EX-2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement dated July 13, 2006
("Agreement"), is made by and between ECONALYTIC SYSTEMS, INC., a
Colorado corporation ("Seller"), and ENERTECK CORP., a Delaware
corporation ("Buyer"). Each of Seller and Buyer may hereinafter
be referred to as a "Party" and collectively as the "Parties".
WHEREAS Seller owns certain proprietary information and
rights relating to products which contain a certain iron-based
chemical compound (the "Key Chemical") that can be added to
diesel fuel to increase the efficiency of a diesel engine, and is
engaged in the business (the "Business") of product development,
proof of performance testing, regulatory approval development and
manufacturing with respect to those certain diesel motor vehicle
fuel additives known as EC5805A and EC5931A which are registered
with the United States Environmental Protection Agency ("EPA")
under 40 CFR Part 79;
WHEREAS, pursuant to that certain Exclusive Market Segment
Development Agreement entered into by the Parties on September 7,
2001 (the "Exclusive Market Segment Development Agreement"),
Seller previously granted Buyer a license to market and sell the
EC5805A and EC5931A products;
WHEREAS Buyer wishes to acquire, and Seller wishes to sell,
all of Seller's rights with respect to the liquid diesel motor
vehicle fuel additives known asEC5805A and EC5931A products
(collectively, the "Additives"), as well as Seller's rights to
certain property items, including intellectual property items,
associated with the Additives; and
WHEREAS Seller wishes to retain, and Buyer does not wish to
acquire, the remainder of Seller's business (the "Retained
Business");
NOW, THEREFORE, in consideration of the mutual promises and
commitments of the Parties set forth herein and other good and
valuable consideration, the Parties agree as follows:
1. Purchase and Sale. Upon the terms and subject to the
conditions set forth herein, Seller agrees to, and hereby does,
sell, assign and transfer to Buyer on the Closing Date (as
defined in Section 4 below), and Buyer agrees to, and hereby
does, purchase and assume from Seller, all of Seller's right,
title and interest in and to all those assets used in or relating
to the Business (other than the Excluded Assets), specifically
the following (the "Purchased Assets"):
(a) the proprietary formulas for the Additives known as EC5805A
and EC5931A and for any Catane liquid product that is or was
also known as EC5805A or EC5931A as set forth on the List of
Registered Diesel Additives maintained by the EPA and identified
on Schedule 1.1(a) (collectively, the "Formulas"), regardless of
whether such products are currently being manufactured, marketed
or sold, including specifically but without limitation any
product with a component of DuPont FOA11 or its components;
(b) the identity and description of each component of each
Formula, including without limitation the Key Chemical,
and all information regarding the source of the
components of the Formulas other than the Key Chemical;
(c) all documents, data and information exclusively relating to
the Formulas and to products incorporating the Formulas (the
"Products"), in any format or media;
(d) all test information, documentation, data and results
(the "Test Data") performed or obtained by or for
Seller or any affiliate of Seller, and filed or
submitted to the EPA in support of Seller's
registration of the Products and the grant to Seller of
manufacturing rights for the Products, and all other
test information, documentation, data and results
pertaining to the Products or Additives performed or
obtained by or for Seller or any affiliate of Seller,
whether or not such test information has been submitted
to the EPA, including without limitation those certain
printed and electronic reports and files of data,
analysis and summary presentations identified in
Schedule 1.1(d);
(e) those certain analytical protocols (the "Analytical
Protocols") required to analyze the Products, the Key
Chemical, and other components thereof, to qualify the
Additives for use for or in diesel applications, as
well as the "Performance Statistical Analysis
Procedure", consisting of the proof of performance
statistical analysis procedure that is applicable to
diesel engine and other applications as well as all
enabling details necessary for Buyer to apply and use
the procedure, subject to Section 9(e) hereof;
(f) all contracts pertaining to the Formulas (the
"Contracts"), including without limitation all
manufacturing agreements, supply agreements, licenses,
sales representative agreements, reseller and
distributor agreements, if any, that pertain to the
manufacture, marketing and sale of Products or which
are reasonably necessary for Buyer to manufacture,
market and sell Products, in each case as listed in
Schedule 1.1(f) hereto; provided that the parties
acknowledge and agree that Seller's contract with
Seller's supplier of the Key Chemical shall not be a
"Contract" and is not being sold or assigned hereunder;
(g) all materials, in any format or media, used for or
materially related to the manufacture, marketing or
sale of Products, and all reports, data, analysis,
presentations, manuscripts, catalogues, brochures,
photographs, graphs and charts relating materially to
the Formulas or the Products;
(h) all computer program source code, object code,
documentation and technical manuals materially relating
to the Test Data, the Analytical Protocols, or the
Performance Statistical Analysis Procedure, or
otherwise materially related to the Formulas or
Products, and all copyrights and any and all other
intellectual property rights or proprietary rights and
information associated exclusively with any and all of
the foregoing, subject to Section 9(e) hereof;
(i) all copyrights, trademarks, service marks, trade names
and other intellectual or proprietary rights, including
with limitation common law rights, exclusively relating
to the Formulas or Products, including those
specifically identified in Schedule 1.1(i);
(j) all sales support and promotional materials,
advertising materials and production, sales and
marketing records exclusively relating to the Formulas
or the Products;
(k) all customer lists and records, sales data and records
as such may exclusively pertain to the Formulas or the
Products, as identified on Schedule 1.1(k); and
(l) all books, records and files exclusively pertaining to
the Formulas or the Products.
2. Excluded Assets. Notwithstanding anything in this Agreement
to the contrary, assets of the Seller that are not set forth in
Section 1 (the "Excluded Assets"), including, without limitation,
the following assets, shall be excluded from, and shall not
constitute, the Purchased Assets:
(a) all software, licenses, contracts, trademarks, trade
names, logos, imprints and all other intellectual
property not exclusively related to the Formulas or
Products;
(b) all assets, both tangible and intangible, not used
exclusively by Seller in connection with the Business
or the Products;
(c) the trademarks "Thermoboost" and "Thermoboost II";
(d) Seller's contract with Seller's supplier of the Key
Chemical; and
(e) all of Seller's rights under this Agreement, including
without limitation all post-Closing rights described
below.
3. Liabilities Assumed by Buyer. On the Closing date, Buyer
shall assume, perform and discharge when due the following
liabilities (the "Assumed Liabilities"):
(a) all liabilities and obligations of Seller which arise
after the Closing Date under the terms of the
Contracts; and
(b) all liabilities and obligations arising in respect of
Formulas and Products manufactured or sold by Buyer on
or after the Closing Date.
4. Closing. The closing of the transactions contemplated
herein (the "Closing") shall take place at the office of counsel
for Buyer, Farnsworth & vonBerg, LLP, 333 North Sam Houston
Parkway, Suite 300, Houston, Texas, on or before June 30, 2006
(the "Closing Date"). At the Closing, Seller will execute and
deliver to Buyer a "Bill of Sale", in the form of Exhibit A
attached hereto, which shall evidence the sale, assignment,
transfer and delivery of the Purchased Assets to Buyer, as well
as such other documents as are referenced herein.
5. Consideration.
(a) The purchase price for the Purchased Assets (the
"Purchase Price") shall be Three Million Dollars
($3,000,000), payable as follows: (i) One Million
Dollars ($1,000,000) will be paid at Closing by
cashier's check or wire transfer, and (ii) the
remaining Two Million Dollars ($2,000,000), evidenced
by a promissory note in the form attached hereto as
Exhibit B (the "Note"), which (a) shall bear interest
each month at a rate of 4% per annum, compounded
monthly, and which shall be paid in four (4) annual
payments of Five Hundred Thousand Dollars ($500,000)
plus accumulated interest to that date on each
anniversary of the Closing (each a "Payment Due Date")
until the Purchase Price is paid in full, and (b) may
be prepaid at any time at a price equal to the
principal then outstanding plus interest accrued
thereon, without the payment of any prepayment premium,
fee or penalty. To secure the debt represented by the
Note, Buyer will execute and deliver to Seller a
Security Agreement in the form attached hereto as
Exhibit C and incorporated herein by reference.
(b) The Purchase Price shall be allocated among the
tangible and intangible assets as set forth in Schedule
5(b).
6. Seller's Representations. For the purposes hereof, "to
Seller's knowledge" as used in the following representations and
warranties refers exclusively to matters within the best
knowledge of Jack Kracklauer after reasonable inquiry (for
purposes hereof, the phrase "reasonable inquiry" means the level
of inquiry that a reasonable seller of the Purchased Assets would
undertake). Seller represents and warrants to the best of
Seller's knowledge to Buyer as follows:
(a) Seller is a corporation, duly organized, validly
existing and in good standing under the laws of the
State of Colorado and all jurisdictions in which it is
doing business or has facilities, and has all requisite
power and authority and all material authorizations,
licenses and permits and governmental authorizations
necessary to own and operate the Purchased Assets and
to conduct the Business as now conducted.
(b) Seller has full legal right, power and authority to
execute and deliver this Agreement and to consummate
the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement
have been duly approved by all necessary action of
Seller. This Agreement has been duly authorized,
executed and delivered by Seller and constitutes a
valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
(c) Seller is the owner of the Purchased Assets and, as of the
Closing, Seller will own good and marketable title to the
Purchased Assets, free and clear of all liens and encumbrances,
except for liens for sales and personal property taxes not yet
due.
(d) Each of the Contracts set forth on Schedule 1.1(f) is
(i) in full force and effect and (ii) a valid and
binding obligation of, and enforceable in accordance
with its terms against each of the parties thereto,
except as may be limited by bankruptcy, moratorium,
insolvency or other similar laws generally affecting
the enforcement of creditors' rights. No party to any
of the Contracts (i) has provided any notice to Seller
of its intent to terminate, (ii) has threatened to
terminate or (iii) is in breach under any provision
thereof. Seller is not in breach or default under any
of the Contracts and has fully complied with all
material provisions of each such Contract.
(e) Neither the execution and delivery of this Agreement
nor the consummation or performance of the transactions
contemplated by this Agreement will, directly or
indirectly, (i) contravene, conflict with or result in
a violation or breach of any law, or (ii) contravene,
conflict with or result in a violation or breach of any
Contract or any agreement with any third party, or
result in the imposition or creation of any encumbrance
of any kind or nature whatsoever upon or with respect
to any of the Purchased Assets, or result in the
restriction of full and unfettered ownership and use of
the Purchased Assets by Buyer.
(f) Seller is not required to give any notice or obtain any
consent from any person or entity in connection with
the execution and delivery of this Agreement or the
consummation or performance of any of the transactions
contemplated by this Agreement.
(g) Schedule 1.1(f) contains an accurate and complete list,
and Seller has delivered to Buyer accurate and complete
copies, of each and every contract that relates,
directly or indirectly, to the Purchased Assets or the
Business other than Seller's contract with Seller's
supplier of the Key Chemical. Other than Seller's
contract with Seller's supplier of the Key Chemical,
there is no contract related to the Purchased Assets or
the Business, including without limitation any
manufacturing agreement, supply agreement, license,
sales representative agreement, reseller or distributor
agreement, that pertains to the manufacturing,
marketing or sale of the Formulas and Products or which
is reasonably necessary for Buyer to manufacture,
market and sell the Formulas and Products, which is not
listed on Schedule 1.1(f). It is acknowledged and
agreed by the Parties that Seller's contract with
Seller's supplier of the Key Chemical shall not be a
Contract, as defined above, is not being sold or
assigned hereunder and will not be listed on Schedule
1.1(f).
(h) Seller owns and has the right to use all the
intellectual property (the "Intellectual Property")
included in the Purchased Assets. Seller is not
obligated to pay any royalty or other fee to any
licensor or other third party with respect to the
Intellectual Property. The Intellectual Property does
not infringe or conflict with any rights of any third
party, and no third party has any interest in the
Intellectual Property or in the Purchased Assets.
(i) Seller is not a party to nor is Seller threatened with,
any litigation or judicial, administrative or
arbitration proceeding, which, if decided adversely
against Seller, could restrict or delay the
consummation of the transactions contemplated hereby or
have a material adverse effect upon the transactions
contemplated hereby or upon the Purchased Assets.
Seller is in compliance in all material respects with
all applicable federal, state and local laws, rules,
regulations and orders relating to its business.
(j) Seller has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary in
connection with the Agreement or the transactions
contemplated hereby for which Buyer would be
responsible.
7. Buyer's Representations. Buyer represents and warrants to
Seller as follows:
(a) Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of the
State of Delaware and all jurisdictions in which it is
doing business or has facilities.
(b) Buyer has full legal right, power and authority to
execute and deliver this Agreement and to consummate
the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement
have been duly approved by all necessary action of
Buyer. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
(c) Buyer is not a party to nor is it threatened with, any
litigation or judicial, administrative or arbitration proceeding,
which, if decided adversely against Buyer, could restrict or
delay the consummation of the transactions contemplated hereby or
have a material adverse effect upon the transactions contemplated
hereby or upon the Purchased Assets.
(d) Buyer has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary in
connection with the Agreement or the transactions
contemplated hereby for which Buyer would be
responsible.
8. Additional Covenants.
(a) License Agreements.
(i) Thermoboost License Agreement. At the Closing,
Buyer and Seller shall execute and deliver a
License Agreement (the "Thermoboost License
Agreement"), substantially in the form attached
hereto Exhibit D, pursuant to which Buyer shall
grant Seller a non-exclusive, fully paid,
perpetual, non-revocable, royalty-free,
assignable license, with the right to sublicense,
to manufacture, market and sell that certain
product known as "Thermoboost II", which has the
same chemical formulation as one of the Additives
and which is exclusively for use in home heating
oil, and to use the Analytical Protocols solely
in connection therewith and in connection with
the Retained Business. The Seller further
agrees not to disclose any of the intellectual
property subject to such License Agreement to any
third parties that have not agreed to keep such
intellectual property confidential on the same
terms as set forth herein.
(ii) Performance Statistical Analysis
Procedure License Agreement. At the Closing,
Buyer and Seller shall execute and deliver a
License Agreement (the "Performance Statistical
Analysis Procedure License Agreement"),
substantially in the form attached hereto Exhibit
E, pursuant to which Buyer shall grant Seller a
non-exclusive, fully paid, perpetual, non-
revocable, royalty-free, assignable, license, with
the right to sublicense, to use the Performance
Statistical Analysis Procedure in connection with
the Retained Business.
(b) Grouping of Test Data. Seller agrees and covenants
that, upon the Closing, Buyer shall be permitted to use
the Test Data for all purposes, including for the
purpose of seeking a manufacturing registration for the
Products. At the Closing, Seller shall execute and
send to EPA, with a copy to Buyer, a letter granting to
Buyer full access to and use of the Test Data filed
with the EPA specifically to facilitate the
registration of Buyer as an additive manufacturer.
(c) Relabeling Rights. The Parties acknowledge that Seller
has previously granted Buyer the right to operate as a
relabeler of the Products and Buyer has obtained a
registration under the EPA in connection with the
relabeling of the Products. Seller hereby grants such
relabeling rights to Buyer, its affiliates and
successors, on a permanent basis, without any further
consideration or payment due from Buyer.
(d) Termination of Exclusive Market Segment Development
Agreement. Upon the Closing hereunder, the Exclusive
Market Segment Development Agreement shall terminate
and be of no further force or effect. Notwithstanding
any language therein to the contrary, all rights and
obligations of each of the Seller and Buyer under the
Exclusive Market Segment Development Agreement shall
terminate upon the Closing as well. Such termination
shall be effective automatically as of the Closing
hereunder and shall take effect without any further
action or acceptance by the Board of Directors of the
Buyer or Seller or any other person.
9. Post-Closing Rights and Covenants.
(a) Nonsolicitation Agreement. Seller agrees, covenants
and undertakes that for five (5) years after the
Closing of this transaction, Seller will not, in any
manner whatsoever, for any purpose or in any place,
hire away or contract with, or attempt to hire away or
contract with, or induce, coerce, counsel, solicit or
entice, any employee employed by Buyer on such date or
employed at any time in the preceding (18) months, to
leave his or her employment with Buyer, nor shall
Seller during such period directly or indirectly cause,
suggest, recommend, solicit, entice or command any
other individual or entity to so do, on behalf of
Seller or on behalf of any other individual or entity.
The parties acknowledge and agree that this Section
9(a) shall not apply to any general solicitation for
employees by Seller aimed at the general marketplace
for personnel qualified to be employed with Seller, for
example through the internet or any publication, even
though such solicitation may be received by an employee
of Buyer.
(b) Noncompetition Agreement. Seller agrees, covenants and
undertakes that for five (5) years after the Closing of this
transaction, Seller will not, directly or indirectly, own,
manage, operate, join, control, be employed by, or participate in
ownership, management, operation, or control of or be connected
in any manner with any person, partnership, association,
corporation, or other organization, whether located within the
United States of America or anywhere abroad, engaged in the
business of researching, developing, manufacturing, marketing or
selling products intended to improve the fuel efficiency of heavy
duty diesel engines. It is specifically acknowledged that the
covenants contained in this paragraph are an integral part of the
consideration for this transaction. The parties acknowledge that
they have made a good faith effort to write and enter into a
covenant not to compete that will be enforceable in accordance
with its terms under the laws of the State of Texas. Seller
acknowledges that the limitation on its ability to compete with
Buyer is fair to Seller and that sufficient consideration has
been given therefor. The parties further acknowledge that the
recovery of monetary damages may be insufficient to protect Buyer
in the event of a breach of this Agreement by Seller and that
Buyer shall be entitled to injunctive or other equitable relief
in the event of a breach. Seller waives any requirement for the
posting of a bond in connection with obtaining any such
injunctive or other equitable relief. Nothing contained in this
Agreement shall be construed as prohibiting Buyer from pursuing
any other remedies available to Buyer for breach or threatened
breach hereunder, including recovery of damages at law from
Seller. The parties acknowledge and agree that the provisions of
this Section 9(b) shall not prohibit Seller from owning up to 1%
of any company that engages in any activity described herein and
whose securities are publicly traded on a stock exchange such as
but not limited to the New York Stock Exchange.
(c) Assistance in Obtaining Registration. Seller covenants
that it will use its commercially reasonable efforts to
promptly and fully respond to all requests of Buyer for
cooperation and assistance in obtaining such rights and
registrations, including a manufacturing registration
under the regulations of the EPA, as may be necessary
or helpful to enable and allow Buyer to manufacture,
market and sell the Products; provided that any
reasonable out-of-pocket expenses incurred or to be
incurred by Seller in providing such assistance shall
be paid in advance by Buyer.
(d) Supply of Products; Supply of Key Chemical.
(i) Supply of Products. To permit Buyer to
continue to use the relabeling rights described in
Section 8(c) hereof, until such time as Buyer obtains a
manufacturing registration under the EPA, Seller agrees
and covenants to use its commercially reasonable
efforts to supply the Products to Buyer on Seller's
standard terms and conditions, as such may be changed
from time to time at Seller's sole discretion,
conditioned only upon Buyer's submission of orders with
a four-month lead time for delivery and Seller's
ability to obtain the Key Chemical and other necessary
components of the Products to fill such orders using
its commercially reasonable efforts, at a price
calculated by the following formula: (a) the price set
forth on Seller's price list for the Key Chemical, as
such may be changed from time to time at Seller's sole
discretion, plus (b) 1.2 multiplied by (i) Seller's
cost for all other components of the Products, plus
(ii) Seller's cost for all blending, formulation and
other manufacturing processes that may be used in
manufacturing the Products, plus (iii) all handling,
shipping and other transportation costs incurred by
Seller to provide the Products to Buyer.
(ii) Supply of Key Chemical. Until such time as
Buyer obtains a manufacturing registration under the
EPA, Seller agrees and covenants to use its
commercially reasonable efforts to supply the Key
Chemical to Buyer, at the price set forth on Seller's
then-current price list and on Seller's then-current
standard terms and conditions, conditioned only upon
Buyer's submission of orders with a four-month lead
time for delivery and Seller's ability to obtain the
Key Chemical to fill such orders using its commercially
reasonable efforts.
(e) Confidentiality. Each Party, on behalf of itself, its
affiliates, its officers, directors, shareholders and
employees, acknowledges that the value of the Purchased
Assets and Excluded Assets to Buyer and Seller,
respectively, depends upon the strict confidentiality
of the Formulas, of all information comprising the
Purchased Assets and Excluded Assets, and of all other
confidential or proprietary information related to any
part of the Purchased Assets or Excluded Assets or to
the Seller's customers, suppliers, vendors, investors,
partners, or other third parties relating directly or
indirectly to the Purchased Assets or Excluded Assets
that cannot be obtained readily by the public
(collectively the "Confidential Information"). Each
Party, on behalf of itself and its affiliates, its
officers, directors, shareholders and employees,
covenants and agrees that it will not, except as
contemplated hereunder, at any time, use, publish,
disclose, appropriate or communicate, directly or
indirectly, any Confidential Information. Each Party
understands the importance of this obligation of
confidentiality to the other Party and acknowledges
that the use or disclosure of Confidential Information
could be damaging to the other Party or its business
operations, particularly if such disclosure is by or to
a competitor, customer or vendor of such other Party.
It is expressly agreed and understood that Seller may
disclose Confidential Information (i) for the purpose
of permitting a party that is a customer of Seller
purchasing products from Seller (a "Product Customer"),
and its agents and representatives, to evaluate the
effectiveness of such products or, (ii) to a party that
is purchasing or evaluating the purchase of all or
substantially all of a division or the entirety of
Seller's business (a "Qualified Purchaser"), and its
agents and representatives, provided that such Product
Customer or Qualified Purchaser, and, in each instance,
its agents and representatives to which Confidential
Information is disclosed, has agreed to keep the
Confidential Information confidential on the same terms
as set forth herein. Each Party agrees and
acknowledges that any actual or threatened breach of
this Section 9(e) will cause the other Party
irreparable harm and that under such circumstances such
other Party shall be entitled immediately to secure
equitable and injunctive relief, without the need to
post a bond, to enjoin such actual or threatened
breach.
(f) Observation Rights.
(i) In connection with the meetings of Buyer's board of
directors (the "Board"), Buyer shall provide observation rights
to one representative designated by Seller (the "Observer").
(ii) The Observer shall have the right to be given notice of
meetings of the meetings of the Board at the same time as the
directors, respectively, and to observe and participate in such
meetings (but not to vote); provided, however, that (i) failure
to give notice of a meeting as required hereby shall in no way
affect the validity of such meeting or any action taken at such
meeting, and (ii) the Observer may be excluded from any Board
meeting or portion of such a meeting (A) if necessary, upon the
advice of the Buyer's legal counsel, to preserve the attorney-
client privilege, or (B) at which the Board is solely discussing
business matters that are wholly internal to Buyer that may not
be reasonably foreseen to directly or indirectly affect Seller or
Seller's rights under this Agreement or the agreements and
instruments referenced herein.
(iii) The rights of the Seller pursuant to this
Section 9(f) shall be effective for so long as any
amounts payable to the Seller under the Note
remain unpaid.
10. Indemnities.
(a) Seller shall indemnify and hold harmless Buyer, and all
of Buyer's affiliates, and each of their respective
directors, officers, employees and agents and the
successors and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from
and against all losses, liabilities, obligations,
claims, demands, damages, penalties, settlements,
causes of action, costs and expenses, including,
without limitation, actual costs paid in connection
with an Indemnified Party's investigation and
evaluation of any claim or right asserted against such
party and all reasonable attorneys' fees and court
costs (collectively, "Indemnifiable Losses") that may
be imposed on, incurred by or asserted against any of
them by a person not a party to this Agreement ("Third
Person") caused by (i) breach by Seller of any of its
representations or warranties made herein or in
Exhibits A, D or E hereto; (ii) breach or non-
fulfillment of any covenant or agreement to be
performed by Seller under this Agreement or under
Exhibits A, D or E hereto; and (iii) liability or
obligation of Seller related to the Purchased Assets
and not assumed by Buyer pursuant to the terms of this
Agreement.
(b) Buyer shall indemnify and hold harmless Seller, and all
of Seller's affiliates, and each of their respective
directors, officers, employees and agents and the
successors and assigns of any of the foregoing
(collectively, the "Seller Indemnified Parties") from
and against all Indemnifiable Losses that may be
imposed on, incurred by or asserted against any of them
by a Third Person caused by (i) breach by Buyer of any
of its representations or warranties made herein or in
Exhibits B or C hereto; (ii) breach or non-fulfillment
of any covenant or agreement to be performed by Buyer
under this Agreement or under Exhibits B or C hereto;
or (iii) liability or obligation of Seller assumed by
Buyer pursuant to the terms of this Agreement.
(c) Each Party, on behalf of itself and its respective
Buyer Indemnified Parties or Seller Indemnified Parties
(each such person, an "Indemnitee"), agrees to provide
the indemnifying Party prompt written notice of any
action, claim, demand, discovery of fact, proceeding or
suit (collectively, a "Claim") for which such
Indemnitee intends to assert a right to indemnification
under this Agreement; provided, however, that failure
to give such notification shall not affect each
applicable Indemnitee's entitlement to indemnification
(or the corresponding indemnifying Party's
indemnification obligations) hereunder except to the
extent that the indemnifying Party shall have been
prejudiced as a result of such failure. The
indemnifying Party shall have the initial right (but
not obligation) to defend, settle or otherwise dispose
of any Claim for which an Indemnitee intends to assert
a right to indemnification under this Agreement as
contemplated in the preceding sentence if, and for so
long as, the indemnifying Party has recognized, in a
written notice to the Indemnitee provided within thirty
(30) days of the written notice of the Claim, its
obligation to indemnify the Indemnitee for any
Indemnifiable Losses relating to such Claim; provided,
however, that if the indemnifying Party assumes control
of the defense, settlement or disposition of a Claim,
the indemnifying Party shall obtain the written consent
of each applicable Indemnitee prior to ceasing to
defend, settling or otherwise disposing of the Claim.
If the indemnifying Party fails to state in a written
notice during such thirty (30) day period its
willingness to assume the defense of such a Claim, the
applicable Indemnitee(s) shall have the right to
defend, settle or otherwise dispose of such Claim,
subject to the applicable provisions of Sections 10(a)
and (b).
11. Limitation of Liability. Each Party hereby waives the
right to seek, claim or obtain, punitive, incidental,
indirect and/or consequential damages (including, but not
limited to, loss of revenue or anticipated profits or loss
of business) as a result of any dispute, claim, action or
proceeding (whether in contract, tort, or otherwise) arising
from this Agreement. Seller's maximum liability to Buyer
for a breach of its representations or covenants hereunder
shall be the Purchase Price.
12. Notices. Any notices required to be given by this Agreement
shall be sufficiently given if in writing and sent by
overnight courier, registered, certified or first class
mail, return receipt requested, or by telefax with
confirmation page, addressed as follows (or to such updated
address as may be specified in writing in accordance
herewith to the other Party from time to time), and such
notices shall be deemed delivered upon their actual receipt
by the addressee:
To Buyer:
EnerTeck Corp.
10701 Corporation Drive, Suite 150
Stafford, TX 77477
Attention: Dwaine Reese
Facsimile: (281) 240-1828
With a copy to:
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, New York 10022
Attention: Elliot Press, Esq.
Facsimile: (212) 940-6348
To Seller:
Econalytic Systems, Inc.
3450 Penrose Place, Suite 160
Boulder, CO 80301
Attention: Jack Kracklauer
Facsimile: (303) 546-6996
with a copy to:
Krendl Krendl Sachnoff & Way, P.C.
370 Seventeenth Street, Suite 5350
Denver, CO 80202
Attention: Lee F. Sachnoff, Esq.
Facsimile: (303) 629-2606
13. Miscellaneous.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado,
without giving effect to the doctrine of conflict of
laws. Any legal action or other legal proceeding
relating to this Agreement or the enforcement of any
provision of this Agreement must be solely and
exclusively brought or otherwise commenced in any court
of competent jurisdiction in or for either Harris
County, Texas, or Boulder County, Colorado.
(b) Neither Party may assign this Agreement without the
prior written consent of the other Party. This
Agreement shall be binding upon and inure to the
benefit of the Parties' successors and assigns.
(c) The waiver by either Party of a breach or violation of
any provision of this Agreement shall not constitute a
waiver of any subsequent or other breach or violation.
(d) If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid or
unenforceable, it shall be modified, if possible, to
the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible,
it shall be stricken and the remaining provisions shall
remain in full force and effect.
(e) Paragraph headings are for reference only.
(f) Each of the Parties hereto shall bear their respective
direct and indirect expenses incurred in connection
with the negotiation, preparation, execution and
performance of this Agreement and the transactions
contemplated hereby, whether or not the transactions
contemplated hereby are consummated.
(g) This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of such
counterparts taken together shall constitute one and
the same instrument.
(h) No warranty of Seller contained herein, if any, shall
apply to any Additive or Product manufactured by Buyer
that is not formulated precisely as specified by the
Formulas.
(i) Buyer and Seller have previously exchanged several
documents that discuss matters substantially related to
this Agreement, including, without limitation, (a) a
Memorandum of Understanding executed on February 4,
2003 by EnerTeck and on February 6, by Econalytic, (b)
an e-mail sent on January 24, 2006 titled "Components
of RubyCat Technology for acquisition", and (c) a
Letter of Intent to Purchase RubyCat, sent by Duane
Reese of EnerTeck to Jack Kracklauer dated October 14,
2005 (collectively, the "Prior Term Sheets"). Buyer
and Seller acknowledge that all of the Prior Term
Sheets, are of no force or effect and do not relate to
or control this Agreement in any way, notwithstanding
the fact that the Prior Term Sheets discuss matters
substantially related to this Agreement.
(j) This Agreement represents the entire agreement of the
Parties in respect of the subject matter hereof and
supersedes any and all prior oral or written
understandings, memoranda, correspondence or agreements
between the Parties; and any representations,
warranties or agreements not included herein shall be
deemed null and void and of no force and effect.
* * * Signatures to follow * * *
IN WITNESS WHEREOF, the Parties have caused this Asset Purchase
Agreement to be executed on the date first above written.
ECONALYTIC SYSTEMS, INC.
By: /s/ Jack Kracklauer
Jack Kracklauer, President
ENERTECK CORP.
By: /s/ Dwaine Reese
Name: Dwaine Reese
Title: Chairman and CEO