STOCK PURCHASE AGREEMENT
AMONG
SCIENTIFIC INDUSTRIES INC.
AND
THE STOCKHOLDERS OF ALTAMIRA INSTRUMENTS, INC.
DATED AS OF NOVEMBER 30, 2006
THIS STOCK PURCHASE AGREEMENT, dated as of November 30, 2006 (this
"Agreement"), is made by and among Scientific Industries Inc., a
Delaware corporation (the "Buyer"), and ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), the
address of each individual is set forth on Schedule I (▇▇▇▇▇, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ collectively are the "Sellers").
The following documents comprise this Stock Purchase Agreement:
1. Stock Purchase Agreement (with Articles I-X)
2. Schedule I (Sellers and their shareholdings)
3. Schedule 3.05 (various audited and unaudited statements)
4. Altamira Disclosure Schedule
5. Exhibit A (Escrow Agreement)
6. Exhibit B (Registration Rights Agreement)
7. Exhibit C (▇▇▇▇▇▇▇▇ P. March Employment Agreement)
8. Exhibit D (Opinion of Seller's Counsel)
9. Exhibit E (Opinion of Buyer's Counsel)
10. Form of resignation of Altamira officer or director
11. Third party consents
The Sellers own all of the outstanding shares of capital stock of
Altamira Instruments, Inc., a Delaware corporation ("Altamira"),
which is engaged in the business of producing and distributing
catalyst research instruments (the "Business"). Sellers desire to
sell to the Buyer and the Buyer desires to acquire all the
outstanding shares of capital stock of Altamira upon the terms
and subject to the conditions set forth herein.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. (a) The following terms, as used in this
Agreement, shall have the following meanings:
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified Person.
"Agreement" has the meaning set forth in the preamble.
"Altamira" has the meaning set forth in the preamble.
"Applicable Percentage" has the meaning set forth in
Section 2.02(a)(iii).
"Buyer" has the meaning set forth in the preamble.
"Buyer's SEC Reports" has the meaning set forth in Section 3.26.
"Buyer's Shares" has the meaning set forth in Section 2.02(a)(ii).
"Business" has the meaning set forth in the preamble.
"Business day" means any day other than a Saturday, Sunday, any
day which is a federal legal holiday in the United States or any
day on which institutions in the State of New York are authorized
or required by law or other governmental action to close.
"CMRP" means the percentage for a Contingent Payment Period of the
net revenues of Altamira represented by the Cost of Materials for
the full period as such revenues and costs are determined in
accordance with GAAP as consistently applied. For example, if for
the period the cost of materials was $1,000,000 and the revenues
were $2,000,000, the CMRP is 50.
"Code" means the Internal Revenue Code of 1986.
"Contract" means any agreement, note, bond, arrangement, understanding,
lease, license, option, indenture, mortgage, deed of trust, plan,
commitment or instrument.
"Competitive Activities" means engaging directly or indirectly in or
being employed in any facet of the production or distribution of
catalyst research instruments or components by or on behalf of any
Person other than the Buyer or a subsidiary of the Buyer.
"Contingent Payment" has the meaning set forth in Section 2.02(a)(iii).
"Contingent Payment Periods" shall be five periods, the first of which
shall commence on the Closing Date or if the Closing Date is not the
first day of a calendar month then on the first day of the first full
calendar month following the Closing Date and shall end on June 30, 2007,
the next three to be the 12 months ended June 30, 2008, June 30, 2009
and June 30, 2010, respectively, and the fifth and last period shall
commence on July 1, 2010 and end on a date which is the last date of
the 47th calendar month following the first calendar month of the first
Contingent Payment Period.
"Cost of Materials" means the cost of the components of the products
sold, including but not limited to: (a) cabinets, mass flow
controllers, electronic control modules, furnaces, control valves,
thermal conductivity detectors, computers, heaters and insulation,
(b) fabrication costs including glass or metal reactors, panels,
painting performed by outside contractors, and custom-welded
components, and (c) stock material costs such as wire, wire wraps,
wire guides, nuts and bolts, small tubing, small fittings and fuses,
but does not include direct or indirect labor which is not part of
the component costs, consulting fees, shipping, broker fees,
commissions and overhead. For example, the Cost of Materials
related to the net sales of $1,365,712 for the year ended December 31,
2005, as set forth in the Audited Financial Statements, was $504,389.
Accordingly, the CMRP for the year was 36.9.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Escrow Agreement" means the agreement among the Sellers, the Buyer
and the Escrow Agent in the form of Exhibit A hereto.
"Escrow Share Indemnification Value" means the weighted average
(based on sales volume) of the reported closing sale price of a
share of Common Stock of the Buyer on the national stock market on
which the Common Stock is traded or if not traded on such market on
the Over-the-Counter Bulletin Board of the NASD for the five days on
which trades were reported immediately preceding the earlier of: (i)
the date of the final determination of the Indemnification Obligation
or (ii) the date which is eighteen months following the Closing Date.
"GAAP" means generally accepted accounting principles.
"Governmental Entity" means any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign.
"Indemnification Claim" has the meaning set forth in Section 8.02(d).
"Indemnification Obligation" means the amount payable by an Indemnifying
Party to an Indemnified Party under Article VIII pursuant to the
agreement of the Indemnifying Party and the Indemnified Party or, in the
absence of such agreement, as determined by arbitration or a judgment of
a court of law from which award or judgment no appeal may be legally made.
"Intellectual Property" means patents, patent applications, trademarks
(registered and unregistered) and service marks (and any applications or
registrations therefor), trade secrets, trade names, corporate names,
copyrights, copyright registrations (and any applications therefor),
know-how, inventions, websites and other intellectual property and
proprietary rights, whether or not subject to statutory registration
or protection or other similar type of proprietary intellectual
property right.
"Material Adverse Effect" means a material adverse effect upon the
business, assets, operations, properties, financial position, results
of operations or prospects, or a material increase or adverse change
in the nature or terms of the liabilities of Altamira or any adverse
effect upon the ability of a party hereto to consummate any of the
transactions contemplated by this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"Permitted Liens" shall mean (i) Security Interests for Taxes not yet
due and payable or being contested in good faith by appropriate
proceedings and for which there are adequate reserves on the books, (ii)
workers or unemployment compensation Security Interests arising in the
ordinary course, (iii) mechanic's, materialman's, supplier's, vendor's
or similar Security Interests arising in the ordinary course securing
amounts that are not delinquent and (iv) zoning ordinances, easements
and other restrictions of legal record affecting real property which
would be revealed by a survey and would not, individually or in the
aggregate, materially interfere with the usefulness of such real
property to the Business.
"Person" means an individual, a partnership, a limited liability
company, a limited liability partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization or any other entity or organization,
domestic or foreign (including a Governmental Entity).
"PID" means "Process Integral Development Eng & Tech, S.L.", a
Spanish company which has contracted with Altamira for the exclusive
distribution, in North America, of laboratory instruments
manufactured by PID.
"SEC" means the Securities and Exchange Commission.
"Security Interest" means mortgages, liens, security interests,
encumbrances, leases, assignments, subleases, easements,
covenants, rights-of-way or other similar restrictions of any
nature whatsoever.
"Sellers" has the meaning set forth in the preamble.
"Sellers' Knowledge" means the knowledge of any Seller and/or
any officer or director of Altamira, such persons having made
reasonable inquiry as to the representations, warranties and
schedules given to the Buyer in this Agreement.
"Seller's Portion" means the percentage set forth opposite the
Seller's name on Schedule I attached hereto, with the sum of
all of the Seller's Portions to be 100%.
"Software" means all electronic data processing systems,
information systems, computer software programs, program
specifications, charts, procedures, source codes, input data,
routines, data bases, report layouts, formats, record file layouts,
diagrams, functional specifications, narrative descriptions, flow
charts and other related material developed for any of the Sellers
or used, licensed, leased or owned, directly or indirectly, by, on
behalf of or for the account of the Sellers.
"Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other entity of which a Person (either
alone or through or together with any other subsidiary) owns,
directly or indirectly, 50% or more of the stock or other equity
or partnership 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 entity.
"Symyx" means Symyx Technologies, Inc., a California corporation
which has granted a license to Altamira for the sale of high through
put laboratory instruments.
"Tax" or "Taxes" means any Federal, state, local or foreign income,
gross receipts, capital stock, franchise, profits, estimated,
payroll, employment, environmental, withholding, social security,
unemployment, disability, real property, ad valorem/personal
property, stamp, excise, occupation, sales, use, transfer, value
added, alternative minimum or other tax, assessment, duty or
similar charge of any kind, including any interest, penalty or
addition thereto, whether disputed or not.
"Tax Return" means any return, report, information return or other
document (including schedules or any related or supporting
information) filed or required to be filed with any Taxing
Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
"Taxing Authority" means any governmental or any quasi-governmental
body exercising any taxing authority or any other authority
exercising Tax regulatory authority.
"Zeton" means Zeton, Inc., a Canadian company which was the
predecessor to Altamira.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
____________________________ ___________
Arbiter 2.02(c)
Audited Financial Statements 3.05(a)
Buyer Indemnitees 8.02(a)
Closing 2.02(d)
Closing Date 2.02(d)
Escrowed Shares 2.02(a)(ii)
Financial Statements 3.05
Indemnified Party 8.02(c)(i)
Indemnifying Party 8.02(c)(i)
IRS 3.09
Listed Contracts 3.10(a)
Losses 8.02(a)
Notice 8.02(c)(i)
June 30, 2006 Balance Sheet 3.05(a)
Pension Plan 3.15(b)
Plan 3.15(a)
Purchase Price 2.02(a)
Shares 2.01
Third Party Claim 8.02(c)(i)
1.02 Defined Terms. (a) Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all
financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect
from time to time.
(b) All references in this Agreement to "Articles", "Sections"
and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement. The words "herein",
"hereof" and "hereunder" and other words of similar import refer
to this Agreement and not to any particular Article, Section or
other subdivision.
(c) In this Agreement, in the computation of periods of time
from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each
mean "to but excluding".
(d) All references to "including" in this Agreement shall mean
including without limitation.
(e) A reference to a law in this Agreement includes any amendment
or modification to such law and any rules or regulations issued
thereunder.
(f) A reference to a Person in this Agreement includes its
successors and permitted assigns (if any).
ARTICLE II
PURCHASE AND SALE OF SHARES
2.01 Purchase and Sale of Shares. At the Closing, upon the terms
and subject to the conditions set forth in this Agreement, each of
the Sellers shall sell, assign, transfer and convey to the Buyer,
and the Buyer shall purchase and acquire from such Seller, the
number of shares of Altamira set forth opposite the Seller's name
on Schedule I attached hereto, which constitute for all the Sellers
in the aggregate, all of the outstanding shares of capital stock
in Altamira (the "Shares").
2.02 Purchase Price.
(a) Purchase Price. The purchase price for the Shares
(the "Purchase Price") shall consist of:
(i) An aggregate of Four Hundred Thousand Dollars ($400,000) payable
by the Buyer at the Closing by certified or cashiers checks, with
the amount payable to each Seller to be the amount set forth in
Schedule I opposite the Seller's name.
(ii) An aggregate of One Hundred and Twenty-Five Thousand (125,000)
shares of Common Stock (the "Buyer's Shares") to be issued at the
Closing, with the number of Buyer's Shares to be issued to each
Seller set forth on Schedule I opposite the Seller's name, but
which, along with the Sellers' duly executed stock powers, are to
be delivered and held pursuant to the Escrow Agreement
(the "Escrowed Shares").
(iii) A Contingent Payment to be made to each Seller by the Buyer
by wire transfer of immediate funds equal to the Seller's Portion
of the amount representing the Applicable Percentage of the revenues
of Altamira for the Contingent Payment Period after deducting all
discounts, returns and customer allowances, all as determined in
accordance with GAAP. The Applicable Percentage shall be five
percent (5%) unless the CMRP for the period is greater than 42,
in which event the Applicable Percentage shall be reduced by
0.119% (5/42) for every percentage greater than 42. For example,
if the CMRP is 50.5% the Applicable Percentage for that Period
will be reduced by 1.0115% to 3.9885%. Payment shall be made by
a date no later than 60 days following the end of each Contingent
Payment Period or in the event of a dispute referred to in Section
2.02(b) three business days following the resolution of the dispute.
(b) Buyer agrees to deliver to the Sellers within 45 days
following the end of each Contingent Payment Period a Statement
of Income of Altamira for the period prepared in accordance with
GAAP, accompanied by a schedule of the computation of the CMRP and,
upon request of ▇▇▇▇▇ on behalf of the Sellers, all relevant
information, including related workpapers.
The computations set forth on the Statement of Income shall be
conclusive and binding upon the parties hereto, unless ▇▇▇▇▇ on
behalf of the Sellers, within five (5) business days after receipt,
notifies the Buyer in writing that the Sellers dispute any of the
relevant amounts set forth therein, specifying the nature of the
dispute and the basis there for. If by the end of the fifth
business day following receipt of such notification, the parties
do not reach agreement resolving the dispute, the parties shall
submit the dispute for resolution to a partner at a nationally
recognized independent accounting firm mutually agreed upon by
▇▇▇▇▇ and by the Buyer, which partner or member shall not have
a material relationship with the Buyer, Altamira or any of the
Sellers or any of their respective Affiliates within two years
preceding the appointment (the "Arbiter"). Promptly, but not
later than ten (10) days after acceptance of his or her appointment
as Arbiter, the Arbiter shall determine, based solely on
presentations by ▇▇▇▇▇ and the Buyer, and not by independent
review, only those issues in dispute and shall render a report as
to the dispute and the resulting computation of the CMRP, which
shall be conclusive and binding upon the parties. All proceedings
conducted by the Arbiter shall take place in New York, New York.
In resolving any disputed item, the Arbiter (i) shall be bound by
the provisions of this Section 2.02(b), and (ii) may not assign a
value of any item greater than the greater value of such item
claimed by either party or less than the smaller value for such
item claimed by either party. The fees, costs and expenses of the
Arbiter (i) shall be borne by the Sellers in proportion that the
aggregate dollar amount that is unsuccessfully disputed by ▇▇▇▇▇
(as finally determined by the Arbiter) bears to the aggregate
dollar amount disputed and (ii) shall be borne by the Buyer in
the proportion that the aggregate dollar amount that is
successfully disputed by ▇▇▇▇▇ (as finally determined by
Arbiter) bears to the aggregate dollar amount disputed.
(c) The Escrow Agreement. The Escrowed Shares shall be
retained as security for the satisfaction of the
Indemnification Obligations, if any, of the Sellers. The
Escrow Agreement shall provide for the release and delivery
to the Sellers or the Buyer, as the case may be, of the
Escrowed Shares as provided in Section 8.02(d).
(d) The Closing. (i) The closing of the transaction contemplated
by this Agreement (the "Closing") shall take place at the offices
of the Buyer at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or, if
desired by ▇▇▇▇▇ on behalf of the Sellers, jointly by facsimile or
electronic transmission at the offices of the Buyer and the office
of Altamira, commencing at 9:00 a.m. (Eastern time) on the second
business day following the satisfaction or waiver of all conditions
to the obligations of the parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions
the respective parties will take at the Closing itself) or such other
date and location as the parties may mutually determine in writing.
The date of the Closing is referred to herein as the "Closing Date".
(e) Deliveries at Closing. At the Closing: (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and
documents referred to in Article VII(A) below; (ii) the Buyer will
deliver to the Sellers the various certificates, instruments, and
documents referred to in Article VII(B) below; (iii) the Sellers
will execute, acknowledge (if appropriate), and deliver to the Buyer
assignments (including documents) and such other instruments of sale,
transfer, conveyance, and assignment of the Shares as the Buyer and
its counsel reasonably request; and (iv) the Buyer will deliver to the
Sellers and the Escrow Agent the respective amounts as specified in
Section 2.02(a) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to the
Buyer as of the date hereof and as of the Closing Date as follows:
3.01 Authorization; Valid and Binding Agreements. The Sellers have
all requisite power and authority to execute and deliver this Agreement,
to perform their respective obligations and undertakings hereunder, and to
consummate the transactions contemplated hereby. The execution and
delivery by the Sellers of this Agreement, the performance by the Sellers
of their obligations and undertakings hereunder, and the consummation by
the Sellers of the transactions contemplated hereby, have been duly and
validly authorized by all necessary action on the part of the Sellers and
no other proceedings on the part of the Sellers are necessary to authorize
the execution or delivery by the Sellers of this Agreement, the performance
by the Sellers of their obligations and undertakings hereunder or the
consummation by the Sellers of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Sellers, and
constitutes the valid and binding obligations of the Sellers, enforceable
against the Sellers in accordance with its terms.
3.02 No Breach. The execution and delivery of this Agreement by Sellers
does not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or to any increased, additional, accelerated
or guaranteed rights or entitlement of any Person under, or result in
the creation of any Security Interest on the properties or assets of
Altamira under, any provision of (a) the certificate of incorporation
or bylaws of Altamira, (b) any Contract to which Altamira or a Seller
is a party or by which any of its properties or assets are bound, (c)
any license, franchise, permit or other similar authorization held by
Altamira, or (d) any judgment, order or decree, or statute, law,
ordinance, rule or regulation applicable to Altamira or its properties
or assets.
3.03 Organization; Capitalization; No Subsidiaries. (a) Altamira is a
corporation duly authorized, validly existing and in good standing under
the laws of Delaware and is duly qualified to do business in all the
jurisdictions set forth on Section 3.03 of the Altamira Disclosure
Schedules, which are the jurisdictions in which the failure to so
qualify has or will have a Material Adverse Effect on its financial
condition or operations.
(b) The authorized capital stock of Altamira consists of 1,500 shares
of common stock, no par value per share. The Shares are all the issued
and outstanding shares of Altamira capital stock. The Shares are owned
beneficially and of record by the Sellers and have been duly authorized
and are validly issued, fully paid and non-assessable. Altamira has
never owned of record or beneficially any shares or equity interests in
any corporation, partnership, limited liability company or any other
business entity.
3.04 No Encumbrance on the Shares. Except as disclosed on Schedule
3.04, the Shares have not been issued in violation of, and are not subject
to, any Contract, including any Contract restricting or otherwise relating
to the voting, distribution rights or disposition of the Shares, or any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, or any voting trust
agreement or Contract to which Altamira is subject, bound or a party or
otherwise. The Shares have not been issued in violation of the certificate
of incorporation, as amended, or the amended and restated bylaws of Altamira.
There are no outstanding warrants, options, rights, "phantom" stock rights,
agreements, convertible or exchangeable securities or other commitments
(other than this Agreement): (i) pursuant to which Altamira is or may
become obligated to issue, sell, purchase, return or redeem any Shares or
other securities or (ii) that give any Person the right to acquire any of
the Shares or receive any benefits or rights similar to any rights enjoyed
by or accruing to the Sellers as owners of the Shares. There are no equity
securities of Altamira reserved for issuance for any purpose. Altamira does
not have outstanding bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which shareholders of Altamira may vote.
No distribution of any shares of capital stock or rights to acquire or
receive shares of capital stock of Altamira have been declared but not
yet paid. Altamira does not have any liability under any Federal, state
or foreign securities law or otherwise, in connection with any prior
issuance or repurchase of any Shares.
3.05. Financial Statements.
(a) Schedule 3.05 hereto contains true and complete copies of (i) the
audited balance sheets of Altamira on June 30, 2006 (the "June 30, 2006
Balance Sheet") and December 31, 2005, the related audited statement of
income for the six-months ended June 30, 2006 and the year ended
December 31, 2005 and the related audited statement of cash flows for the
six-months ended June 30, 2006 and year ended December 31, 2005,
accompanied by the unqualified report of the independent accounting firm
of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ (collectively, the "Audited Financial Statements");
and (ii) the unaudited statements of income of Altamira for the six-months
ended June 30, 2005 and the year ended December 31, 2004. The financial
statements described above are collectively referred to as the "Financial
Statements".
(b) The Financial Statements fairly present, in all material respects, the
financial condition of Altamira as of the dates indicated therein and the
results of operations and changes in financial position of Altamira for
the periods specified therein and have been prepared in conformity with
GAAP applied on a consistent basis during the periods covered thereby and
prior periods.
3.06 No Undisclosed Material Liabilities. There are no liabilities or
obligations of Altamira of any kind whatsoever (whether accrued, absolute,
contingent, unasserted or otherwise), and there is no existing condition,
situation or set of circumstances which could reasonably be expected to
result in such a liability or obligation, except (i) as disclosed, reflected
or reserved against on the June 30, 2006 Balance Sheet, and (ii) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since June 30, 2006 and not in violation of
the terms of this Agreement which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
3.07 Absence of Certain Developments. Since June 30, 2006 and except as set
forth on Section 3.07 of the Altamira Disclosure Schedules, the businesses of
Altamira have been conducted in the ordinary course and in substantially the
same manner as previously conducted and Altamira and the Sellers have made
all reasonable efforts consistent with past practices to preserve the
relationships of Altamira with its customers, suppliers and others with
whom it deals, and there has not been:
(a) any material adverse change in the business, assets, operations,
properties, financial position, results of operations, or prospects or
material increase in the actual or contingent liabilities of Altamira;
(b) a declaration or making any distribution to or in respect of
any Shares of Altamira;
(c) any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization with respect to Altamira;
(d) any acquisition on behalf of Altamira by merger or
consolidation with, or by purchase of a substantial portion of assets of,
or by any other manner, of any business or any corporation, partnership,
association or other Person or division thereof;
(e) any sale of shares of Altamira (other than pursuant to this
Agreement) or sale, lease or other disposition of assets of Altamira,
which are material, individually or in the aggregate, to Altamira, taken
as a whole;
(f) any redemption or other acquisition of any Shares or other
securities of Altamira;
(g) any (i) grant of severance or termination pay to any director,
officer or employee of Altamira, (ii) execution of any employment,
deferred compensation or other similar agreement (or any amendment to
any such existing agreement) with any director, officer or employee of
Altamira, (iii) increase in benefits payable under existing severance or
termination pay policies of Altamira or under employment agreements to
which Altamira is a party, (iv) increase in compensation, bonus or other
benefits payable to employees of Altamira, or (v) acceleration of the time
of payment or vesting of compensation of any director, officer or
employee of Altamira;
(h) any incurrence or assumption by or on behalf of Altamira of
any liabilities, obligations or indebtedness for borrowed money or for
the deferred purchase price of property or services or guarantee of any
such liabilities, obligations or indebtedness, other than in the
ordinary course of business consistent with past practice;
(i) any cancellation of any indebtedness owed to or, waiver of
any material claims or material rights owned by, Altamira;
(j) any change in any method of accounting or accounting practice,
or policy of Altamira other than those required by GAAP;
(k) any incurrence or commitment by or on behalf of Altamira of
any capital expenditure or capital expenditures which exceeds $1,000
individually or $2,500 in the aggregate;
(l) any election relating to Taxes on behalf of Altamira or any
change in the method of accounting for Tax purposes for Altamira; or
(m) any agreement, whether in writing or otherwise, to do any of
the foregoing.
3.08. Properties. (a) Altamira does not own or have any beneficial interest
in any real property.
(b) To Sellers' Knowledge, the current use of offices and other
facilities located on property leased by Altamira does not violate any
local zoning or similar land use or government regulation in any material
respect. Altamira has not received any communication during the past
three years from any Person that alleges that it is not in compliance in
any respect with the Americans with Disabilities Act.
(c) Altamira has good and marketable title to all of the assets
reflected on the June 30, 2006 Balance Sheet or thereafter acquired, in
each case, free and clear of all Security Interests, except for (i)
Security Interests set forth Section 3.08 of the Altamira Disclosure
Schedules and (ii) Security Interests relating to current Taxes not yet due
and payable. The tangible personal properties of Altamira, in the aggregate,
have been maintained in all respects in accordance with past practice of
Altamira and generally accepted industry practice, and are in all material
respects in good operating condition and repair, ordinary wear and tear
excepted. The leased personal property of Altamira is in the condition
required of such property by the terms of the leases applicable thereto
during the term of the related lease and upon expiration thereof.
(d) There are no developments affecting any of the assets or properties
of Altamira pending, or to Sellers' Knowledge, threatened, which might
materially detract from the value of such assets or property, interfere
with any present or intended use of any such assets or property or
materially adversely affect the marketability of such assets or property.
(e) Altamira has not disposed of any of the fixed assets set forth on
the June 30, 2006 Balance Sheet other than in the ordinary course of
business.
(f) Section 3.08(f) of the Altamira Disclosure Schedules lists
and describes briefly all real property leased or subleased to Altamira,
including the names of the lessor or sublessor and the lessee or
sublessee of each property and the affiliation, if any, of the lessor
or sublessor with a Seller. Altamira has delivered to the Buyer correct
and complete copies of the leases and subleases described on Section
3.08(f) of the Altamira Disclosure Schedules. With respect to the
lease and subleases referred to or listed on such Schedules:
(i) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(ii) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
(iii) to Sellers' Knowledge, no party to the lease or sublease is in
breach or default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and warranties
set forth in subsections (i) through (v) above are true and correct
with respect to the underlying lease;
(vii) Altamira has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof, and to Sellers'
Knowledge have been operated and maintained in accordance with applicable
laws, rules, and regulations, except for such noncompliance which would
not, individually or in the aggregate, have a Material Adverse Effect; and
(ix) all facilities leased or subleased thereunder are, in the ordinary
course, supplied with utilities and other services necessary for the
operation of said facilities.
3.09. Tax Matters. All Tax Returns for periods ending on or prior to
the Closing Date by Altamira have been or will be filed on a timely basis
with the appropriate Taxing Authority in all jurisdictions in which such
Tax Returns are required to be filed. All such Tax Returns are and will
be true, correct and complete in all material respects. All Taxes due
from and payable by a Seller or Altamira with respect to the assets and
business of Altamira on or prior to the Closing Date have been fully paid
on a timely basis and none of them is currently the beneficiary of any
extension of time within which to file any Tax Return. No written claim
has ever been made by an authority in a jurisdiction where Altamira does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction, and none of them has received any written notice, or
written request for information from any such authority. No issues
have been raised in writing with a Seller with respect to her or his
interests in Altamira by the Internal Revenue Service (the "IRS") or
any other Taxing Authority in connection with any Tax Return filed by
any of them, and there are no issues which, either individually or in
the aggregate, could result in liabilities for Tax obligations of
Altamira relating to periods ending on or before Closing Date in excess
of the accrued liability for Taxes shown on the June 30, 2006 Balance
Sheet. No waivers of statutes of limitations have been given or
requested with respect to Altamira. No differences exist between the
amounts of the book basis and the tax basis of assets that are not
accounted for by an accrual on the books of Altamira for Federal Income
Tax purposes. Altamira is not required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by Altamira or a Seller,
and the IRS has proposed no adjustment or change in accounting method.
All transactions or methods of accounting that could give rise to an
understatement of Federal Income Tax (within the meaning of Section 6662
of the Code for Tax Returns filed after December 31, 1990) have been
adequately disclosed on the Tax Returns in accordance with Section
6661(b)(2)(B) in accordance with Section 6662(d)(2)(B) of the Code for
Tax Returns filed after December 31, 1990. Altamira has complied
(and until the Closing Date will comply) with all applicable laws
relating to the payment and withholding of Taxes (including withholding
and reporting requirements under Sections 1441 through 1464, 3401
through 3406, 6041 and 6049 of the Code and similar provisions under
any other laws) and, within the time and in the manner prescribed by
law, will have withheld from wages, fees and other payments and paid
over to the proper Taxing Authorities all amounts required.
3.10. Contracts and Commitments. (a) Except as set forth on Section
3.10 of the Altamira Disclosure Schedules, Altamira is not a party
to or bound by any:
(i) collective bargaining agreement or other Contract with any labor union;
(ii) bonus, pension, profit sharing, retirement or other form of deferred
compensation plan (or any Deferred Compensation Obligations whether
pursuant to such a plan or otherwise) not disclosed pursuant to
Section 3.15;
(iii) stock purchase, stock option or similar plan;
(iv) Contract for the employment of any officer, individual employee
or other Person on a full-time, part-time or consulting basis;
(v) agreement, indenture, mortgage, deed of trust or other instrument
relating to the deferred purchase of property or services from, the
borrowing of money from, or the issuance of any note, bond, debenture
or other evidence of indebtedness to, any Person or Persons or to the
mortgaging, pledging or, otherwise placing a Security Interest on any
of its properties or assets;
(vi) Contract under which (A) any Person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Altamira or
(B) Altamira has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any Person (in each case other than
endorsements for the purpose of collection in the ordinary course
of business);
(vii) lease or agreement under which it is lessee or sublessee of, or
holds or operates any machinery, equipment, vehicle or other personal
property owned by any other Person, for which the annual rental
exceeds $2,500;
(viii) lease or agreement under which it is lessor or sublessor of or
permits any other Person to hold or operate any property or asset, real
or personal, for which the annual rentals for all such leases and
agreement exceed in the aggregate $5,000;
(ix) Contract or group of Contracts and purchase orders with the same
Person and its Affiliates for the purchase of products or services from
them, under which the undelivered balance of such products and services
has a purchase price in excess of $10,000 in the aggregate;
(x) Contract or group of Contracts and customer or sale orders with the
same Person and its Affiliates for the sale of products or services to them,
under which the undelivered balance of such products or services has a
sales price in excess of $10,000 in the aggregate;
(xi) noncompete or similar Contract which prohibits Altamira from freely
engaging in business anywhere in the world or restricts the development,
manufacture, marketing or distribution of any product or service by A
ltamira;
(xii) Contract under which it has, directly or indirectly, made or
committed to make any advance, loan, extension of credit or capital
contribution to, or other investment in, any Person, except for
advances to employees in the ordinary course of business and not in
excess of an aggregate of $1,000 for all employees;
(xiii) agreement or instrument providing for indemnification of any
Person with respect to liabilities relating to any current or former
business of Altamira or any predecessor Person of such company;
(xiv) license, option or other agreement relating in whole or in part
to the Intellectual Property of Altamira (including any license or
other agreement under which Altamira is licensee or licensor of any
such Intellectual Property) or to trade secrets, confidential
information or proprietary rights and processes of Altamira or
any other Person;
(xv) any partnership, joint venture or other similar Contract; or
(xvi) other Contract, which (A) has a future aggregate liability in
excess of $5,000 or (B) is not made in the ordinary course of
business of Altamira.
All Contracts listed on Section 3.10 of the Altamira Disclosure Schedules
(the "Listed Contracts") are, to the best of the Sellers' Knowledge,
valid, binding and in full force and effect and are enforceable by
Altamira in accordance with their respective terms and Altamira has
performed all obligations to be performed by it to date under the
Listed Contracts.
(b) Buyer either has been supplied with, or has been given access to, a
true and correct copy of all Listed Contracts, together with all
amendments, waivers or other changes thereto.
(c) Altamira is not in breach or default (with or without the lapse
of time or the giving of notice or both) in any respect under any
Listed Contract, and, to Sellers' Knowledge, neither is any other
party to any such document.
3.11. Intellectual Property.
(a) Set forth on Section 3.11 of the
Altamira Disclosure Schedules is a true and complete list of Intellectual
Property that currently exists in written form owned or filed by,
licensed to or used in the conduct of the business of Altamira as now
conducted. With respect to registered trademarks, Section 3.11 of the
Altamira Disclosure Schedules sets forth a list of all jurisdictions in
which such trademarks are registered or applied for and all registration
and application numbers. Altamira has all rights to Intellectual
Property as are used or are necessary in connection with its businesses
as presently conducted, and except as set forth on the Section 3.11 of
the Altamira Disclosure Schedules, owns, and has the right to use,
execute, reproduce, display, perform, modify, enhance, distribute,
prepare derivative works of and sublicense, without payment to any other
Person, all such Intellectual Property free and clear of the claims of
others and of all Security Interests. The consummation of the transactions
contemplated hereby will not conflict with, alter or impair any right as
described in the immediately preceding sentence.
(b) Altamira has not granted any options, licenses or agreements of any
kind relating to Intellectual Property or the marketing or distribution
thereof. Altamira is not bound by or a party to any option, license or
agreement of any kind relating to the Intellectual Property of any other
Person. The conduct of the businesses of Altamira as presently conducted
do not, to Sellers' Knowledge, violate, conflict with or infringe the
Intellectual Property of any other Person. No claims are pending, or, to
Sellers' Knowledge, threatened against Altamira by any Person with respect
to the ownership, validity, enforceability, effectiveness or use of any
Intellectual Property used in connection with a business of Altamira, and
during the past five years, Altamira has not received any communications
alleging that Altamira has violated any rights relating to Intellectual
Property of any Person.
3.12. Litigation. Except as set forth on Section 3.12 of the Altamira
Disclosure Schedules, there are no actions, suits or proceedings pending or,
to Sellers' Knowledge, threatened against or affecting Altamira or any of
its properties, assets, operations or businesses at law or in equity, or
before or by any court or other Governmental Entity or arbitration tribunal.
Except as set forth on Section 3.12 of the Altamira Disclosure Schedules,
none of the lawsuits or claims listed on Section 3.12 of the Altamira
Disclosure Schedules as to which there is at least a reasonable possibility
of adverse determination would have, if so determined, individually or in
the aggregate, a Material Adverse Effect. Altamira is not a party or subject
to or in default under any judgment, order, injunction or decree of any
Governmental Entity or arbitration tribunal applicable to it or any of its
properties, assets, operations or business. Except as set forth on Section
3.12 of the Altamira Disclosure Schedules, there is no lawsuit or claim by
Altamira pending, or which Altamira intends or reasonably expects to initiate,
against any other Person. To Sellers' Knowledge, there is no pending or
threatened investigation of or affecting Altamira by any Governmental Entity.
3.13. Governmental Consents. No permit, consent, approval, license, order
or authorization of, or registration, declaration or filing with, any court
or other Governmental Entity is required to be obtained or made in connection
with (a) the execution, delivery or performance of this Agreement by the
Sellers or the consummation of any of the transactions contemplated hereby
or (b) the conduct by Altamira of its businesses following the Closing
Date as conducted on the date hereof.
3.14. Salaries of Officers and Directors. Section 3.14 of the Altamira
Disclosure Schedules contains a true and complete list of the officers and
directors of Altamira and the salary and other compensation paid or
allocated to such Persons, in their respective capacities as officers
or directors of Altamira for the six months ended June 30, 2006 and the
twelve months ended December 31, 2005. The compensation paid to and
accrued on behalf of ▇▇▇▇▇▇▇▇ P. March, including salary and commissions,
for the period from January 1, 2006 through the Closing Date has not and
will not exceed an annual rate of $110,000.
3.15. Employee Benefit Plans. (a) Section 3.15 of the Altamira Disclosure
Schedules contains a list and a brief, general description of each pension,
retirement, savings, deferred compensation, and profit-sharing plan and
each stock option, stock appreciation, stock purchase, performance share,
bonus or other incentive plan, severance plan, health, group insurance or
other welfare plan, or other similar plan and any "employee benefit plan"
within the meaning of Section 3(3) of ERISA, under which Altamira has any
current or future obligation or liability or under which any employee or
former employee (or beneficiary of any employee or former employee) of
Altamira has or may have any current or future right to benefits (the
term "plan" shall include any Contract or policy, each such plan being
hereinafter referred to individually as a "Plan"). The Sellers have
delivered to the Buyer true and complete copies of (i) each Plan, (ii)
the summary plan description for each Plan for which a summary plan
description is required by law to be furnished to participants, (iii)
the latest annual report, if any, which has been filed with the IRS for
each Plan and (iv) with respect to any Plan intended to comply with
Section 401(k) of the Code, copies of calculations for the most recent
three Plan years showing such Plan's compliance with the requirements
under Section 401(k)(3) and, if applicable, 401(m)(2) of the Code. Each
Plan that is required to satisfy Sections 401(a), 401(k), 401(m),
419, 419A, 505, 501(c)(9), 105(h), 125 or 129 of the Code or any other
Code provision concerning discrimination has been tested for compliance
with and has satisfied such applicable requirements for the most recent
six Plan years ending before the Closing Date. Each Plan intended to be
tax qualified under Sections 401(a) and 501(a) of the Code has been
determined by the IRS to be tax qualified under Sections 401(a) and 501(a)
of the Code and, since such determination, no amendment to or failure to
amend any such Plan and no other circumstance adversely affects its tax
qualified status. There has been no prohibited transaction within the
meaning of Section 4975 of the Code and Section 406 of Title I of ERISA
with respect to any Plan.
(b) No Plan is subject to Title IV of ERISA. During the past five
years, neither Altamira nor any business or entity controlling, controlled
by, or under common control with Altamira contributed to or was obliged to
contribute to a pension plan within the meaning of Section 3(2) of ERISA
(a "Pension Plan") that was or is subject to Title IV of ERISA. Altamira
has no potential or contingent liability with respect to any Person under
Title IV of ERISA.
(c) There are no actions, claims, lawsuits or arbitrations (other than
routine claims for benefits) pending, or, to Sellers' Knowledge, threatened,
with respect to any Plan or the assets of any Plan, and, to Sellers'
Knowledge, there are no facts which could give rise to any such actions,
claims, lawsuits or arbitrations (other than routine claims for benefits).
Altamira has timely satisfied all funding, compliance and reporting
requirements for all Plans and each Plan has been maintained, funded and
administered in compliance with its terms and all applicable Contracts
and laws (including, without limitation, ERISA). With respect to each
Plan, Altamira has paid all contributions (including employee salary
reduction contributions), all obligations thereunder, and all insurance
premiums that have become due and any such expense accrued but not due
as of June 30, 2006 is properly reflected in the June 30, 2006 Balance
Sheet.
(d) Except as described on Section 3.15 of the Altamira Disclosure
Schedules, no Plan provides or is required to provide, now or in the
future, health, medical, dental, accident, disability, death or survivor
benefits to or in respect of any Person beyond termination of employment,
except to the extent required under any state insurance law or under Part
6 of Subtitle B of Title I of ERISA and under Section 4980(B) of the
Code. Except as noted in the immediately preceding sentence, no Plan
covers any individual other than an employee of Altamira and his or her
spouse or dependents under health and child care policies listed on the
Section 3.15 of the Altamira Disclosure Schedules and delivered to the
Buyer.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any employee of Altamira to severance
pay or termination benefits, (ii) accelerate the time of payment or
vesting or increase the amount of compensation due to any such employee
or former employee, or (iii) obligate Altamira to pay or otherwise be
liable for any compensation, vacation days, pension contribution or
other benefits to any employee, consultant or agent of Altamira for
periods before the Closing Date (other than any compensation, vacation,
pension contribution or other similar benefit owed or accrued by
Altamira in the ordinary course of business) or for personnel whom the
Buyer does not actually employ.
(f) To Sellers' Knowledge, none of the employees of Altamira
will leave or intends to leave its employ as a result of this
Agreement or the transactions contemplated hereby, except for ▇▇▇▇▇,
who will be bound by Section 5.10.
3.16. Employee and Labor Relations. (a) There is no labor strike,
dispute or work stoppage or lockout actually pending or, to Sellers'
Knowledge, threatened, against or affecting Altamira, and during the
past five years there has not been any such action; (b) Altamira has
not received written notice of any union organizational campaign in
progress with respect to the employees of Altamira or of any dispute
concerning representation of such employees; (c) Altamira is in
compliance with all 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; (d)
there is no unfair labor practice charge or complaint against
Altamira pending, or, to Sellers' Knowledge, threatened, before
the National Labor Relations Board; (e) there is no pending, or,
to Sellers' Knowledge, threatened, grievance that, if adversely
decided, would have, either individually or in the aggregate, a
Material Adverse Effect; (f) no charges with respect to or relating
to Altamira are pending before the Equal Employment Opportunity
Commission or any Governmental Entity responsible for the prevention
of unlawful employment practices; (g) Altamira has not received notice
of the intent of any Governmental Entity responsible for the enforcement
of labor or employment laws to conduct an investigation with respect
to or relating to Altamira and, to Sellers' Knowledge, no such
investigation is in progress; and (h) no complaints, lawsuits or
other proceedings are pending, or, to Sellers' Knowledge,
threatened, in any forum by or on behalf of any present or former
employee of Altamira, any applicant for employment or classes of
the foregoing alleging breach of any express or implied Contract
for employment, breach of any law governing employment or the
termination thereof or other discriminatory, wrongful or tortious
conduct in connection with any employee relationship.
3.17 Insurance. Section 3.17 of the Altamira Disclosure Schedules
lists each insurance policy maintained with respect to Altamira or
any of its assets and properties. All such policies are in full
force and effect, all premiums due and payable thereon have been paid,
and no notice of cancellation or termination has been received with
respect to any such policy, which has not been replaced on substantially
similar terms prior to the date of such cancellation. The activities
and operations of Altamira have been conducted in a manner so as to
conform in all respects to all applicable provisions of such insurance
policies. The insurance policies listed on Section 3.17 of the Altamira
Disclosure Schedules have been maintained in such amounts, with such
deductibles against such risks and losses, as are reasonable for the
business and assets of Altamira.
3.18. Compliance with Laws. Except as set forth on Section 3.18 of
the Altamira Disclosure Schedules, which exceptions are not material in
the aggregate, Altamira: (i) has complied with all applicable laws,
statutes, ordinances, rules, orders and regulations thereunder, and (ii)
has not received any written communication during the past three years
from any Governmental Entity that alleges that Altamira is not in
compliance with any applicable laws, statutes, ordinances, rules,
orders and regulations.
3.19. Environmental Compliance. There is and, there has been no storage,
disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous wastes
or hazardous substances by Altamira (or, to Sellers' Knowledge, any
predecessor in interest) at, upon or from any of the property now or
previously owned or leased by such company in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree
or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit;
there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due
to or caused by Altamira or any of its predecessors; and the terms
"hazardous wastes," "toxic wastes," "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, Federal and foreign laws or regulations with respect
to environmental protection.
3.20. Accounts; Safe Deposit Boxes; Powers of Attorney; Officers and
Directors. Section 3.20 of the Altamira Disclosure Schedules sets
forth (a) a true and correct list of all bank and savings accounts,
certificates of deposit and safe deposit boxes of Altamira and the
persons authorized to sign thereon, (b) a true and correct list of
all powers of attorney granted by Altamira and the persons authorized
to act thereunder and (c) a true and correct list of all officers and
directors of Altamira.
3.21. Effect of Transaction. No creditor, employee, client or customer
or other Person having a business relationship with Altamira has informed
Altamira, any of its officers, directors or Affiliates that such Person
will or intends to terminate or change the relationship because of the
sale of the Shares by the Sellers or the consummation of any other
transaction contemplated hereby.
3.22. Transactions with Affiliates. Except as set forth on Section 3.22
of the Altamira Disclosure Schedules, (a) neither a Seller, nor (b) any
current or former director, officer, employee of Altamira or any of its
Affiliates nor (c) any Person with a relationship of not more remote
than first cousin of any Person specified in clauses (a) or (b), is
presently, or during the 12-month period ending on the date hereof has
been, (i) a party to any transactions with Altamira (including any Contract
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, Altamira or any such
Affiliate, director, officer, employee or shareholder or relative) or
(ii) the direct or indirect owner of an interest in any Person which is
a present (or potential) competitor, supplier or customer of Altamira;
nor does any such Person receive income from any source other than
Altamira, which relates to the business of Altamira or should properly
accrue to Altamira.
3.23. Customers. Section 3.23 of the Altamira Disclosure Schedules
contains a true and complete list of each customer of Altamira who
during the twelve calendar months immediately preceding the date of this
Agreement, was billed in excess of $5,000 for production, distribution
or sales by Altamira. Since June 30, 2006, there has not been (a) any
material adverse change in the business relationship of Altamira with
any customer named on Section 3.23 of the Altamira Disclosure Schedules
or (b) any change in any term (including credit terms) of the agreements
with such customer. During the 12 months ending on the date hereof,
Altamira has not received any customer complaints concerning its products,
deliveries, or marketing services other than complaints in the ordinary
course of business, which have not, and are not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect and,
to Sellers' Knowledge, none of the customers who acquired goods or
services since June 30, 2006 for an aggregate purchase price in excess
of $5,000 per customer has advised Altamira of its intent to
discontinue purchases of a material amount relative to their history
of purchases from Altamira.
3.24. Software. Section 3.24 of the Altamira Disclosure Schedules
includes an accurate and correct description of the material Software
of which Altamira is the owner, lessee, or licensee. Altamira owns or
has the right to use the Software used in their business. No proprietary
rights in any Software have been transferred, whether by sale,
assignment or license, or have been lost. The rights of Altamira in
the Software are free and clear of any Security Interests except as set
forth on Schedule 3.24. No claims are pending or threatened against
Altamira relating to violation of trade secret rights, copyrights or
other proprietary rights with respect to the Software.
3.25. Customer Accounts Receivable. All customer accounts receivable of
Altamira whether reflected on the June 30, 2006 Balance Sheet or
subsequently created, have arisen from bona fide transactions in the
ordinary course of business. Altamira has good and marketable title to
its accounts receivable, free and clear of all Security Interests.
Since June 30, 2006, there have not been any write-offs as uncollectible
of any accounts receivable of Altamira, except for write-offs in the
ordinary course of business and consistent with past practices which
do not exceed in the aggregate $1,000.
3.26. Investment; Review. Each Seller is acquiring the Seller's Portion
of the Buyer's Shares for his or her account for investment purposes
only without any intention to sell, pledge, or distribute the shares.
Each Seller acknowledges receipt from the Buyer of copies of the Buyer's:
(i) Annual Reports on Form 10-KSB for the years ended June 30, 2006 and
June 30, 2005; (ii) Reports on Form 10-QSB for the three months ended
March 31, 2006, December 31, 2005 and September 30, 2005; and (iii)
Reports on Form 8-K for events dated August 7, 2006, June 14, 2006,
May 4, 2006, February 15, 2006, and September 28, 2005 (collectively
"Buyer's SEC Reports").
3.27. Brokerage. There are no brokerage commissions, finders', investment
banker or financial advisor fees or similar compensation in connection
with the transactions contemplated by this Agreement payable or to be
payable based on any arrangement or agreement made by or on behalf of
the Sellers or Altamira.
3.28. Disclosure. No representation or warranty contained in this
Article III and no statement contained in any document, certificate or
Schedule furnished or to be furnished to the Buyer or any of its
respective representatives pursuant to this Agreement contains or
will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary in order to fully
and fairly provide the information required to be provided in any
such document, certificate or Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each of the Sellers as of the date
hereof and as of the Closing Date, as follows:
4.01 Organization and Corporate Power. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws
of Delaware, with all requisite corporate power and authority to enter
into this Agreement and perform its obligations hereunder and to
consummate the transactions contemplated hereby.
4.02 Authorization. The execution, delivery and performance of this
Agreement by the Buyer and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
requisite corporate action on the part of the Buyer, and no other
corporate proceedings on its part are necessary to authorize the
execution, delivery or performance by the Buyer of this Agreement.
This Agreement has been duly executed and delivered by the Buyer and
constitutes the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms.
4.03 Capitalization; SEC Reports. (a) The authorized capital stock
of the Buyer consists of 7,000,000 shares of Common Stock, of which
1,000,352 shares are issued and outstanding (exclusive of 19,802
shares held in the treasury of the Buyer and 106,334 shares reserved
for issuance upon exercise of options granted or which may be granted
under the Buyer's 2002 Stock Option Plan). The Buyer's Shares, when
issued, will have been duly authorized and validly issued and not
subject to liens, encumbrances or claims by any Person.
(b) The Buyer's SEC Reports are all of the reports the Buyer has
been required to file with the SEC since December 31, 2004. No Report
contains any material misstatement of fact or omits to include any
material fact.
4.04 No Breach. The execution and delivery of this Agreement by the
Buyer does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with,
or result in any violation of or default (with or without notice or
lapse of time, or both) under, any provision of (a) the certificate
of incorporation or by-laws of the Buyer, (b) any Contract to which
the Buyer is a party or by which any of its properties or assets are
bound or (c) any judgment, order or decree, or statute, law,
ordinance, rule or regulation applicable to the Buyer or its
properties or assets, other than, in the case of clauses (b) and
(c), those conflicts, violations and defaults that do not have,
individually or in the aggregate, a material adverse effect upon
the business, assets, operations, properties, financial position,
results of operations, prospects or liabilities of the Buyer.
4.05 Governmental Consents. No permit, consent, approval, license,
order or authorization of, or registration, declaration or filing
with, any court or other Governmental Entity is required to be
obtained or made in connection with the execution, delivery or
performance of this Agreement by the Buyer or the consummation
by the Buyer of any of the transactions contemplated hereby.
4.06 Brokerage. There are no claims for brokerage commissions,
finders', investment banker or financial advisor fees or similar
compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on
behalf of the Buyer.
ARTICLE V
COVENANTS OF THE SELLERS
The Sellers covenant and agree as follows:
5.01. Conduct of the Business. (a) From the date hereof until
earlier of the Closing Date or the termination of this Agreement in
accordance with Section 9.01 hereof, the Sellers shall cause Altamira
to carry on its business in the ordinary and usual course of business
and substantially in the same manner as presently conducted (including
with respect to production, marketing, sales, distribution, advertising,
promotion, capital, repair and maintenance expenditures and inventory
levels) consistent with past practices and to preserve relationships
with customers, suppliers and others with whom Altamira deals.
(b) From the date hereof until the Closing Date, except as otherwise
expressly permitted by this Agreement or consented to in advance in
writing by the Buyer, Sellers shall not permit Altamira to:
(i) amend its certificate of incorporation;
(ii) permit or allow any insurance policy listed on Section 3.17
of the Altamira Disclosure Schedules to terminate or be cancelled
unless such policy is replaced on substantially similar terms prior
to the date of such termination or cancellation; or
(iii) agree, whether in writing or otherwise, to do any of the foregoing.
None of the Sellers shall take or agree or commit to take any action
or cause Altamira to take or agree or commit to take any action that
would, or that could reasonably be expected to, result in (or omit or
agree or commit to omit to take any action that would prevent, or that
could reasonably be expected to prevent) any of the Sellers'
representations and warranties set forth in this Agreement becoming
untrue at, or as of any time prior to, the Closing Date.
5.02 Access to Books and Records. From the date of this Agreement
until the first to occur of (a) the Closing Date or (b) the
termination of this Agreement in accordance with Section 9.01, the
Sellers shall cause Altamira to permit the Buyer and its
representatives to make such investigation of the businesses, assets,
operations and properties of Altamira as the Buyer deems necessary or
desirable in connection with the transactions contemplated by this
Agreement. Such investigation shall include access to the respective
directors, officers, employees, agents and representatives
(including legal counsel and independent accountants) of Altamira
and the property, books, records and commitments of Altamira. The
Sellers shall cause Altamira to furnish the Buyer and its
representatives with such financial, operating and other data and
information, and copies of documents with respect to Altamira, as
the Buyer shall from time to time request. Such access and
investigation shall be made upon reasonable notice and at reasonable
places and times with reasonable opportunity for a representative of
Altamira to attend any conference with any of the foregoing. Such
access and information shall not in any way affect or diminish any
of the representations or warranties of the Sellers hereunder.
Without limiting the foregoing, during such period, the Sellers shall
keep the Buyer informed as to the businesses and operations of
Altamira and shall consult with the Buyer as appropriate.
5.03 Notification. (a) The Sellers shall give immediate written
notice to the Buyer of any material adverse development causing a
breach of any of the representations and warranties in Article III
above; provided, however, that nothing in this Section 5.03 will in
any way modify or impair the right of the Buyer to elect not to close
the transactions contemplated by this Agreement or to seek its
appropriate legal remedies if the representations and warranties
being made to it under this Agreement, without giving effect to any
such modification, shall not be true and correct in all material
respects (except for representations and warranties which are qualified
by materiality, which representations and warranties shall be true and
correct in all respects) when made and at and as of the Closing
without giving effect to any such modification.
(b) The Sellers shall, and shall cause Altamira to, promptly notify
the Buyer of (i) any notice or other communications from any Person
alleging that the consent of such Person is or may be required in
connection with the consummation of the transactions contemplated
hereby and (ii) any notice or other communication from any
Governmental Entity in connection with the consummation of the
transactions contemplated hereby.
5.04. Conditions. The Sellers shall use and cause Altamira to use
reasonable efforts to cause the conditions set forth in Article VII(A)
to be satisfied and to consummate the transactions contemplated herein
as soon as reasonably possible.
5.05. Regulatory Filings. The Sellers shall ensure that Altamira shall
make or cause to be made all filings and submissions under laws or
regulations applicable to Altamira required in connection with the
consummation of the transactions contemplated herein. The Sellers
shall cause Altamira to coordinate and cooperate with the Buyer in
exchanging such information and assistance as the Buyer may reasonably
request and shall keep the Buyer apprised of the status of any inquiries
or requests for additional information made by any Governmental Entity
in connection with the foregoing.
5.06. Resignations. At the Closing, the Sellers shall cause Altamira to
deliver to the Buyer duly signed resignations, effective immediately upon
the Closing, of all directors and officers of Altamira and shall take
such other action as is necessary to accomplish the foregoing; such
resignations shall include releases, satisfactory to the Buyer, releasing
Altamira and the Buyer from any and all claims, past, present or future,
pursuant to, under or otherwise in connection with rights to
indemnification or reimbursement under applicable law or the certificate
of incorporation or by-laws of Altamira or pursuant to outstanding
agreements for matters arising prior to the Closing Date, or otherwise
with the understanding that no payments shall be made by Altamira or
the Buyer in connection with the foregoing.
5.07. Other Transactions. Prior to the Closing Date, the Sellers agree
not to, and to cause the directors, officers, employees, agents and
representatives of Altamira not to, directly or indirectly, contact,
initiate, solicit or encourage any inquiries or proposals by,
participate in any discussions or negotiations or enter into any
agreement, whether oral or written, with, or disclose any non-public
information concerning or afford any access to the property, assets,
books and records of Altamira to any other Person looking toward the
sale of any Shares or capital stock of Altamira or any merger,
consolidation or other business combination or recapitalization or
any sale, other than in the ordinary course of its business, of any
assets of Altamira. In the event that the Sellers or Altamira or any
of their Affiliates receives a proposal relating to any such
transaction, the Sellers shall promptly notify the Buyer of such
proposal.
5.08. Noncompetition and Confidentiality. (a) For a period with
respect to (i) ▇▇▇▇▇ of five (5) years following the later of the
Closing Date or the last day of her employment by, or engagement as
a consultant to, Altamira or Buyer, (ii) ▇▇▇▇▇▇ through May 15, 2008
and (iii) ▇▇▇▇▇▇▇▇ of two years from the last day of his employment
by Altamira, each of the Sellers agrees not to, and to cause his or
her Affiliates not to, directly or indirectly:
(i) (A) participate or engage, directly or indirectly, in a Competitive
Activity, (B) enter the employ of, invest in or become an officer,
director, agent, representative, consultant or advisor to, or become
directly or indirectly affiliated with any company or entity engaged,
directly or indirectly, in a Competitive Activity; and/or (C) assist any
Person in any way to do, or attempt to do, anything prohibited by clause
(A) or (B) above.
(ii) perform any action, activity or course of conduct which is detrimental
to the business or business reputation of Altamira, including (A)
soliciting, recruiting or hiring any of the employees of Altamira or any
of its Subsidiaries, or Persons who have worked for the same during the
12 months prior to such solicitation, recruitment or hiring; and (B)
soliciting or encouraging any employee of Altamira or any of its
Subsidiaries to leave the employment of Altamira or the Subsidiary.
(iii) Notwithstanding anything to the contrary contained in this Section
5.08(a), the Buyer hereby agrees that the foregoing covenant in Section
5.08(a)(i) shall not be deemed breached as a result of the ownership by
Sellers and their Affiliates of less than an aggregate for all of such
persons of three percent (3%) of any class of stock of an entity engaged
in a Competitive Activity, provided that such stock is listed on a
national securities exchange, the Nasdaq Global Market or is quoted on
the National Market System of the NASDAQ Stock Market.
(iv) The foregoing provisions of this Section 5.018(a), with respect to
a Seller shall terminate and be of no further effect in the event that
Buyer fails to cure within a period of 30 days of receipt of notice
from that Seller of Buyer's breach or default of a material term of this
Agreement related to such Seller.
(b) Except as required by law or administrative process and except for
information which becomes public other than as a result of a breach of
this Section 5.08(b), or in the course of and pursuant to the performance
of his or her duties as an employee of or consultant to Altamira, none of
the Sellers shall disclose to any other Person or employ any information
relating to or used by Altamira or its Affiliates, whether in written,
oral or other form including, but not limited to, any trade secret, recipe,
manual, sales and advertising material, business plan, marketing plan,
proprietary pricing policy, financial data, customer list, customer
information, customer contact, supplier contact and any technical
information and know-how.
(c) If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 5.08 is invalid or unenforceable,
the parties to this Agreement agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable
as so modified.
(d) In the event of a breach by a Seller or the failure of a Seller to
discontinue any action within one business day of written notice from the
Buyer to the Seller to discontinue such breach or action which if
consummated would constitute a breach by the Seller of the provisions of
this Section 5.08, the Seller acknowledges that the Buyer may not have an
adequate remedy at law and therefore shall be entitled to a temporary
restraining order or a preliminary or permanent injunction restraining
such party from such breach without the necessity of the Buyer proving
irreparable harm or injury as a result of such breach or threatened
breach or being required to post a security bond. Nothing contained
in this Section 5.08 or elsewhere in this Agreement shall be construed
as prohibiting the Buyer from pursuing any other remedies available at
law or equity for such breach or threatened breach by any party to the
provisions of this Section 5.08.
5.09. Releases; Prior Compensation. (a) None of the Sellers has any
claim against Altamira for any amount, except for compensation for
services at the rate reflected in the Statement of Income for the
six months ended June 30, 2006 or for expenses incurred on behalf
of the Company in the ordinary course of business prior to the
Closing Date.
(b) The Sellers at the Closing will hereby release Altamira from
all rights they may have to acquire any of its securities and all
actions, suits, debts, promises, agreements, damages, demands or claims
of any kind whatsoever arising from any event or action prior to the
Closing Date that the Sellers had, have or may in the future have against
Altamira, except for any rights that the Sellers may have pursuant to
this Agreement.
5.10. Transition Support. ▇▇▇▇▇ agrees to be engaged as an employee of
Altamira for a period designated at the Closing by Buyer, but not to
exceed 90 days following the Closing, at the rate of her compensation
reflected in the Statement of Income for the six months ended June 30, 2006,
and thereafter during a period ending on the second anniversary of the
Closing Date as an independent contractor to perform such consulting
services as Altamira may reasonably request with respect to the operations
of Altamira, at the rate of $65 per hour, provided that she shall not be
required to perform consulting services in excess of an aggregate of eight
days during any 30-consecutive day period. In connection therewith, Buyer
shall cause Altamira to reimburse ▇▇▇▇▇ for expenses authorized by the
Chief Executive Officer of Altamira incurred by her in the performance
of such services.
5.11. Consents of PID and Symyx. Sellers shall take all commercially
reasonable efforts to cause the delivery no later than a date 12 months
following the Closing Date of the written consents of PID and Symyx to
Altamira or the Buyer under their respective agreements with Altamira
to the transfer of ownership of the Shares to the Buyer.
ARTICLE VI
ADDITIONAL COVENANTS
6.01. Access to Books and Records Relating to Taxes. From and after
the Closing Date, the Buyer shall provide the Sellers and their agents
with reasonable access (for the purpose of examining and copying)
during normal business hours and upon reasonable notice, to the books
and records of Altamira with respect to periods or occurrences prior to
the Closing Date as is reasonably necessary for the preparation and
filing of any Tax Return and/or for the defense of any claim against any
of the Sellers by any third party following the Closing. The Sellers
shall reimburse the Buyer for reasonable out-of-pocket costs and expenses
incurred in assisting the Sellers pursuant to this Section 6.01. Altamira
and the Buyer shall not be required by this Section 6.01 to take any action
that would unreasonably interfere with the conduct of the business of
Altamira or that of its Subsidiaries or unreasonably disrupt their respective
normal operations.
6.02. Expenses. The Sellers and the Buyer shall each bear their own costs
and expenses incurred in connection with the negotiation, execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including attorneys' fees and expenses, except that the
Buyer and the Company shall bear equally the fee of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ for
its services in auditing the Audited Financial Statements, provided that the
Closing is not terminated by the Buyer because of the Sellers' failure to
satisfy the condition set forth in Section 7.01 in which event such fees
shall be borne by the Company or if the Closing is not effected because of
the Buyer's failure to satisfy the conditions set forth in Article VII(B) in
which event such fees shall be borne by the Buyer.
6.03. Transfer Restrictions. The Sellers will not sell or otherwise transfer
any of the Buyer's Shares or interests therein unless such shares have been
registered under the Securities Act of 1933, as amended (the "Act") or the
disposition is effected in a transaction which in the opinion of counsel to
Buyer is exempt from registration under the Act. The stock certificates
evidencing for Buyer's Shares will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF UNLESS REGISTERED OR IN THE OPINION OF COUNSEL,
PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS."
The Transfer Agent for the Common Stock of the Buyer will be
instructed to place stop transfer orders on its records with respect to
the Buyer's Shares.
6.04. Further Assurances. Each party hereto shall use all commercially
reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated under this Agreement as expeditiously as
practicable.
6.05 Operation of Altamira. (a) During the period from the Closing Date
to the last day of the last Contingent Payment Period, Buyer shall use
its commercially reasonable best efforts to manage and cause the
operations of Altamira, including its research and development activities,
to be conducted in a manner and no less than the scope it was conducted
during the 12 months ended September 30, 2006. Subject to the receipt of
their consents to Buyer's acquisition of the Shares, Buyer also agrees to
use its commercially reasonable efforts to maintain its relationships with
PID and Symyx pursuant to the agreements with each outstanding as of the
date hereof.
(b) The Buyer shall maintain the amount of insurance and coverage as in
effect immediately prior to the Closing for the operations of Altamira
during the Contingent Payment Period or which insurance and coverage,
at its discretion, may be in the form of Products and Completed
Operations Insurance to protect the Buyer, Sellers, and the business
of Altamira, from loss due to claims customarily insured against
under Products and Completed Operations Insurance forms and arising
from past, present, or future claims as to the products of Altamira
listed on the disclosure schedules. Each of the Sellers will be
named as additional insured and will be provided a certificate of
insurance evidencing that the insurance is in place and that the
same shall not be cancelable except upon 30 days notice (or for
non-payment of premium 10 days notice) to Sellers. The Buyer
agrees that any agreement for the transfer of any part of the
business during a Contingent Payment Period involving Altamira's
operation shall obligate the transferee and its transferees to
maintain such insurance.
6.06 Representation. The Buyer will agree to appoint ▇▇▇▇▇ as a
Director of the Company.
6.07 Protection of Records. The Buyer will safeguard all past and
future accounting records and other records of the business.
6.08 Registration Rights. Buyer shall enter into a Registration
Rights Agreement with Sellers, in the form attached hereto as Exhibit B.
ARTICLE VII
CONDITIONS PRECEDENT
A. To Buyer's Obligations. The obligations of the Buyer hereunder
are subject to the fulfillment or satisfaction, on and as of the
Closing Date, of each of the following conditions (any one or more
of which may be waived by the Buyer, but only in a writing signed
on behalf of the Buyer by its Chief Executive Officer or Vice
President):
7.01. Accuracy of Representations and Warranties. The representations
and warranties of the Sellers set forth in this Agreement (a) that are
qualified by materiality or Material Adverse Effect will be true and
correct and (b) that are not qualified by materiality or Material
Adverse Effect will be true and correct in all material respects, in
each case on and as of the Closing Date with the same force and effect
as if they had been made at the Closing Date (except for any such
representations or warranties that, by their terms, speak only as of a
specific date or dates, in which case such representations and
warranties that are qualified by materiality or Material Adverse
Effect will be true and correct, and such representations and
warranties that are not qualified by materiality or Material Adverse
Effect will be true and correct in all material respects, on and as
of such specified date or dates), and the Buyer will have received a
certificate dated as of the Closing Date to such effect executed by
▇▇▇▇▇ on behalf of the Sellers.
7.02. Covenants. The Sellers will have performed and complied in all
material respects with all of their covenants and obligations contained in
this Agreement on or before the Closing Date (to the extent that such
covenants and obligations require performance by them on or before the
Closing Date), and the Buyer will have received a certificate dated as
of the Closing Date to such effect executed by ▇▇▇▇▇ on behalf of the
Sellers.
7.03. Absence of Material Adverse Change. There will not have been any
Material Adverse Effect to Altamira whether or not resulting from a
breach in any representation, warranty or covenant contained herein,
and the Buyer will have received a certificate dated as of the
Closing Date to such effect executed by ▇▇▇▇▇ on behalf of the Sellers.
7.04. Compliance with Law; No Legal Restraints. There will not
be issued, enacted or adopted, or threatened in writing by any
Governmental Authority, any order, decree, temporary, preliminary
or permanent injunction, legislative enactment, statute, regulation,
action or proceeding, or any judgment or ruling by any Governmental
Entity that (i) prohibits or renders illegal or imposes limitations
on: (a) the purchase of the Shares by the Buyer or any other material
transaction contemplated by this Agreement; or (b) Altamira's right to
own, sell, retain, use or operate any of its products, assets or
properties on or after the Closing Date; or (ii) seeks a disposition or
divestiture of any such products, assets or properties.
7.05. Government Consents. There will have been obtained at or before
the Closing Date such permits or authorizations, and there will have
been taken such other actions, as may be required to consummate purchase
of the Shares by the Buyer by any regulatory authority having jurisdiction
over the parties and the actions herein proposed to be taken, including
satisfaction of any and all requirements under applicable federal and
state securities laws.
7.06. No Litigation. No litigation or proceeding will be pending or
threatened which will have the probable effect of enjoining or
preventing the consummation of the transactions contemplated by this
Agreement. No litigation or proceeding will be pending or threatened
which could reasonably be expected to have a Material Adverse Effect.
7.07. Escrow Agreement. The Buyer will have received an executed
counterpart of the Escrow Agreement from each of the Sellers and the
Escrow Agent.
7.08. Options and Warrants. There shall be no outstanding securities or
Contracts immediately prior to the Closing Date that purport to obligate,
upon exercise of options or warrants or otherwise, Altamira to issue or a
Seller (except pursuant to this Agreement) to sell or transfer beneficial
interests or shares of capital stock of Altamira or grant any options or
warrants to acquire shares of capital stock of Altamira.
7.09. Employment Agreement. ▇▇▇▇▇▇▇▇ P. March shall have executed and
delivered to Altamira and the Buyer the employment agreement in the form
of Exhibit C.
7.10. Consents, Documents. The Buyer will have received from Altamira
or the Sellers duly executed copies of all written consents, assignments,
waivers, authorizations or other certificates (collectively, the "Third
Party Documents"), from third parties required to be obtained for Altamira
to continue to operate after the Closing without being in breach or
default of the applicable Third Party Document to which it is a party,
except as provided in Section 5.11 as to PID and Symyx.
7.11. Opinion of Counsel. The Buyer will have received from ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the Sellers, an opinion in
substantially the form attached hereto as Exhibit D.
7.12. Resignations of Directors. The Sellers will have delivered to
the Buyer evidence satisfactory to the Buyer that all persons holding
the position of a director (or comparable position) of Altamira in office
immediately prior to the Closing Date, have resigned in writing from such
positions effective as of the Closing.
7.13. Employment Matters. Except for deaths or resignations without
notice, each employee of Altamira holding a responsible position in
sales, manufacturing, administration, shipping, receiving or software,
shall have remained continuously employed in such position or, if
approved by Buyer, in a superior position with Altamira from the date
of this Agreement through the Closing Date.
7.14. Consents of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇. Each of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
shall have delivered his or her written consent to the effectiveness
and continuation or reinstatement of his or her noncompetition agreement
with Altamira for the period specified therein.
B. To Sellers' Obligations. The obligations of the Sellers are s
ubject to the fulfillment or satisfaction on and as of the Closing Date
of each of the following conditions (any one or more of which may be
waived by ▇▇▇▇▇, but only in writing signed by her).
7.15. Representations and Warranties of the Buyer. The representations
and warranties of the Buyer contained in Article IV shall be true and
correct in all respects as of the date of this Agreement and as of the
Closing Date as if made on and as of the Closing Date.
7.16. Covenants. The Buyer shall have performed and complied with all
covenants and agreements required to be performed or complied with by it
on or prior to the Closing Date.
7.17. Employment Agreements. Altamira shall have executed and delivered to
Brookman P. March the employment agreement in the form attached hereto as
Exhibit C.
7.18. Escrow Agreement. The Sellers shall have received a copy of the
Escrow Agreement executed by the Buyer.
7.19. Opinion of Buyer's Counsel. The Sellers will have received from
Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC, counsel to the Buyer, an opinion in
substantially the form attached hereto as Exhibit E.
ARTICLE VIII
ADDITIONAL COVENANTS
8.01. Survival. Notwithstanding any investigation conducted at any time
with regard thereto by or on behalf of any party, the representations and
warranties of the Sellers and of the Buyers contained in this Agreement
or in any Exhibit or Schedule hereto shall survive the Closing and the
consummation of the transactions contemplated hereby (and any examination
or investigation by or on behalf of any party hereto).
8.02. Indemnification.
(a) Indemnification by the Sellers. The Sellers, severally, shall
indemnify the Buyer and its Affiliates and each of their respective
officers, directors, employees, shareholders, agents, representatives,
successors and assigns (collectively the "Buyer Indemnitees") against
and hold them harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) ("Losses") suffered or
incurred by any such indemnified party arising from, relating to or otherwise
in respect of (i) any breach of any representation or warranty of a Seller
contained in this Agreement or in any certificate delivered pursuant hereto,
(ii) any breach of any covenant of a Seller contained in this Agreement, and
(iii) any and all actions, suits, proceedings, demands, judgments, costs and
legal and other expenses incident to any of the matters referred to in clauses
(i) and (ii) of this Section 8.02(a).
(b) Indemnification by the Buyer. The Buyer shall indemnify the Sellers and
their respective Affiliates and each of their respective agents,
representatives, successors and assigns (collectively the "Sellers
Indemnitees") against and hold them harmless from any Losses suffered or
incurred by any such indemnified party arising from, relating to or
otherwise in respect of (i) any breach of any representation or warranty
of the Buyer contained in this Agreement or in any certificate delivered
pursuant hereto, (ii) any breach of any covenant of the Buyer contained
in this Agreement and (iii) any and all actions, suits, proceedings,
demands, judgments, costs and legal and other expenses incident
to any of the matters referred to in clauses (i) or (ii) of this Section
8.02(b).
(c) Procedures Relating to Third Party Claims.
(i) A party seeking indemnification pursuant to Section 8.02(a) or 8.02(b)
(an "Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim or assessment (a "Section 8.02 Claim"), or the commencement of any
action, suit or other proceeding, by a third party in respect of which
indemnity may be sought hereunder (a "Third Party Claim", which along with
a Section 8.02 Claim is referred to as an "Indemnification Claim") and will
give the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but no failure to give such
notice shall relieve the Indemnifying Party of any liability hereunder
(except to the extent the Indemnifying Party has suffered actual and
material prejudice thereby). The Indemnifying Party shall have the right,
exercisable by written notice (the "Notice") to the Indemnified Party
within 14 days of receipt of notice from the Indemnified Party of
commencement of or assertion of any Third Party Claim, to assume the
defense of such Third Party Claim, using counsel selected by the
Indemnifying Party and reasonably acceptable to the Indemnified Party;
provided, that the Indemnifying Party shall not have the right to assume
the defense of a Third Party Claim if the Indemnified Party shall have
been advised by counsel that under applicable standards of professional
responsibility, a conflict will arise in the event both the Indemnified
Party and the Indemnifying Party are represented by the same counsel
with respect to the Third Party Claim, in which case such Indemnified
Party shall have the right to control the defense of such Third Party
Claim and all Losses in connection therewith shall be reimbursed by
the Indemnifying Party from time to time upon demand of the Indemnified
Party. In addition, if the Indemnifying Party fails to give the
Indemnified Party the Notice complying with the provisions stated
above within the stated time period, the Indemnified Party shall have
the right to assume control of the defense of the Third Party Claim and
all Losses in connection therewith shall be reimbursed by the
Indemnifying Party from time to time upon the demand of the Indemnified
Party.
(ii) The Indemnifying Party or the Indemnified Party, as the case may
be, shall in any event have the right to participate at its own expense,
in the defense of any Third Party Claim which the other is defending.
(iii) The Indemnifying Party, if it shall have assumed the defense of
any Third Party Claim in accordance with the terms hereof, shall have
the right, upon 30-days prior written notice to the Indemnified Party,
to consent to the entry of judgment with respect to, or otherwise settle,
such Third Party Claim unless (A) the Third Party Claim involves
equitable or other non-monetary damages, (B) in the reasonable judgment
of the Indemnified Party such settlement would have a continuing material
adverse effect on the business or financial condition of the Indemnified
Party (and, if such Indemnified Party is the Buyer, on the business or
operations of Buyer or Altamira or any of its other Subsidiaries)
including any material impairment of relationships with customers or
suppliers or (C) the Indemnifying Party is not obligated to pay the
full amount of the liability in connection with such Third Party Claim,
in which case such settlement only may be made with the written consent
of the Indemnified Party, which may be arbitrarily withheld.
The Indemnified Party shall have the sole and exclusive right to settle
any Third Party Claim on such terms and conditions as it deems reasonably
appropriate (1) if the Indemnifying Party fails to assume the defense
in accordance with the terms hereof or (2) to the extent such Third
Party Claim involves equitable or other non-monetary relief, and shall
have the right to settle any Third Party Claim involving monetary d
amages with the consent of the Indemnifying Party, which consent shall
not be unreasonably withheld.
(d) Indemnification Escrow. As security for the payment of an
Indemnification Obligation of the Sellers arising pursuant to an
Indemnification Claim, the Sellers authorize the Buyer to hold and
deliver as Escrow Agent the Escrowed Shares pursuant to the Escrow
Agreement in the form of Exhibit A attached hereto. The Buyer is
authorized to (i) withdraw from the Seller's portion of the Escrowed
Funds described therein, if any, such amount and (ii) withdraw and
cancel from the Seller's portion of the Escrowed Shares such number of
Escrowed Shares based on the Escrow Share Indemnification Value needed
to satisfy the Indemnification Obligation of the Seller. In the event
all the Escrowed Shares and Escrowed Funds have not been delivered in
satisfaction of Indemnification Obligations of the Sellers, on a date
which is the corresponding date in the twelfth month following the
Closing Date, the Buyer as Escrow Agent shall deliver to each Seller
such Seller's Portion of the Escrowed Shares and Escrowed Funds which
based on the Escrow Share Indemnification Value as of such date are not
reserved to satisfy Indemnification Obligations which may arise from
outstanding Indemnification Claims of the Buyer as of such date. The
Escrowed Shares and Escrowed Funds so reserved, if any, shall be
delivered to the Buyer or the Sellers within five business days
following the final determination as to the Indemnification Claims
outstanding.
To the extent an Indemnification Obligation of a Seller can not
be satisfied by the delivery of the Escrowed Shares and Escrowed Funds,
the Seller agrees to pay the balance to the Buyer within ten days of
the determination of his or her Indemnification Obligation by wire
transfer of immediate funds.
(e) Indemnification Claim Period and Amount. No claim for
indemnification shall be valid as against a Seller unless made within
twelve (12) months following the Closing. The aggregate of the
indemnity obligations of a Seller shall not exceed the total consideration
received by the Seller pursuant to Section 2.02, valuing each of
the Escrowed Shares at the weighted average (based on sales volume) of
the reported closing sale price of a share of Common Stock of the Buyer
on the Over-the-Counter Bulletin Board of the NASD for the five days on
which trades were reported immediately preceding the Closing Date.
8.03. Tax Matters. (a) The Sellers shall be responsible for all
transfer, excise, stamp, sales, use, recording or similar taxes or fees
arising out of the sale of the Shares.
(b) From the date hereof until the Closing Date, without the
prior written consent of the Buyer, the Sellers shall cause Altamira not
to make or change any Tax election, change any annual Tax accounting
period, adopt or change any method of Tax accounting, file any amended
Tax Return, enter into any closing agreement, settle any Tax refund,
consent to any extension or waiver of the limitations period applicable
to any Tax claim or assessment or take or omit to take any other action,
if any such action or omission would have the effect of increasing the
Tax liability of Altamira.
8.04 Appointment and Authorization of ▇▇▇▇▇. Each Seller irrevocably
appoints and authorizes ▇▇▇▇▇ as his or her agent and attorney-in-fact
to take such action as agent and attorney-in-fact on her or his behalf
and solely to exercise such powers where specified that she acts on
behalf or as agent of the Sellers in this Agreement, and the Escrow
Agreement and any related documents which require any form of Seller
approval or consent, together with all such powers as are reasonably
incidental thereto. ▇▇▇▇▇ may perform her duties as such through
sub-agents and attorneys-in-fact and shall have no liability for any
acts or omissions of any such sub-agent or attorney if selected by it
with reasonable care.
Without limiting the generality of the foregoing, ▇▇▇▇▇ acting alone
without the consent of any other Seller, is hereby authorized to (i)
take any and all actions with respect to the foregoing, (ii) supervise,
defend, coordinate and negotiate claims for indemnification under Article
VIII (including settlements thereof), (iii) effect deliveries to Sellers
hereunder or under the Escrow Agreement (iv) receive or give notices
hereunder, (v) receive or make payment hereunder, (vi) execute waivers
or amendments hereof, and/or (vii) execute and deliver documents,
releases and/or receipts hereunder.
▇▇▇▇▇, acting on behalf or as agent of the Sellers, may consult with
legal counsel, independent public accountants and other experts selected
by her and shall not be liable for any action taken or omitted to be taken
by her in good faith in accordance with the advice of such counsel,
accountants or experts. She shall not be liable in her capacity as agent
for any action or omission otherwise taken by her hereunder except in the
case of gross negligence or willful misconduct by and shall not be deemed
to be a trustee or other fiduciary on behalf of any Seller or any other
Person, nor shall ▇▇▇▇▇ have any liability in the nature of a trustee or
other fiduciary.
Each Seller shall, ratably in accordance with his or her pro rata percentage
set forth on Schedule I hereto, pay or reimburse ▇▇▇▇▇, upon presentation of
an invoice, for all her costs and expenses as such agent (including, without
limitation, fees and expenses of counsel) in connection with: (i) the
enforcement of this Agreement and any related document and/or the
protection or preservation of the rights of each Seller against the
Buyer, or any of their respective assets, and (ii) any amendment,
modification or waiver of any of the terms of this Agreement or any
related document (whether or not any such amendment, modification or
waiver is signed or becomes effective).
Each Seller shall, ratably in accordance with his or her pro rata
percentage set forth on Schedule I hereto, indemnify, defend and hold
harmless ▇▇▇▇▇ as his or her agent and her agents and attorneys (to the
extent not otherwise reimbursed) against any claim that such indemnitees
may suffer or incur in connection with her capacity as agent, or any
action taken or omitted by such indemnitees hereunder or thereunder
(except such resulting from such indemnitee's willful misconduct).
8.06. Exclusive Remedy. Subject to Section 10.11 hereof, except in
the case of fraud, willful misrepresentation or intentional wrongful
acts, the rights and remedies set forth in this Article VIII, Section
5.08(d) and in the Escrow Agreement are the exclusive rights and remedies
with respect to any claims related to (i) this Agreement, and/or (ii)
the ownership and operation of Altamira prior to the Closing.
ARTICLE IX
TERMINATION
9.01. Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of the Buyer and the Sellers;
(b) by the Buyer, if any of the conditions set forth in Article III
and/or Article V shall have become incapable of fulfillment;
(c) by either ▇▇▇▇▇ on behalf of the Sellers or by the Buyer, in
writing, without liability, if for any reason the Closing has not
occurred by November 30, 2006; provided, however, that the right to
terminate this Agreement under this Section 9.01(c) shall not be available
to any party whose failure to fulfill or perform any obligation under this
Agreement or any document delivered pursuant to the terms of this Agreement
has been a material cause of, or has materially resulted in, the failure
of the Closing to occur on or before such date.
(d) Nothing in this Section 9.01 shall relieve any party of any liability
for a breach of this Agreement prior to its termination.
9.02. Effect of Termination. In the event of termination of this Agreement
by either the Buyer or ▇▇▇▇▇ on behalf of the Sellers pursuant to Section
9.01, written notice thereof shall be given to the other and thereupon
the provisions of this Agreement shall immediately become void and of no
further force and effect (other than this Section 9.02, Section 6.02 and
Section 10.01, Section 10.02, Section 10.07, Section 10.08, Section 10.09,
and Section 10.10 which shall survive the termination of this Agreement),
and there shall be no liability on the part of either the Buyer, on the
one hand, or a Seller, on the other hand, to one another, except for
liability for breaches of this Agreement prior to the time of such
termination. In the event of such Termination, the Sellers and the
Buyer agree to be subject to the nondisclosure proscriptions imposed
by the Nondisclosure Agreement between the Buyer and Altamira and
▇▇▇▇▇, dated May 12, 2006.
ARTICLE X
MISCELLANEOUS
10.01. Arbitration. (a) Except as provided in Section 2.02(b) or
8.02(c) with respect to a Third Party Claim, and except with respect to
Section 5.08, any dispute arising out of this Agreement or any
transaction contemplated hereby, including a claim for Losses under
Section 8.02(a) or 8.02(b), which is not settled by mutual consent shall
be finally settled by binding arbitration, conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association by
one arbitrator appointed in accordance with said rules. Such arbitrator
shall be reasonably satisfactory to each of the Buyer and ▇▇▇▇▇ on behalf
of the Sellers; provided, that if they are unable to agree upon the identity
of such arbitrator within 15 days of demand by the Buyer or by ▇▇▇▇▇, then
any of the parties to the Agreement shall have the right to petition a
presiding justice of the Supreme Court of New York, New York County, to
appoint an arbitrator. The arbitration shall be held in New York, New York.
(b) The costs of the arbitration, including administrative and arbitrators'
fees, shall be borne by the party or parties seeking damages or relief
except if damages in an amount in excess of $10,000 are awarded or
relief of such party or parties is granted, such costs shall be borne by
the Buyer if a Seller is awarded such damages or granted relief or by the
applicable Seller or Sellers if the Buyer is awarded such damages or
granted relief.
(c) In rendering judgment, the arbitrator shall be instructed by the
parties that he or she shall be permitted to select solely from the proposals
for resolution, the relevant issue presented by a party, and not any other
proposal.
(d) The parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes, controversies,
claims and counterclaims presented to the arbitrator. Application may be
made to any court having jurisdiction over the party (or its assets) against
whom the decision is rendered for a judicial recognition of the decision and
an order of enforcement.
10.02. Entire Agreement. This Agreement and the Schedules and Exhibits
hereto contain the entire agreement among the parties with respect to the
matters contemplated by this Agreement and collectively supersede all prior
and/or contemporaneous agreements or understandings, whether written or oral,
among the parties with respect to such matters.
10.03. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and sufficient if delivered
personally or sent by telecopy (with confirmation of receipt) or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Buyer:
Scientific Industries Inc.,
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Seller:
To the name and address set forth on Schedule I
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number as the party to whom
notice is to be given may have furnished to the other party in
writing in accordance herewith. Each such notice, request or
communication shall be effective when received or, if given by mail,
when delivered at the address specified in this Section 10.03 or on
the fifth business day following the date on which such communication
is posted, whichever occurs first.
10.04. Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts (each of which may be transmitted via facsimile),
and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but
one agreement.
10.05. Benefits of Agreement. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any
party hereto shall bind and inure to the benefit of the successors and
permitted assigns of such party. This Agreement is for the sole benefit
of the parties hereto and not for the benefit of any third party.
10.06. Amendments and Waivers. No modification, amendment or waiver of
any provision of, or consent required by, this Agreement, or any consent
to any departure herefrom, shall be effective unless it is in writing and
signed by all of the parties hereto. Such modification, amendment,
waiver or consent shall be effective only in the specific instance and
for the purpose for which given.
10.07. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by the Buyer hereto
without the prior written consent of ▇▇▇▇▇ on behalf of the Sellers or
by a Seller without the prior written consent of the Buyer. Any
instrument purporting to make an assignment in violation of this
Section 10.07 shall be void.
10.08. Enforceability. It is the desire and intent of the parties
hereto that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be
adjudicated to be invalid or unenforceable, such provision shall be
deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to
the operation of such provision in the particular jurisdiction in which
such adjudication is made.
10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
10.10. General. All Exhibits and Schedules attached to this Agreement
are hereby incorporated by reference and made a part of this Agreement.
10.11. Remedies. The parties hereto specifically acknowledge and agree
that a remedy at law for breach of the provisions of this Agreement
will be inadequate and that a party, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive
relief. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party shall be cumulative, nonexclusive and in
addition to, but not in lieu of, any other remedy available whether at
law, in equity or otherwise.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SCIENTIFIC INDUSTRIES INC.
By:
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SELLERS:
/s/▇▇▇▇▇ ▇▇▇▇▇
_______________
▇▇▇▇▇ ▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SCHEDULE I
Names Address Number Percent- Purchase Price
of Shares age
_____________ ________________ _________ ________ ______________
Cash Shares
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 300 90.36% $361,440 112,950
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇. 16 4.82% $ 19,280 6,025
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. 16 4.82% $ 19,280 6,025
#123
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---- ------ -------- -------
Total: 332 100.0% $400,000 125,000
