================================================================================
ASSET PURCHASE AGREEMENT
AMONG
HEMIWEDGE VALVE CORPORATION
as Buyer
and
XXXXXXXXX RESEARCH AND DEVELOPMENT, INC.
INPROP, INC.
and
XXXXXXXXX XXXXXXXXX
as Sellers
December 2, 2005
================================================================================
Article I DEFINITIONS..........................................................1
Section 1.1 Definitions ..............................................1
Section 1.2 Usage ....................................................5
Article II SALE AND TRANSFER OF ASSETS; CLOSING................................5
Section 2.1 Assets To Be Sold ........................................5
Section 2.2 Consideration ............................................6
Section 2.3 Additional Consideration .................................6
Section 2.4 Payment into Escrow Account ..............................6
Section 2.5 Closing ..................................................6
Section 2.6 Closing Obligations ......................................6
Article III REPRESENTATIONS AND WARRANTIES OF SELLERS..........................7
Section 3.1 Organization and Good Standing ...........................7
Section 3.2 Enforceability; Authority; No Conflict ...................7
Section 3.3 Title to Assets; Encumbrances ............................8
Section 3.4 Legal Proceedings; Orders ................................8
Section 3.5 Intellectual Property Assets .............................8
Section 3.6 Patents ..................................................9
Section 3.7 Trademarks ...............................................9
Section 3.8 Disclosure ..............................................10
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER............................10
Section 4.1 Organization and Good Standing ..........................10
Section 4.2 Authority; No Conflict ..................................10
Section 4.3 Certain Proceedings .....................................10
Article V ADDITIONAL COVENANTS................................................10
Section 5.1 Consignment Agreement ...................................10
Section 5.2 Further Assurances ......................................11
Article VI INDEMNIFICATION; REMEDIES..........................................11
Section 6.1 Survival ................................................11
Section 6.2 Indemnification and Reimbursement by Sellers ............11
Section 6.3 Indemnification and Reimbursement by Buyer ..............11
Section 6.4 Right of Setoff .........................................12
Section 6.5 Third-Party Claims ......................................12
Section 6.6 Other Claims ............................................13
Article VII GENERAL PROVISIONS................................................14
Section 7.1 Expenses ................................................14
Section 7.2 Notices .................................................14
Section 7.3 Jurisdiction; Service of Process ........................14
Section 7.4 Enforcement of Agreement ................................15
Section 7.5 Waiver; Remedies Cumulative .............................15
Section 7.6 Entire Agreement and Modification .......................15
Section 7.7 Assignments, Successors, and No Third-Party Rights.......15
Section 7.8 Severability ............................................15
Section 7.9 Construction ............................................15
Section 7.10 Time of Essence .........................................16
Section 7.11 Governing Law ...........................................16
Section 7.12 Execution of Agreement ..................................16
Section 7.13 Seller Obligations ......................................16
Page i
EXHIBITS AND SCHEDULES
Exhibit A ...........Assets
Exhibit B ...........Form of Escrow Agreement
Exhibit C ...........Form of Assignment and Xxxx of Sale
Exhibit D ...........Form of Promissory Note
Exhibit E ...........Form of Consignment Agreement
Schedule 3.2(c) .....Notices and Consents
Schedule 3.3 ........Permitted Encumbrances
Schedule 3.4(a) .....Legal Proceedings; Orders
Schedule 3.6 ........Patents
Schedule 3.7 ........Trademarks
Page ii
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of December
2, 2005, by and among HEMIWEDGE VALVE CORPORATION, a Texas corporation (the
"Buyer"), XXXXXXXXX RESEARCH AND DEVELOPMENT, INC., a Texas corporation ("SRD"),
INPROP, INC., a Texas corporation ("Inprop") and XXXXXXXXX XXXXXXXXX
("Xxxxxxxxx", and together with SRD, Inprop and Xxxxxxxxx, each a "Seller" and,
collectively, the "Sellers").
RECITALS
WHEREAS, Sellers are the current owners of the Patents, Trademark and the
Website (all as hereinafter defined); and
WHEREAS, Buyer desires to purchase from Sellers and Sellers desire to sell
to Buyer, all of the Patents, the Trademark, and the Website; and
NOW, THEREFORE, IN CONSIDERATION OF the recitals and mutual covenants and
agreements set forth in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms and variations thereof have the meanings specified or referred to in this
Section 1.1:
"Additional Consideration" shall have the meaning as set forth in Section
2.3(b).
"Assets" shall have the meaning set forth in Section 2.1.
"Assignment and Xxxx of Sale" shall have the meaning as set forth in
Section 2.6(a)(i).
"Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible; provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions, or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
"Breach" means any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any event which with the passing of time
or the giving of notice, or both, would constitute such a breach, inaccuracy or
failure.
"Business Day" means any day other than (i) Saturday or Sunday or (ii) any
other day on which banks in Houston, Texas are permitted or required to be
closed.
"Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
Page 1
"Buyer Indemnified Persons" shall have the meaning as set forth in Section
6.2.
"Buyer's Closing Documents" shall have the meaning as set forth in Section
4.2.
"Closing" shall have the meaning as set forth in Section 2.5.
"Closing Date" means the date on which the Closing actually takes place.
"Code" means the Internal Revenue Code of 1986.
"Consent" means any approval, consent, ratification, waiver, or other
authorization.
"Consignment Agreement" shall have the meaning as set forth in Section
5.1.
"Contemplated Transactions" means all of the transactions contemplated by
this Agreement.
"Damages" shall have the meaning as set forth in Section 6.2.
"Effective Time" means December 2, 2005.
"Encumbrance" means any charge, claim, contractual interest, community or
other marital property interest, condition, equitable interest, lien, option,
pledge, security interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar restriction,
including any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income, or exercise of any other attribute of
ownership.
"Equity Payments" shall have the meaning as set forth in Section 2.3(b).
"Governing Documents" means, with respect to any particular entity, (a) if
a corporation, the articles or certificate of incorporation and the bylaws; (b)
if a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership agreement and
the certificate of limited partnership; (d) if a limited liability company, the
articles of organization and operating agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of a Person; (f) all equityholders'
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person, or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
"Governmental Authorization" means any Consent, license, registration or
permit issued, granted, given, or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" means any (a) nation, state, county, city, town,
borough, village, district, or other jurisdiction; (b) federal, state, local,
municipal, foreign, or other government; (c) governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers); (d) multi-national organization or body; (e) body
exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power; or (f) official of any of the foregoing.
Page 2
"Indemnified Person" shall have the meaning as set forth in Section 6.5.
"Indemnifying Person" shall have the meaning as set forth in Section 6.5.
"Intellectual Property Assets" means all intellectual property or
materials with respect to the Patents, the Trademark and the Website, in which
Sellers have a proprietary interest, whether of a tangible or intangible nature,
including all computer documents, designs, drawings, backup documentation and
references with respect thereto, as well as all claims of Sellers against third
parties relating to the Intellectual Property Assets, whether xxxxxx or
inchoate, known or unknown, contingent or non-contingent.
"IRS" means the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Knowledge" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) that individual is actually aware of that
fact or matter; or (b) a prudent individual could be expected to discover or
otherwise become aware of that fact or matter in the course of conducting a
reasonably comprehensive investigation regarding the accuracy of any
representation or warranty contained in this Agreement. A Person (other than an
individual) will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is serving, or who has at any time served, as a
director, officer, partner, executor, or trustee of that Person (or in any
similar capacity) has, or at any time had, Knowledge of that fact or other
matter (as set forth in (a) and (b) above), and any such individual (and any
individual party to this Agreement) will be deemed to have conducted a
reasonably comprehensive investigation regarding the accuracy of the
representations and warranties made herein by that Person or individual.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance, principle
of common law, code, regulation, statute, or treaty.
"Liability" means, with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person.
"Monthly Advances" shall have the meaning as set forth in Section 2.3(a).
"Order" means any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator.
"Patents" means (a) Expired U.S. Patent No. 4,962,911 (titled HemiWedge
Valve), (b) U.S. Patent No. 5,333,834 (titled Valve Driver), (c) U.S. Patent No.
5,507,469 (titled Valve Actuator System for Initial Torque Reduction), and (d)
U.S. Patent Application 60/658,548 (filed on March 4, 2005 and titled
High-Pressure Hemi-wedge Cartridge Valve).
Page 3
"Permitted Encumbrances" shall have the meaning as set forth in Section
3.3.
"Person" means an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
Governmental Body.
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Promissory Note" shall have the meaning as set forth in Section
2.6(b)(iii).
"Purchase Price" shall have the meaning as set forth in Section 2.2.
"Record" means any information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Related Person" means, with respect to a specified Person other than an
individual, a Related Person means (a) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or indirectly
under common control with, such specified Person; (b) any Person that holds a
Material Interest in such specified Person; (c) each Person that serves as a
director, officer, partner, executor, or trustee of such specified Person (or in
a similar capacity); (d) any Person in which such specified Person holds a
Material Interest; and (e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity). For
purposes of this definition, (a) "Control" (including "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and shall be construed as such term is used in the rules promulgated
under the Securities and Exchange Act of 1934; and (b) "Material Interest" means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other voting interests
representing at least ten percent (10%) of the outstanding voting power of a
Person or equity securities or other equity interests representing at least ten
percent (10%) of the outstanding equity securities or equity interests in a
Person.
"Representative" means, with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"Seller(s)" shall have the meaning as set forth in the first paragraph of
this Agreement.
"Sellers' Closing Documents" shall have the meaning as set forth in
Section 3.2.
"Tax" means any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum, and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever,
and any interest, penalty, addition or additional amount thereon, imposed,
assessed, collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
Page 4
"Third Party" means a Person that is not a party to this Agreement.
"Third-Party Claim" means any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
"Trademark" means the word xxxx HEMIWEDGE, Ser. No. 74666375.
"Website" means the Internet website xxx.xxxxxxxxx.xxx.
Section 1.2 Usage.
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears, (i) the singular number includes the plural number and
vice versa; (ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually; (iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof; (v) reference to
any Legal Requirement means such Legal Requirement as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from
time to time, including rules and regulations promulgated thereunder and
reference to any section or other provision of any Legal Requirement means
that provision of such Legal Requirement from time to time in effect and
constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision; (vi)
"hereunder," "hereof," "hereto" and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision thereof; (vii) "including" (and with
correlative meaning "include") means including without limiting the
generality of any description preceding such term; (viii) "or" is used in
the inclusive sense of "and/or"; (ix) with respect to the determination of
any period of time, "from" means "from and including" and "to" means "to
but excluding"; and (x) references to documents, instruments or agreements
shall be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.
(b) Legal Representation of the Parties. This Agreement was
negotiated by the parties with the benefit of legal representation and any
rule of construction or interpretation otherwise requiring this Agreement
to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof.
ARTICLE II
SALE AND TRANSFER OF ASSETS; CLOSING
Section 2.1 Assets To Be Sold. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, but effective as of the
Effective Time, Sellers shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Sellers, free and clear of any
Encumbrances other than Permitted Encumbrances, all of Sellers' right, title and
interest in and to all of the Intellectual Property Assets as described in more
detail on Exhibit A attached hereto ("Assets").
Page 5
Section 2.2 Consideration. The consideration for the Assets (the "Purchase
Price") will be (i) One Hundred Thirty-Eight Thousand Five Hundred and No/100
Dollars ($138,500.00) to be deposited by Buyer into the Escrow Account (as
defined below) by wire transfer at Closing for the Intellectual Property Assets,
and (ii) One Hundred Thousand Dollars and No/100 ($100,000.00) payable in the
form of the Promissory Note for the Intellectual Property Assets.
Section 2.3 Additional Consideration. As additional consideration for the
consummation of the Contemplated Transactions, Buyer also agrees to deposit into
the Escrow Account:
(a) Seventy-Two Thousand and No/100 Dollars ($72,000.00) to be paid
in the form of a monthly advance in the amount of Three Thousand and
No/100 Dollars ($3,000.00) for each month of the twenty-four (24) month
period beginning the month immediately following the Closing Date (the
"Monthly Advances").
(b) Three percent (3%) of the net sales proceeds collected from
customers from (i) gross revenue received by Buyer from (A) sales by Buyer
of valves described and claimed in U.S. Patent No. 5,333,834 and U.S.
Patent No. 4,962,911, (B) sales by Buyer of equipment that are described
and claimed in U.S. Patent No. 5,507,469, and (C) sales by Buyer of valves
that are described and claimed in any patent that issues from U.S. Patent
Application 60/658,548 less (ii) those sales and/or use taxes actually
paid, import and/or export duties actually paid, outbound transportation
pre-paid or allowed, and amounts allowed or credited due to returns (not
to exceed the original billing or invoice amounts) (the "Equity Payments",
and together with the Monthly Advances, the "Additional Consideration").
The payment of the Equity Payments shall begin two (2) years after the
Closing Date and continue until the end of the patent life of U.S. Patent
No. 5,333,834, which shall expire on March 29, 2013.
The sum total of the Monthly Advances shall be credited against the total amount
of Equity Payments to be received by the Sellers.
Section 2.4 Payment into Escrow Account. The Purchase Price and the
Additional Consideration shall be paid to an escrow account established by the
Parties hereto, pursuant to the terms and conditions of the Escrow Agreement
attached as Exhibit B hereto (the "Escrow Account").
Section 2.5 Closing. The purchase and sale provided for in this Agreement
(the "Closing") will take place at the offices of Buyer's counsel at 0000 Xxxxx
Xxxx 000 Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, commencing at 11:30 a.m. Central
Standard Time on December 2, 2005, unless Buyer and Sellers otherwise agree.
Subject to the provisions of Article VII, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 2.5 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement. In such a situation, the Closing will occur as soon as practicable,
subject to Article VII.
Section 2.6 Closing Obligations. In addition to any other documents to be
delivered under other provisions of this Agreement, at the Closing:
Page 6
(a) Sellers shall deliver to Buyer:
(i) assignments of all of the Intellectual Property Assets
(the "Assignment and Xxxx of Sale"), including separate assignments
of each of the Patents and the Trademark, in the form of Exhibit C,
each of which is executed by the applicable Seller(s);
(ii) such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer
and conveyance as may reasonably be requested by Buyer, each in form
and substance satisfactory to Buyer and its legal counsel and
executed by Sellers; and
(iii) a certificate of the Secretary of each of SRD and Inprop
certifying and attaching all requisite resolutions or actions of
such Seller's board of directors and shareholders approving the
execution and delivery of this Agreement and the consummation of the
Contemplated Transactions and certifying to the incumbency and
signatures of the officers of such Seller executing this Agreement
and any other document relating to the Contemplated Transactions.
(b) Buyer shall deliver to Sellers or deposit into the Escrow
Account, as applicable:
(i) One Hundred Thirty-Eight Thousand Five Hundred and No/100
Dollars ($138,500.00) for the Intellectual Property Assets by wire
transfer to the Escrow Account;
(ii) a promissory note executed by Buyer and payable to
Sellers with respect to the Intellectual Property Assets in the
principal amount of One Hundred Thousand and No/100 Dollars
($100,000.00) in the form of Exhibit E hereto (the "Promissory
Note");
(iii) the Assignment and Xxxx of Sale executed by Buyer; and
(iv) a certificate of the Secretary of Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants, jointly and severally, to Buyer as
follows:
Section 3.1 Organization and Good Standing. Each of SRD and Inprop is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas, with full corporate power and authority to sell the
Assets that it may own.
Section 3.2 Enforceability; Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of each Seller, enforceable against each of them in accordance
with its terms. Upon the execution and delivery by Sellers of each
agreement to be executed or delivered by Sellers at the Closing
(collectively, the "Sellers' Closing Documents"), each of the Sellers'
Closing Documents will constitute the legal, valid, and binding obligation
of each Seller, enforceable against each of them in accordance with its
terms. Each Seller has the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and the Sellers' Closing
Documents to which such Seller is party and to perform its obligations
under this Agreement and the applicable Sellers' Closing Documents, and
such action has been duly authorized by all necessary action by the
shareholders and board of directors of SRD and Inprop.
Page 7
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) breach (A) any provision of any of the Governing Documents
of either SRD or Inprop, or (B) any resolution adopted by the board
of directors or the shareholders of either SRD or Inprop;
(ii) breach or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under any Legal Requirement
or any Order to which Sellers or any of the Assets, may be subject;
and
(iii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets.
(c) Except as set forth in Schedule 3.2(c), no Seller is required to
give any notice to or obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
Section 3.3 Title to Assets; Encumbrances. Sellers own good and
transferable title to all of the Assets free and clear of any Encumbrances other
than those described in Schedule 3.3 ("Encumbrances"). Sellers warrant to Buyer
that at the time of Closing, all Assets shall be free and clear of all
Encumbrances other than those identified on Schedule 3.3 as acceptable to Buyer
("Permitted Encumbrances").
Section 3.4 Legal Proceedings; Orders. Except as set forth in Schedule
3.4, there is no pending or, to Sellers' Knowledge, threatened Proceeding or
Order, (i) by or against Sellers or that otherwise relates to or may affect the
Assets; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To the Knowledge of Sellers, no event has occurred or circumstance
exists that is reasonably likely to give rise to or serve as a basis for the
commencement of any such Proceeding.
Section 3.5 Intellectual Property Assets. Sellers are the owners in and to
each of the Intellectual Property Assets, free and clear of all Encumbrances,
and Sellers have the right to use without payment to a Third Party all of the
Intellectual Property Assets.
Page 8
Section 3.6 Patents.
(a) Schedule 3.6 contains a complete and accurate list and summary
description of all Patents.
(b) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable,
and are not subject to any maintenance fees or taxes or actions falling
due within ninety (90) days after the Closing Date.
(c) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition Proceeding. To Sellers' Knowledge,
there is no potentially interfering patent or patent application of any
Third Party.
(d) None of the Patents has been infringed or, to Sellers'
Knowledge, has been challenged or threatened in any way, and none of the
products manufactured or sold, nor any process or know-how used, by
Sellers infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
(e) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
Section 3.7 Trademarks.
(a) Schedule 3.7 contains a complete and accurate summary
description of the Trademark.
(b) The Trademark has been registered with the United States Patent
and Trademark Office is currently in compliance with all formal legal
requirements (including the timely post-registration filing of affidavits
of use and incontestability and renewal applications), is valid and
enforceable, and is not subject to any maintenance fees or taxes or
actions falling due within ninety (90) days after the Closing Date.
(c) The Trademark has not been and is not now involved in any
opposition, invalidation, or cancellation Proceeding and, to Sellers'
Knowledge, no such action is threatened with respect to the Trademark.
(d) To Sellers' Knowledge, there is no potentially interfering
trademark or trademark application of any other Person.
(e) The Trademark has not been infringed or, to Sellers' Knowledge,
has not been challenged or threatened in any way. The Trademark does not
infringe or is not alleged to infringe any trade name, trademark, or
service xxxx of any other Person.
(f) All products and materials containing a Xxxx xxxx the proper
federal registration notice where permitted by law.
Page 9
Section 3.8 Disclosure. No representation or warranty or other statement
made by Sellers in this Agreement, the certificates delivered pursuant to
Section 2.6(a) or otherwise in connection with the Contemplated Transactions
contains any untrue statement or omits to state a material fact necessary to
make any of them, in light of the circumstances in which it was made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas, with full corporate power and authority to conduct its business as it is
now being conducted.
Section 4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Assignment and Xxxx
of Sale, the Consignment Agreement, the Promissory Note and each other
agreement to be executed or delivered by Buyer at Closing (collectively,
the "Buyer's Closing Documents"), each of the Buyer's Closing Documents
will constitute the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its respective terms. Buyer
has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to
perform its obligations under this Agreement and the Buyer's Closing
Documents, and such action has been duly authorized by all necessary
corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to
(i) any provision of Buyer's Governing Documents; (ii) any resolution
adopted by the board of directors or the shareholders of Buyer; (iii) any
Legal Requirement or Order to which Buyer may be subject.
(c) Buyer is not and will not be required to obtain any Consent from
any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated
Transactions.
Section 4.3 Certain Proceedings. There are no pending Proceedings that
have been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
ARTICLE V
ADDITIONAL COVENANTS
Section 5.1 Consignment Agreement. The Parties agree to execute a
Consignment Agreement in the form set forth on Exhibit E (the "Consignment
Agreement"), pursuant to which Buyer shall attempt to sell Sellers' remaining
inventory of valves that is currently located on Buyer's property.
Page 10
Section 5.2 Further Assurances. The Parties shall cooperate reasonably
with each other and with their respective Representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and the parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other parties
hereto may reasonably request for the purpose of carrying out the intent of this
Agreement and the Contemplated Transactions.
ARTICLE VI
INDEMNIFICATION; REMEDIES
Section 6.1 Survival. All representations, warranties, covenants
(including those covenants set forth in Article V), and obligations in this
Agreement, the certificates delivered pursuant to Section 2.6, and any other
certificate or document delivered pursuant to this Agreement shall survive the
Closing and the consummation of the Contemplated Transactions, subject to
Section 6.6.
Section 6.2 Indemnification and Reimbursement by Sellers. Each Seller,
jointly and severally, will indemnify, hold harmless and release Buyer, and its
Representatives, shareholders, subsidiaries, and Related Persons (collectively,
the "Buyer Indemnified Persons") from, and will reimburse the Indemnified
Persons for, any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees and expenses) or
diminution of value, whether or not involving a Third-Party Claim (collectively,
"Damages"), arising from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in
(i) this Agreement, (ii) the certificates delivered pursuant to Section
2.6, (iii) any transfer instrument or (iv) any other certificate,
document, writing or instrument delivered by Sellers pursuant to this
Agreement;
(b) any Breach of any covenant or obligation of Sellers in this
Agreement or in any other certificate, document, writing or instrument
delivered by Sellers pursuant to this Agreement; or
(c) any Liability arising out of or relating to the ownership or
operation of the Assets prior to the Closing Date.
Section 6.3 Indemnification and Reimbursement by Buyer. Buyer will
indemnify and hold harmless Sellers, and will reimburse Sellers, for any Damages
arising from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement; or
Page 11
(b) any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement.
Section 6.4 Right of Setoff. Upon notice to Sellers specifying in
reasonable detail the basis therefor, Buyer may setoff any amount to which it
may be entitled under this Agreement or the Consignment Agreement against
amounts otherwise payable under the Promissory Note. The exercise of such right
of setoff by Buyer in good faith, whether or not ultimately determined to be
justified, will not constitute an event of default under the Promissory Note or
any instrument securing the Promissory Note. Neither the exercise of nor the
failure to exercise such right of setoff or to give a notice of a claim under
this Agreement will constitute an election of remedies or limit Buyer in any
manner in the enforcement of any other remedies that may be available to it.
Section 6.5 Third-Party Claims.
(a) Promptly after receipt by a Person entitled to indemnity under
Section 6.2 and Section 6.3 (to the extent provided in the last sentence
of Section 6.3) (an "Indemnified Person") of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to
the Person obligated to indemnify under such Section (an "Indemnifying
Person") of the assertion of such Third-Party Claim; provided that the
failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any liability that it may have to any Indemnified
Person, except to the extent that the Indemnifying Person demonstrates
that the defense of such Third-Party Claim is prejudiced by the
Indemnified Person's failure to give such notice.
(b) If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 6.5(a) of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to participate in the defense of
such Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the Indemnifying Person
fails to provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Third-Party Claim and provide
indemnification with respect to such Third-Party Claim), to assume the
defense of such Third-Party Claim with counsel satisfactory to the
Indemnified Person. After notice from the Indemnifying Person to the
Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, as long as it
diligently conducts such defense, be liable to the Indemnified Person
under this Article VI for any fees of other counsel or any other expenses
with respect to the defense of such Third-Party Claim, in each case
subsequently incurred by the Indemnified Person in connection with the
defense of such Third-Party Claim, other than reasonable costs of
investigation. If the Indemnifying Person assumes the defense of a
Third-Party Claim, (i) such assumption will conclusively establish for
purposes of this Agreement that the claims made in that Third-Party Claim
are within the scope of and subject to indemnification; and (ii) no
compromise or settlement of such Third-Party Claims may be effected by the
Indemnifying Person without the Indemnified Person's Consent unless (A)
there is no finding or admission of any violation of Legal Requirement or
any violation of the rights of any Person, (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Person, and (C)
the Indemnified Person shall have no liability with respect to any
compromise or settlement of such Third-Party Claims effected without its
Consent. If notice is given to an Indemnifying Person of the assertion of
any Third-Party Claim and the Indemnifying Person does not, within ten
days after the Indemnified Person's notice is given, give notice to the
Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person will be bound by any
determination made in such Third-Party Claim or any compromise or
settlement effected by the Indemnified Person.
Page 12
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Third-Party Claim may adversely affect it or its Related Persons other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by
notice to the Indemnifying Person, assume the exclusive right to defend,
compromise, or settle such Third-Party Claim, but the Indemnifying Person
will not be bound by any determination of any Third-Party Claim so
defended for the purposes of this Agreement or any compromise or
settlement effected without its Consent (which may not be unreasonably
withheld).
(d) Notwithstanding the provisions of Section 7.3, Sellers hereby
consent to the non-exclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified
Person may have under this Agreement with respect to such Proceeding or
the matters alleged therein, and agree that process may be served on
Sellers with respect to such a claim anywhere in the world.
(e) With respect to any Third-Party Claim subject to indemnification
under this Article VI: (i) both the Indemnified Person and the
Indemnifying Person, as the case may be, shall keep the other Person fully
informed of the status of such Third-Party Claim and any related
Proceedings at all stages thereof where such Person is not represented by
its own counsel, and (ii) the parties agree (each at its own expense) to
render to each other such assistance as they may reasonably require of
each other and to cooperate in good faith with each other in order to
ensure the proper and adequate defense of any Third-Party Claim.
(f) With respect to any Third-Party Claim subject to indemnification
under this Article VI, the parties agree to cooperate in such a manner as
to preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it will
use its Best Efforts, in respect of any Third-Party Claim in which it has
assumed or participated in the defense, to avoid production of
Confidential Information (consistent with applicable law and rules of
procedure), and (ii) all communications between any party hereto and
counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.
Section 6.6 Other Claims. A claim for indemnification for any matter not
involving a Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.
Page 13
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 Expenses. Except as otherwise provided in this Agreement, each
party to this Agreement will bear its respective fees and expenses incurred in
connection with the preparation, negotiation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expense of
its Representatives. If this Agreement is terminated, the obligation of each
party to pay its own fees and expenses will be subject to any rights of such
party arising from a Breach of this Agreement by another party.
Section 7.2 Notices. All notices, Consents, waivers, and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if sent by
certified mail, return receipt requested; in each case to the following
addresses, facsimile numbers or e-mail addresses and marked to the attention of
the person (by name or title) designated below (or to such other address,
facsimile number, e-mail address or person as a party may designate by notice to
the other parties):
If to Buyer: If to SRD:
HemiWedge Valve Corporation. Xxxxxxxxx Research and Development, Inc.
00000 XX 0000 176 April Cove
Conroe, Texas 77301 Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000) 000-0000 Telefax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx Attn: Xxxxx Xxxxxxxx, President
If to Inprop: If to Xxxxxxxxx:
176 April Cove 176 April Cove
Montgomery, Texas 77356-8818 Xxxxxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000) 000-0000 Telefax: (000) 000-0000
Attn: Xxxxxxxxx Xxxxxxxxx, Attn: Xxxxxxxxx Xxxxxxxxx
President
Section 7.3 Jurisdiction; Service of Process. Any Proceeding arising out
of or relating to this Agreement may be brought in the courts of the State of
Texas, County of Xxxxxx, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of Texas, and each of the
parties irrevocably submits to the exclusive jurisdiction of each such court in
any such Proceeding, waives any objection it may now or hereafter have to venue
or to convenience of forum, agrees that all claims in respect of the Proceeding
shall be heard and determined only in any such court, and agrees not to bring
any Proceeding arising out of or relating to this Agreement or in any other
court. The parties agree that either or both of them may file a copy of this
paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum. Process in any Proceeding referred to in the
first sentence of this Section 7.3 may be served on any party anywhere in the
world.
Page 14
Section 7.4 Enforcement of Agreement. Sellers acknowledge and agree that
Buyer would be irreparably damaged if any of the provisions of this Agreement
are not performed in accordance with their specific terms and that any Breach of
this Agreement by Sellers could not be adequately compensated in all cases by
monetary damages alone. Accordingly, in addition to any other right or remedy to
which Buyer may be entitled, at law or in equity, it shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
Section 7.5 Waiver; Remedies Cumulative. The rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither any
failure nor any delay by any party in exercising any right, power, or privilege
under this Agreement or any of the documents referred to in this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or any of the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of that party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided for in this Agreement or the
documents referred to in this Agreement.
Section 7.6 Entire Agreement and Modification. This Agreement supersedes
all prior agreements, whether written or oral, between the parties with respect
to its subject matter (including any letter of intent and any confidentiality
agreement between Buyer and Sellers) and constitutes (along with the Exhibits
and other documents delivered pursuant to this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended, supplemented
or otherwise modified except by a written agreement executed by the party to be
charged with the amendment.
Section 7.7 Assignments, Successors, and No Third-Party Rights. No party
may assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 7.7.
Section 7.8 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section 7.9 Construction. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Articles," "Sections" and "Exhibits" refer
to the corresponding Articles, Sections and Exhibits of this Agreement.
Page 15
Section 7.10 Time of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
Section 7.11 Governing Law. This Agreement will be governed by and
construed under the laws of the State of Texas without regard to conflicts of
laws principles that would require the application of any other law.
Section 7.12 Execution of Agreement. This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. The exchange of copies of this Agreement
and of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for all
purposes.
Section 7.13 Seller Obligations. The liability of each Seller hereunder
shall be joint and several with each of the other Sellers.
[Remainder of Page Left Intentionally Blank.]
[Signature Page to Follow.]
Page 16
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first written above.
BUYER
-----
HEMIWEDGE VALVE CORPORATION, a Texas corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
President
SELLERS
-------
XXXXXXXXX RESEARCH AND
DEVELOPMENT, INC., a Texas corporation
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------
Xxxxx Xxxxxxxx
President
INPROP, INC, a Texas corporation
By: /s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxxxxx Xxxxxxxxx
President
/s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------------
XXXXXXXXX XXXXXXXXX
Signature Page to Asset Purchase Agreement
EXHIBIT A
ASSETS
------
1. Expired U.S. Patent No. 4,962,911 (titled HemiWedge Valve)
2. U.S. Patent No. 5,333,834 (titled Valve Driver)
3. U.S. Patent No. 5,507,469 (titled Valve Actuator System for Initial Torque
Reduction)
4. U.S. Patent Application 60/658,548 (filed on March 4, 2005) (titled
High-Pressure Hemi-Wedge Cartridge Valve)
5. Word xxxx HEMIWEDGE, Ser. No. 74666375
6. Website: xxx.xxxxxxxxx.xxx
Exhibit A
