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ASSET CONTRIBUTION AGREEMENT
This Asset Contribution Agreement (the "Agreement") is made and entered
into effective November 7, 1996, by and between HYDROSCIENCE,INC., a Texas
corporation ("Hydroscience"), and HYDROSCIENCE TECHNOLOGIES, INC., a Texas
corporation (HTI).
Hydroscience is in the business of manufacturing, selling, and servicing
offshore geophysical and seismic products (the "Business"). Hydroscience
desires to transfer and contribute, and HTI desires to acquire, the assets of
Hydroscience. Hydroscience shall obtain the approval, authorization, and
ratification of the agreement from Whitehall corporation, Hydroscience's parent
company, and Whitehall corporation shall grant to HTI, and HTI desires to
acquire, certain leasehold rights in and to real property owned by Whitehall
Corporation and presently occupied by Hydroscience.
In consideration of the foregoing recitals and the mutual covenants and
obligations of the parties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
Contribution and
Transfer
1.1. Contribution and Transfer of Assets. On the terms set forth herein,
Hydroscience hereby transfers, assigns, and delivers to HTI, and HTI hereby
acquires and accepts from Hydroscience, all tangible and intangible assets
owned by Hydroscience, including but not limited to the following: (i) the name
"Hydroscience" and all derivations of or other names substantially similar to
such name, (ii) inventory, (iii) equipment, furniture, and furnishings, (iv)
permits relating to or used in the Business to the extent they are
transferrable, (v) patents of Hydroscience, and all patents related to the
business of Hydroscience but owned by Whitehall Corporation, trademarks,
service marks, technology, know-how, and other intangible property used in the
Business and all goodwill associated therewith, and (vi) books and records;
however, Hydroscience retains, and does not hereby transfer certain designated
accounts receivable due to Hydroscience from its customers which shall be
itemized and shown on Exhibit "All attached hereto and made a part of this
agreement for all relevant purposes.
The transfer and delivery given effect by this Agreement shall be effective
as of 5:00 p.m., Central Standard Time, on November 7, 1996 (the "Effective
Time"). The parties intend that the transfer and contributions effected hereby
qualify as a contribution to the capital of HTI in conformity with the
requirements of Section 351 of the Internal Revenue Code of 1986,as amended.
1.2. Issuance of Preferred Stock. As consideration for the transfer by
Hydroscience to HTI of its Assets, HTI has contemporaneously herewith issued
and delivered to Hydroscience
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818,182 shares of Preferred Stock, $0.01 par value per share, of HTI (the
"Preferred Shares"), which shall have an assigned value of $4,454,000.00 based
upon an equal value of the contributed assets allocated as follows:
Work in progress inventory - $500,000.00
Finished goods inventory - $605,000.00
Raw materials inventory - $330,000.00
Patents - $1,575,000.00
Machinery and equipment - $1,444,000.00
1.3. Limited Assumption of Liabilities. As further consideration for the
transfer by Hydroscience to HTI of its Assets, Hydroscience hereby assigns to
HTI, and HTI hereby accepts such assignment of assumes and agrees to perform
and pay, Hydroscience's obligations and liabilities under the warranties given
by Hydroscience to its customers relating to products sold by Hydroscience
which do not exceed $100,000.00 (direct labor and materials). Once $100,000.00
has been expended, HTI will provide labor and Hydroscience will pay for
materials. HTI accepts responsibility for costs of labor which may be required
to fulfill Hydroscience's warranty. Except as expressly set forth in the
preceding sentence, HTI is not acquiring, and does not assume, any liability or
obligation whatsoever of or belonging to Hydroscience, and Hydroscience shall
remain solely liable for all liabilities and obligations of any kind or nature
not expressly assumed by HTI herein.
1.4. Real Property Lease. (a) As further consideration for the issuance to
it of the Preferred Stock and HTI's assumption of warranty liabilities under
Section 1.3, Hydroscience agrees to cause Whitehall Corporation ("Whitehall"),
its parent company, to grant to HTI a real property lease of the real property
owned by Whitehall and commonly known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, from
the Effective Time through December 31, 1997. The consideration for such lease
agreement shall be one dollar ($1.00) for the full term of the lease. All terms
and conditions of such lease shall be set out in a written lease agreement
which shall be attached hereto as Exhibit "B" and made a part hereof for all
relevant purposes. Whitehall corporation shall be responsible for payment of
all utilities costs related to the leased property including HTI's bills for
electricity, water, and gas. Whitehall corporation shall also pay all
maintenance costs for maintenance of the leased premises, all real property
taxes, and all insurance costs for insuring the leased premises.
1.5. Employees of Hydroscience. HTI agrees to initially employ all of the
present employees of Hydroscience effective at the Effective time and retain
such employees until such time as in HTI's management's judgment their
continued employment is not in HTI's best interest. HTI agrees that all
benefits which Hydroscience provides to its employees will terminate
immediately before the Effective Time, and as soon as practicable after the
Effective Time HTI will provide health insurance benefits to all
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its employees formerly employed by Hydroscience. HTI shall not be responsible
for any obligation owing by Hydroscience to any Hydroscience employee.
1.6. Further Assurances. After the execution and delivery of this Agreement
(the "Closing"), each of the parties agrees to execute and deliver such
additional documents and take such additional actions as any party may
reasonably deem to be practical and necessary or advisable in order to
consummate the transactions contemplated by this Agreement, including vesting
more fully in HTI the ownership of Hydroscience's Assets and in Hydroscience
the ownership of the Preferred Shares.
1.7. Change of Name by Hydroscience. As soon as reasonably practicable
after Closing, Hydroscience may change its corporate name as it sees fit,
however such name change shall have no affect whatsoever on HTI except that HTI
shall be entitled to all benefits, and good will associated with Hydroscience
and its name.
ARTICLE II
Representations and Warranties of Hydroscience
Hydroscience represents and warrants that the following are true and
correct as of the Effective Time as if made at that date and time:
2.1. Organization and Good Standing. Hydroscience is a corporation duly
organized, validly existing, and in good standing under the laws of Texas, with
all requisite power and authority to carry on the business in which it is
engaged and to own all Assets being transferred to HTI.
2.2. Authorization and Validity. The execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by Hydroscience, and its parent corporation Whitehall
Corporation. This Agreement together with exhibits thereto constitute the
legal, valid, and binding obligation of Hydroscience, enforceable against it,
and Whitehall Corporation, in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
2.3. Title. Hydroscience has at the Effective Time transferred to HTI good
and marketable title to the transferred Assets, free and clear of all liens,
security interests, claims, and encumbrances. Hydroscience shall obtain the
transfer of all relevant patents, and trademarks used by Hydroscience in "The
Business" from Whitehall Corporation to HTI.
2.4. No Violation. The execution and performance of this Agreement will not
(a) result in a violation or breach of the
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Articles of Incorporation or Bylaws of Hydroscience or any agreement or other
instrument under which Hydroscience is bound or to which any of the assets of
Hydroscience are subject, or result in the creation or imposition of any lien,
security interest, claim, or encumbrance upon any of such assets, or (b)
violate any applicable law or regulation or any judgment or order of any court
or governmental agency.
2.5. Consents. No authorization, consent, approval, permit, or license of,
or filing with, any governmental or public body or authority, any lender or
lessor, or any other person or entity is required to authorize, or is required
in connection with, the execution, delivery, and performance of this Agreement
by Hydroscience.
2.6. Litigation. There is no legal action, threatened legal action, or
administrative proceeding or investigation instituted or, to the knowledge of
Hydroscience threatened against Hydroscience which could affect the
consummation of the transactions contemplated hereby, or the assets being
transferred to HTI by Hydroscience.
ARTICLE III
Representations and Warranties of HTI
HTI represents and warrants that the following are true and correct as of
the Effective Time as if made at that date and time:
3.1. Organization and Good Standing. HTI is a corporation duly organized,
validly existing, and in good standing under the laws of Texas, with all
requisite power and authority to carry on the business in which it is to engage
and to own the assets it owns and which are being transferred to it by
Hydroscience.
3.2. Authorization and Validity. The execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by HTI. This Agreement and the Exhibits thereto
constitute the legal, valid, and binding obligation of HTI, enforceable against
it in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors rights generally
or the availability of equitable remedies.
3.3. Preferred Shares. The authorized capital stock of HTI consists of (i)
3,000,000 shares of common stock, $0.01 par value, of which 1,000,000 shares
are issued and outstanding and (ii) 818,182 shares of preferred stock, of which
818,182 shares are outstanding as the Preferred Shares. The Preferred Shares
have the rights and privileges set forth in the Articles of Incorporation of
HTI, a true, correct, and complete copy of which has previously been provided
by HTI to Hydroscience. No amendment to the Articles of Incorporation of HTI
which effects the rights or privileges of holders of preferred stock may be
approved or implemented without the approval of the holders of preferred stock,
voting as a class.
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No shares of HTI capital stock are held by it in treasury. No shares of HTI
capital stock have been issued or disposed of in violation of, and no
shareholder has any, preemptive rights. There is no existing option, warrant,
call, subscription, agreement, right, or commitment of any kind calling for the
issuance of authorized but unissued shares of HTI capital stock, or securities
convertible into or exchangeable for, or otherwise relating to any HTI capital
stock other than (as to convertibility) the Preferred Shares.
3.4. No Violation. The execution and performance of this Agreement will not
(a) result in a violation or breach of the Articles of Incorporation or Bylaws
of HTI or any agreement or other instrument under which HTI is bound or to
which any of the assets of HTI are subject, or result in the creation or
imposition of any lien, security interest, claim, or encumbrance upon any of
such assets, or (b) violate any applicable law or regulation or any judgment or
order of any court or governmental agency.
3.5. Consents. No authorization, consent, approval, permit, or license of,
or filing with, any governmental or public body or authority, any lender or
lessor, or any other person or entity is required to authorize, or is required
in connection with, the execution, delivery, and performance of this Agreement
by HTI.
3.6. Litigation. There is no legal action or administrative proceeding or
investigation instituted or, to the best of the knowledge of HTI, threatened
against HTI which could affect the consummation of the transactions
contemplated hereby.
ARTICLE IV
Indemnification
4.1. Indemnity by Hydroscience. Hydroscience and Whitehall Corporation
shall indemnify, defend, and hold HTI and its officers, directors, agents,
shareholders, attorneys, and affiliates (collectively, the "Hydroscience
Indemnified Person") harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees, and expenses (collectively, "Damages") asserted against or
incurred by any of the Hydroscience Indemnified Persons by reason of or
resulting from: (a) a breach by Hydroscience of any representation, warranty,
or covenant with others or contained herein, (b) any liability or obligation of
Hydroscience not assumed by HTI pursuant to Section 1.3, and (c) except with
respect to liabilities or obligations assumed by HTI pursuant to Section 1.3,
any claim arising out of or relating to occurrences of any nature relating to
the Business, product warranties, the employees, or the Purchased Assets prior
to the Effective Time, whether any such claims are asserted prior to or after
the Effective Time.
4.2. Indemnity by HTI. HTI shall indemnify, defend, and hold Hydroscience
and its officers, directors, agents, shareholders, attorneys, and affiliates
(collectively, the "HTI Indemnified
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Persons") harmless from and against all Damages asserted against or incurred by
any of the HTI Indemnified Persons by reason of or resulting from: (a) a breach
by HTI of any representation, warranty, or covenant contained herein; (b) the
liabilities and obligations assumed by HTI pursuant to Section 1.3, and (c) any
claim arising out of or relating to occurrences of any nature relating to the
Purchased Assets or the conduct of business by HTI (whether or not using the
Purchased Assets) after the Effective Time.
ARTICLE V
Miscellaneous
5.1. Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures after Closing as it
reasonably considers are required by law so long as it notifies the other party
in advance of any such disclosure.
5.2. Survival of Representations, Warranties and Covenants. The
representations, warranties, and covenants contained herein shall survive the
Closing and the Effective Time and any investigation made by either party
hereto or on its behalf.
5.3. Taxes. HTI shall be liable for and shall indemnify Hydroscience
against any sales, use, or other similar taxes resulting from the transactions
contemplated hereby, except any taxes on the real property involved in this
agreement.
5.4. Notices. Any notices, consents, demands, requests, approvals, and
other communications to be given under this Agreement by any party to the other
shall be deemed to have been duly given if given in writing and personally
delivered, sent by nationally recognized courier, sent by telegram, or
telecopy, or sent by mail, registered or certified, postage prepaid with return
receipt requested, at the address specified beside each party's signature at
the end of this Agreement. Notices delivered personally or by courier,
telegram, or telecopy shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of 10:00 a.m. on the third business day
after mailing. Any party may change its address for notice hereunder by giving
notice of such change in the manner provided in this Section.
5.5. Entire Agreement. This writing, and the exhibits thereto, constitute
the entire agreement of the parties, and such agreement supersedes any and all
other agreements, either oral or written, between the parties hereto with
respect to the subject matter hereof and contains all of the covenants and
agreements between the parties with respect thereto.
5.6. Modification and Wavier. No change or modification of this Agreement
shall be valid or binding upon the parties hereto unless such change or
modification shall be in writing and signed
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by both the parties hereto. No waiver of any term or condition of this
Agreement shall be enforceable unless it shall be in writing and signed by the
party against which it is sought to charged. The waiver by either party of a
breach of any provision of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach by such other party.
5.7. Governing Law. The laws of the State of Texas shall govern the validity
or enforceability and the interpretation or construction of all provisions of
this Agreement and all issues hereunder. This Agreement shall be performable in
Dallas County, Texas. Venue of any litigation arising hereunder shall be in a
court of competent jurisdiction in Dallas County, Texas. HTI hereby agrees
irrevocably and unconditionally to consent to submit to the exclusive
jurisdiction of the courts of the State of Texas and of the United States of
America located in Dallas, Texas, for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby,
and further agrees that service of process, summons or notice by U.S.
registered mail to HTI's address set forth above shall be effective service of
process of any action, suit or proceeding brought against HTI in any such
court. HTI hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of Texas or
the United States of America located in Dallas, Texas, and hereby irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
5.8. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which shall constitute one and
the same document.
5.9. Costs. That parties hereto shall pay all of their own expenses
relating to the negotiation, documentation, and closing of the transactions
contemplated by this Agreement, including (without limitation) the fees and
expenses of their respective counsel, accountants, and other advisors. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees, costs, and necessary disbursements in addition to any other relief to
which it may be entitled.
5.10. Assignment. Neither party may assign this Agreement without the prior
written consent of the other party hereof, which consent may be withheld in its
sole discretion; provided, however, that Hydroscience may assign this Agreement
to Whitehall (or Whitehall's successor) if Hydroscience liquidates its assets.
5.11. Binding Effect. This Agreement shall be binding upon the parties
hereto, together with their respective successors and permitted assigns.
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5.12. Language; Captions; References. Whenever the context requires,
references in this Agreement to the singular number shall include the plural,
the plural number shall include the singular, and words denoting gender shall
include the masculine, feminine, and neuter. Section headings in this Agreement
are for convenience of reference only and shall not be considered in construing
or interpreting this Agreement. "Hereof," "hereto," "herein," and words of
similar import used in this Agreement shall be deemed references to this
Agreement as a whole, and not to any particular Section, paragraph, or other
provision of this Agreement unless the context specifically indicates to the
contrary. Any reference to a particular "Section" shall be construed as
referring to the indicated Section of this Agreement unless the context
indicates to the contrary. Whenever the term "including" is used herein, it
shall mean "including without limitation."
5.13. Relationship of Parties. Nothing in this Agreement shall create or be
deemed to create the relationship of partners, joint venturers,
employer-employee, or principal-agent between the parties, nor shall either
party have any authority to assume or create any obligation or responsibility
whatsoever, express or implied, on behalf of or in the name of the other party
or to bind the other party in any manner whatsoever, nor shall either party
make any representation, warranty, covenant, agreement, or commitment on behalf
of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of 5:00 p.m. on November 7, 1996.
Address: HYDROSCIENCE, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ --------------------------------
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇. ▇. ▇▇▇▇▇▇▇▇
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Title: Vice President
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HYDROSCIENCE TECHNOLOGIES, INC.
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ------------------------------------
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: President
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By:
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Name:
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Telecopy
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AUTHORIZATION AND RATIFICATION
The foregoing agreement by and between Hydroscience, Inc. and Hydroscience
Technologies, Inc. is hereby approved, authorized, ratified and adopted by
Whitehall Corporation.
WHITEHALL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ - PRESIDENT
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title of Authorized Representative:
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