such taxation.
(b) The unpaid Taxes of the Company
(i) did not, as of August 31, 2006, exceed the reserve
for Tax Liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the face of the August 31, 2006 balance
sheet (rather than in any notes thereto), and (ii) will not,
as of the Closing Date, exceed such accruals to the extent they are
reflected on the August 31, 2006 balance sheet. Since
December 31, 2005, neither the Company nor (with respect to
the Company, its business, its assets or the Membership Interests)
Seller has incurred any Liability for Taxes outside the ordinary
course of business or otherwise inconsistent with past custom and
practice.
17
(c) No deficiencies for Taxes
against the Company or with respect to the Company, its business,
its assets or the Membership Interests, or for which the Company
may be liable, have been claimed, proposed or assessed by any
Taxing Authority. There are no pending (or threatened) audits,
assessments or other actions for or relating to any Liability in
respect of Taxes of the Company or its business, its assets or the
Membership Interests, and there are no matters under discussion
with any Taxing Authority, or known to the Company or to Seller,
with respect to Taxes that are likely to result in an additional
Liability for Taxes with respect to the Company, its business, its
assets or the Membership Interests. The Company or Seller has
delivered or made available to Parent complete and accurate copies
of federal, state and local Tax Returns of the
