TRANSFER AGREEMENT BY AND AMONG SHUMATE INDUSTRIES, INC., HEMIWEDGE VALVE CORPORATION AND TEJAS RESEARCH & ENGINEERING, L.P. October 14, 2008
Execution
Version
TRANSFER
AGREEMENT
BY
AND AMONG
XXXXXXX
INDUSTRIES, INC.,
HEMIWEDGE
VALVE CORPORATION
AND
TEJAS
RESEARCH & ENGINEERING, L.P.
October
14, 2008
Page
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ARTICLE
I
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THE
TRANSACTIONS
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1
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1.1
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Assignment
and License of the Intellectual Property
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1
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1.2
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Issuance
of Warrants
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1
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1.3
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No
Assumption of Liabilities
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1
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ARTICLE
II
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THE
PURCHASE PRICE
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2
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2.1
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Purchase
Price
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2
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ARTICLE
III
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CLOSING
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2
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3.1
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Closing
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2
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3.2
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Deliveries
and Actions by the Sellers
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2
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3.3
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Deliveries
and Actions by Tejas
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3
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
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4
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4.1
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Representations
and Warranties of the Sellers
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4
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4.2
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Representations
and Warranties of Tejas
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7
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ARTICLE
V
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COVENANTS
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9
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5.1
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Reasonable
Commercial Efforts
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9
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5.2
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Confidentiality
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10
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5.3
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Engineering
Support
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11
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5.4
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Subsequent
Financing
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11
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5.5
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Transfer
Taxes
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12
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ARTICLE
VI
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MISCELLANEOUS
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12
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6.1
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Nature
and Survival of Representations
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12
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6.2
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Notices
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12
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6.3
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Successors
and Assigns
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13
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6.4
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Governing
Law
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13
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6.5
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Venue;
Service of Process
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13
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6.6
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Headings
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13
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6.7
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Counterparts
and Facsimile Signatures
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13
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6.8
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Further
Assurances
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14
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6.9
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Amendment
and Waiver
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14
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6.10
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Entire
Agreement
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14
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6.11
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Severability
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14
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6.12
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Expenses
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14
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6.13
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Construction
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15
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6.14
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Definitions
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15
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i
SCHEDULES:
Schedule
4.1(c)
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Third
Party and Governmental Consents (Sellers)
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Schedule
4.1(f)
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Assets;
Encumbrances to be Released at Closing
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Schedule
4.1(h)
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Subsequent
Events
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Schedule
4.1(j)
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Capitalization
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Schedule
4.1(k)
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Brokers’
Fees
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ii
THIS
TRANSFER AGREEMENT (this “Agreement”)
is
entered into this 15th day of October, 2008, by and among Xxxxxxx Industries,
Inc., a Delaware corporation (“Xxxxxxx”),
Hemiwedge Valve Corporation, a Texas corporation and wholly owned subsidiary
of
Xxxxxxx (“Hemiwedge”
and,
together with Xxxxxxx, the “Sellers”),
and
Tejas Research & Engineering, L.P., a Texas limited partnership
(“Tejas”).
WHEREAS,
the Sellers, directly or indirectly, have designed and developed valve products
in the energy field services (the “Hemiwedge
Valve Technology”);
WHEREAS,
the Sellers desire to transfer to Tejas, and Tejas desires to acquire from
the
Sellers, certain of the Sellers’ assets related to the Hemiwedge Valve
Technology, on the terms and conditions set forth in this Agreement;
WHEREAS,
Xxxxxxx desires to sell to Tejas, and Tejas desires to purchase from Xxxxxxx,
certain common stock purchase warrants of Xxxxxxx; and
NOW,
THEREFORE, in consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE
I
THE
TRANSACTIONS
1.1
|
Assignment
and License of the Intellectual Property.
On the Closing Date (as hereinafter defined), Hemiwedge
and Tejas shall enter into that certain Intellectual Property Agreement
dated as of the date hereof (the “Intellectual
Property Agreement”)
providing for the assignment of certain intellectual property and
related
assets (the “Purchased
Assets”)
and the license of certain intellectual property (the “Licensed
Assets”
and together with the Purchased Assets, the “Assets”).
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1.2
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Issuance
of Warrants.
On the Closing Date:
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(a)
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Xxxxxxx
shall deliver (i) to Tejas its Common Stock Purchase Warrants dated
as of
the date hereof (“Warrants”)
to acquire 2,443,269 shares of Xxxxxxx’x common stock, par value $.001 per
share (“Common
Stock”),
and (ii) upon the transfer by Tejas to Intervale Capital, LLC, a
Delaware
limited liability company (“ICLLC”),
of the Warrants, to ICLLC Warrants to acquire such number of shares
of
Common Stock transferred by Tejas to
ICLLC;
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(b)
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Xxxxxxx
and Xxxxx shall enter into that certain Registration Rights Agreement
dated as of the date hereof (the “Registration
Rights Agreement”)
providing for the registration of the Common Stock that may be acquired
upon exercise of the Warrants.
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1.3
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No
Assumption of Liabilities.
Tejas shall
not assume or be responsible for any claims against or commitments,
contracts, agreements, obligations or other liabilities of the Sellers,
whether known or unknown, asserted or unasserted, accrued or unaccrued,
absolute or contingent, liquidated or unliquidated, due or to become
due,
and whether contractual, statutory, or otherwise, and the Sellers
will at
all times indemnify and hold Tejas harmless from and against any
claim
therefor or liability arising
therefrom.
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ARTICLE
II
THE
PURCHASE PRICE
2.1
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Purchase
Price.
The aggregate purchase price to be paid by Tejas to the Sellers in
consideration of the sale, assignment and transfer of the Assets,
the sale
of the Warrants and the consummation of the other transactions
contemplated herein shall be Three Million Five Hundred Thousand
and
No/100 Dollars ($3,500,000.00) (the “Purchase
Price”).
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ARTICLE
III
CLOSING
3.1
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Closing.
The closing of the transactions contemplated by this Agreement (the
“Closing”)
shall take place contemporaneously with the execution of this Agreement
(the “Closing
Date”)
at the offices of Tejas’s counsel in Houston, Texas or at such other place
as may be agreed by the parties. For convenience, the parties agree
that
the Closing may take place by the exchange of electronic signatures
to the
documents to be executed and delivered at the Closing (the “Closing
Documents”)
and delivery of the Purchase Price by wire transfer of immediately
available funds, followed by the mailing of executed originals of
the
Closing Documents, without the need for a face to face
meeting.
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3.2
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Deliveries
and Actions by the Sellers.
At the Closing, the Sellers shall deliver, or cause to be delivered,
to
Tejas:
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(a)
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the
Assets, free and clear of all Encumbrances, other
than the Permitted Encumbrances (as defined in the Intellectual Property
Agreement);
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(b)
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one
or more bills of sale, assignments or other conveyances, in form
and
substance reasonably satisfactory to Tejas (collectively, the
“Assignments”),
duly executed by the applicable
Seller;
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(c)
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the
Intellectual Property Agreement, duly executed by
Hemiwedge;
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(d)
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the
(i) Warrants issued to Tejas to acquire 2,443,269 shares of Common
Stock
and (ii) upon the transfer by Tejas to ICLLC of such Warrants, Warrants
issued to ICLLC to acquire such number of shares of Common Stock
transferred by Tejas to ICLLC, in each case, duly executed by
Xxxxxxx;
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(e)
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the
Registration Rights Agreement, duly executed by
Xxxxxxx;
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(f)
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copies
of all consents and approvals required in connection with (i) the
execution, delivery and performance of this Agreement and (ii) the
sale or
license of the Assets, including those consents listed on Schedule
4.1(c),
in form and substance reasonably satisfactory to
Tejas;
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2
(g)
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evidence,
in form and substance reasonably satisfactory to Tejas, of the release
of
all Encumbrances on the Assets, including those listed on Schedule
4.1(f)(i);
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(h)
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a
secretary’s certificate or certificates from each of the Sellers, which
certifies as true, accurate, and complete, as of the Closing Date:
(i) a
copy of the resolutions of the board of directors of such Seller,
authorizing the execution, delivery, and performance by such Seller
of
this Agreement and the ancillary agreements described therein, and
the
consummation by such Seller of the transactions contemplated hereby
and
thereby; (ii) with respect to Hemiwedge, a copy of the resolutions
of the
shareholders of Hemiwedge, approving the consummation by Hemiwedge
of the
transactions contemplated in this Agreement and the ancillary agreements
described herein; (iii) the incumbency of the officer or officers
of such
Seller authorized to execute this Agreement and any ancillary agreements
on behalf of such Seller; and (iv) the charter and bylaws, or comparable
organizational documents, of such Seller;
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(i)
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a
certificate issued by the Secretary of State of the state of each
Sellers’
jurisdiction of incorporation evidencing the existence and good standing
of such Seller, as of a recent
date;
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(j)
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an
originally executed copy of the written opinions of Indeglia & Xxxxxx
and Xxxxxxxx Xxxxx L.L.P., counsel for the Sellers, as to such matters
concerning the Sellers and the Closing Documents as Tejas may reasonably
request, dated as of the Closing, addressed to Tejas, and otherwise
in
form and substance reasonably satisfactory to Tejas;
and
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(k)
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such
other documents and instruments as Tejas may reasonably request and
which
are deemed by Tejas to be reasonably necessary or advisable to effect
the
transactions contemplated herein and by the ancillary agreements.
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3.3
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Deliveries
and Actions by Tejas.
At the Closing, Tejas shall deliver, or cause to be delivered, to
the
Sellers:
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(a)
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the
Purchase Price;
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(b)
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the
Intellectual Property Agreement, duly executed by
Tejas;
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(c)
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the
Registration Rights Agreement, duly executed by Tejas;
and
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(d)
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such
other documents and instruments as the Sellers may reasonably request
and
which are deemed by the Sellers to be reasonably necessary or advisable
to
effect the transactions contemplated herein and by the ancillary
agreements.
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3
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
4.1
|
Representations
and Warranties of the Sellers.
The Sellers represent and warrant to Tejas, as of the date hereof,
as
follows:
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(a)
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Organization
of the Seller.
The Sellers are duly organized, validly existing and in good standing
under the laws of their respective jurisdiction of incorporation
and are
duly qualified to do business and are in good standing in each
jurisdiction in which the nature of the business being conducted
requires
such Seller to be so qualified.
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(b)
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Authorization.
The Sellers have the necessary power and authority to enter into
and
deliver this Agreement and to perform their respective obligations
hereunder. The execution and delivery of this Agreement by the Sellers
and
the performance by the Sellers of their respective obligations hereunder
have been duly authorized by all necessary corporate action. This
Agreement and all agreements contemplated to be delivered hereunder
have
been executed and delivered by each Seller party thereto and constitute
the legal, valid and binding obligations of the Sellers enforceable
against each of them in accordance with their terms, subject, however,
to
limitations with respect to enforcement imposed by law in connection
with
bankruptcy, insolvency and other laws affecting creditors’ rights
generally.
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(c)
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Noncontravention.
Neither the execution and the delivery of this Agreement by the Sellers,
nor the consummation by the Sellers of the transactions contemplated
hereby will (with or without the giving of notices or the passage
of time)
(i) violate any applicable Law or other restriction of any Governmental
Authority to which any Seller, the Hemiwedge Technology or the Assets
are
subject or any provision of the Sellers’ respective charter or bylaws (or
other organizational documents) or (ii) except as set forth in
Schedule
4.1(c),
conflict with, result in a breach of, constitute a default under,
result
in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which
the
Sellers are a party or by which the Sellers are bound or to which
any of
the Assets is subject which (in the case of clause (ii) only) could
adversely affect the consummation of the transactions contemplated
hereby
or the value of the Assets or result in the imposition of any Encumbrance
upon any of the Assets. Except as set forth in Schedule
4.1(c),
the Sellers do not need to give any notice to, make any filing with
or
obtain any authorization, consent or approval of, any Governmental
Authority or other third party in order for the parties to consummate
the
transactions contemplated by this
Agreement.
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(d)
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Securities
and Exchange Commission Filings.
The information filed with the U.S. Securities and Exchange Commission
(the “SEC”)
by or on behalf of Xxxxxxx (the “SEC
Filings”)
complies as to form in all material respects with the requirements
of the
Securities Act of 1933, as amended (the “Securities
Act”),
and the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
as applicable. No facts have come to the attention of the Sellers
that
have caused any of the Sellers to believe that any such information
contained any untrue statement of a material fact or omitted to state
a
material fact required to be stated therein or necessary to make
the
statements therein not misleading.
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4
(e)
|
Financial
Statements. Except
as may have been corrected or supplemented in a subsequent SEC Filing,
the
financial statements of Xxxxxxx included in the SEC Filings (the
“Financial
Statements”)
comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as
in effect
at the time of filing. Except as may have been corrected or supplemented
in a subsequent SEC Filing, the Financial Statements have been prepared
in
accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved, except
as may
be otherwise specified in such Financial Statements or the notes
thereto,
or, in the case of unaudited financial statements, as permitted by
Regulation S-X promulgated under the Securities Act and the Exchange
Act,
and fairly present in all material respects the financial position
of
Xxxxxxx and its consolidated subsidiaries as of and for the dates
thereof
and the results of operations and cash flows for the periods then
ended,
subject, in the case of unaudited statements, to normal, year-end
audit
adjustments and the lack of footnotes.
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(f)
|
Assets.
Except as set forth on Schedule
4.1(f),
the Sellers are the sole and exclusive owner of, and have good and
marketable title to, each of the Assets, free and clear of all
Encumbrances except for the Encumbrances, if any, listed on Schedule
4.1(f)
and which will be removed at or prior to the Closing, and are exclusively
entitled to possess and dispose of same. At Closing, the Sellers
will
transfer to Tejas sole and exclusive, and good and marketable, title
to
all of the Assets, free and clear of any and all Encumbrances. There
are
no outstanding agreements or options to sell which grant to any Person
other than Tejas the right to purchase or otherwise acquire any of
the
Assets.
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(g)
|
Intellectual
Property.
Neither Xxxxxxx nor any of its Affiliates have any right, title or
interest in or to the Hemiwedge Intellectual Property, or the Technology
and Deliverables (as such terms are defined in the Intellectual Property
Agreement) associated therewith.
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(h)
|
Subsequent
Events. Except
as set forth on Schedule
4.1(h),
since June 30, 2008, there has not been any change that constitutes,
and
no event or events have occurred which have resulted in or constitute,
or
would reasonably be expected to result in or constitute, a material
adverse effect on the Hemiwedge Valve Technology or the Assets. Without
limiting the foregoing, since that date, none of the following has
occurred:
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(i)
|
the
Sellers have not sold, leased, transferred or assigned any of the
Assets;
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(ii)
|
no
Encumbrance has been imposed upon any of the Assets;
and
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5
(iii)
|
the
Sellers have not committed to do any of the
foregoing.
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(i)
|
Legal
Proceedings.
There is no complaint or petition in which relief is sought involving,
affecting, or relating to the ownership, operation or use of the
Assets or
that would prevent, delay or make illegal the transactions contemplated
by
this Agreement, and there is no litigation, action, suit, proceeding
or
investigation by any Governmental Authority pending or threatened
against
(orally or in writing), involving, affecting or relating to the Sellers,
the Assets, the Hemiwedge Valve Technology or the transactions
contemplated by this Agreement.
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(j)
|
Capitalization;
Reservation of Common Stock.
The authorized common stock of Xxxxxxx consists of 50,000,000 shares
of
Common Stock, of which, as of the date hereof, (i) 22,013,879 shares
of
Common Stock are issued and outstanding and (ii) 2,443,269 shares
of
Common Stock have been reserved and are available solely for issuance
and
delivery to Tejas and/or its designated nominee, as applicable, upon
the
exercise of the Warrants. Except as set forth in Schedule
4.1(j),
there are no rights or obligations which are convertible into,
exchangeable for, or exercisable to acquire any Common Stock.
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(k)
|
Brokers’
Fees.
Except as set forth in Schedule
4.1(k),
the Sellers have not incurred any obligation or liability, contingent
or
otherwise, for brokers’ or finders’ fees in respect of the matters
provided for in this Agreement for which Tejas could become
liable.
|
(l)
|
Asset
Assignment and License Process.
The Sellers have been engaged in ongoing discussions with various
prospective financiers, corporate and strategic partners, purchasers,
and
licensors with respect to the Assets, pursuant to which the Sellers
have
sought to achieve the highest value and best price for the sale,
assignment and/or license of the Assets. The Assets were marketed
for
approximately six months. The offer made by Tejas represented the
highest
value and best price for the Assets. The negotiation of the assignment
and
license of the Assets to Tejas was conducted in good faith and on
an arms’
length basis.
|
(m)
|
Accuracy
of Information Furnished.
No representation, warranty, statement or information contained in
this
Agreement (including the various Schedules attached hereto) or any
agreement executed in connection herewith or in any certificate delivered
pursuant hereto or thereto or made or furnished to Tejas or their
respective representatives by or on behalf of the Sellers, contains
or
shall contain any untrue statement of a material fact or omits or
shall
omit any material fact necessary to make the information contained
therein
not misleading. The Sellers have provided Tejas with true, accurate
and
complete copies of all documents listed or described in the various
Schedules attached hereto.
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6
4.2
|
Representations
and Warranties of Tejas.
Tejas hereby represents and warrants to the Sellers, as of the date
hereof, as follows:
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(a)
|
Organization
of Tejas.
Tejas is duly organized, validly existing and in good standing under
the
laws of its jurisdiction of organization and is duly qualified to
do
business and is in good standing in each jurisdiction in which the
nature
of its business being conducted requires it to be so
qualified.
|
(b)
|
Authorization.
Tejas has the necessary power and authority to enter into and deliver
this
Agreement and to perform its obligations hereunder. The execution
and
delivery of this Agreement by Tejas and the performance by Tejas
of its
obligations hereunder have been duly authorized by all necessary
action.
This Agreement and all agreements contemplated to be delivered hereunder
constitute the legal, valid and binding obligations of Tejas enforceable
against it in accordance with their terms, subject, however, to
limitations with respect to enforcement imposed by law in connection
with
bankruptcy, insolvency and other laws affecting creditors’ rights
generally.
|
(c)
|
Noncontravention.
Neither the execution and the delivery of this Agreement by Tejas,
nor the
consummation by Tejas of the transactions contemplated hereby will
(with
or without the giving of notices or the passage of time) (i) violate
any applicable Law or other restriction of any Governmental Authority
to
which Tejas is subject or any provision of its charter or bylaws
(or other
organizational documents) or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in
any party the right to accelerate, terminate, modify or cancel, or
require
any notice under any agreement, contract, lease, license, instrument
or
other arrangement to which Tejas is a party or by which Tejas is
bound.
Tejas does not need to give any notice to, make any filing with or
obtain
any authorization, consent or approval of, any Governmental Authority
or
other third party in order for the parties to consummate the transactions
contemplated by this Agreement.
|
(d)
|
Brokers’
Fees.
Tejas has not incurred any obligation or liability, contingent or
otherwise, for brokers’ or finders’ fees in respect of the matters
provided for in this Agreement for which the Sellers could become
liable.
|
(e)
|
Information
on Xxxxxxx.
Xxxxx has received and had the opportunity to review all documents
and any
other information requested from Xxxxxxx, has been given full and
complete
access to information regarding Xxxxxxx, and has utilized such access
to
Tejas’s satisfaction for the purpose of obtaining such information
regarding Xxxxxxx as Xxxxx has reasonably requested; and, particularly,
Tejas has been given reasonable opportunity to ask questions of,
and
receive answers from, representatives of Xxxxxxx concerning the terms
and
conditions of the offering of the Warrants and to obtain any additional
information, to the extent reasonably
available.
|
(f)
|
Information
on Tejas.
Tejas is an “accredited investor”, as such term is defined in Regulation D
promulgated by the Commission under the Securities Act, is experienced
in
investments and business matters, has made investments of a speculative
nature and, with its representatives, has such knowledge and experience
in
financial, tax and other business matters as to enable Tejas to utilize
the information made available by Xxxxxxx to evaluate the merits
and risks
of and to make an informed investment decision with respect to the
proposed purchase. Tejas has the authority and is duly and legally
qualified to purchase and own the Securities. Tejas is able to bear
the
risk of such investment for an indefinite period and to afford a
complete
loss thereof.
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7
(g)
|
Investment
Intent.
On the Closing Date, Tejas will purchase the Warrants as principal
for its
own account for investment only and not with a view toward, or for
resale
in connection with, the public sale or any distribution thereof,
other
than, as soon as practicable following Tejas’s receipt of the Warrants, to
transfer the Warrants to Intervale Capital, LLC, a Delaware limited
liability company.
|
(h)
|
Compliance
with Securities Act.
Tejas understands and agrees that neither the Warrants nor the shares
of
Common Stock issuable upon exercise thereof (the “Warrant Shares”) have
been registered under the Securities Act or any applicable state
securities laws, by reason of their issuance in a transaction that
does
not require registration under the Securities Act (based in part
on the
accuracy of the representations and warranties of Tejas contained
herein),
and that the Warrants and the Warrant Shares must be held indefinitely
unless a subsequent disposition is registered under the Securities
Act or
any applicable state securities laws or is exempt from such
registration.
|
(i)
|
Warrant
Legend.
The Warrants shall bear the following
legend:
|
“THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER OR
EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO XXXXXXX INDUSTRIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED. A COPY OF THE WARRANT IS AVAILABLE AT THE OFFICES
OF THE COMPANY.”
(j)
|
Warrant
Shares Legend.
The Warrant Shares shall bear the following
legend:
|
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO XXXXXXX INDUSTRIES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.”
8
(k)
|
Communication
of Offer.
The offer to sell the Warrants was directly communicated to Tejas
by
Xxxxxxx. At no time was Tejas presented with or solicited by any
leaflet,
newspaper or magazine article, radio or television advertisement,
or any
other form of general advertising or solicited or invited to attend
a
promotional meeting otherwise than in connection and concurrently
with
such communicated offer.
|
(l)
|
Restricted
Securities.
Tejas understands that the Securities have not been registered under
the
Securities Act and Tejas will not sell, offer to sell, assign, pledge,
hypothecate or otherwise transfer any of the Warrants unless pursuant
to
an effective registration statement under the Securities Act.
Notwithstanding anything to the contrary contained in this Agreement,
Tejas may transfer (without restriction and without the need for
an
opinion of counsel) the Securities to its Affiliates (as defined
below)
provided that each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the terms and
conditions of this Agreement.
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(m)
|
No
Governmental Review.
Tejas understands that no United States federal or state agency or
any
other governmental or state agency has passed on or made recommendations
or endorsement of the Securities or the suitability of the investment
in
the Warrants nor have such authorities passed upon or endorsed the
merits
of the offering of the Warrants.
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ARTICLE
V
COVENANTS
5.1
|
Reasonable
Commercial Efforts.
Each party will use its reasonable commercial efforts to take all
actions
and to do all things necessary, proper or advisable to consummate,
make
effective and comply with all of the terms of this Agreement and
the
transactions contemplated hereby (including satisfaction, but not
waiver,
of the closing deliveries required by ARTICLE
III).
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9
5.2
|
Confidentiality.
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(a)
|
Each
party acknowledges that in performing this Agreement, the party may
be
provided with and have access to the other party’s confidential
information, including, without limitation, technical information
(such as
software, algorithms, technology, and trade secrets relating to the
Assets), processes, product plans and sales information, that the
party
treats as proprietary, confidential or of substantial value and which
value would be impaired if improperly used or disclosed to third
parties
(“Confidential
Information”).
The parties acknowledge that Confidential Information may include
any of
the foregoing which has been provided to the other party prior to
the
Closing Date. However, “Confidential Information” shall not include
information that (i) is or becomes available to the public through
no
wrongful act of the receiving party, (ii) was in the possession of
the
receiving party prior to the time it was disclosed hereunder, (iii)
is
independently made available as a matter of right to the receiving
party
by a third party, or (iv) is independently developed for the receiving
party.
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(b)
|
For
a period of five (5) years from the Closing Date, each party shall
maintain the other party’s Confidential Information in confidence and not
disclose the other party’s Confidential Information to any Person other
than to its officers, fiduciaries, employees, agents or consultants
who
have a business need to know such Confidential Information, who have
been
informed of the confidential nature of such Confidential Information
and
who are, either by nature of their positions or duties or pursuant
to
written agreement, subject to substantially equivalent restrictions
with
respect to the use and disclosure of the Confidential Information
as are
set forth in this Agreement.
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(c)
|
The
obligation of each party to maintain the other party’s Confidential
Information in confidence shall not apply to any Confidential Information
(i) that becomes publicly available (other than by reason of a disclosure
by a party in violation of this Agreement), (ii) the disclosure of
which
has been consented to by the other party in writing, or (iii) the
disclosure of which is required by a court of competent jurisdiction
or
other Governmental Authority or otherwise as required by applicable
Law or
regulation of a national securities exchange on which the securities
of
such party may then be listed.
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(d)
|
Before
any party discloses any of the other party’s Confidential Information
pursuant to Section
5.2(c)(iii),
such party shall as soon as practicable, and in any event prior to
making
any such disclosure, notify the other party of the specific Confidential
Information proposed to be disclosed and of the court order, subpoena,
interrogatories, government order or other reason that requires disclosure
of the Confidential Information so that the other party may seek
a
protective order or other remedy to protect the confidentiality of
the
Confidential Information or waive compliance with the applicable
provisions of this ARTICLE
V.
Such party shall also consult with the other party on the advisability
of
taking steps to eliminate or narrow the requirement to disclose the
Confidential Information and shall otherwise cooperate with the efforts
of
the other party to obtain a protective order or other remedy to protect
the Confidential Information. If a protective order or other remedy
cannot
be obtained, such party may disclose only that Confidential Information
that its counsel advises in writing (which writing shall also be
addressed
and delivered to the other party) is legally required to be
disclosed.
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10
(e)
|
Each
party shall promptly inform the other party if it becomes aware of
any
reason, whether under applicable law, policy or otherwise, that it
will,
or might become compelled to, use the other party’s Confidential
Information other than as contemplated by Section
5.2(b)
or
disclose Confidential Information in violation of the confidentiality
restrictions in this ARTICLE
V.
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5.3
|
Engineering
Support.
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(a)
|
At
the reasonable request of Tejas, the Sellers shall provide engineering
support, including the use of the Sellers’ design engineers, application
engineers and technical specialists (collectively, the “Engineering
Support”),
to Tejas as follows:
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(i)
|
From
time to time after the date hereof, the Sellers shall provide up
to 500
hours of Engineering Support to Tejas, at no charge to
Tejas.
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(ii)
|
From
time to time after the number of hours of Engineering Support set
forth in
clause (i) above have been provided by the Sellers, the Sellers shall
continue to provide up to 1,000 hours of Engineering Support to Tejas,
at
an agreed charge of (x) $100 per hour for Engineering Support provided
by
design engineers and application engineers and (y) the lesser of
$100 per
hour and the then current market rate
per hour for Engineering Support provided by technical
specialists.
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(iii)
|
From
time to time after the aggregate number of hours of Engineering Support
set forth in clauses (i) and (ii) above has been provided by the
Sellers,
the Sellers shall continue to provide Engineering Support to Tejas
on a
reasonable basis on commercial terms and at market rates for comparable
services.
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(b)
|
All
payments to be made pursuant to this Section
5.3
hereunder by Tejas shall be due and payable thirty (30) days after
receipt
by Tejas of an invoice identifying such amounts
owed.
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5.4
|
Subsequent
Financing.
The
Sellers hereby agree that, in the event that during the period commencing
on the date hereof and ending on October 14, 2011, any Seller or
any of
its respective affiliates shall desire to raise capital through the
issuance of debt or equity securities, or enter into any other arrangement
having the practical effect of the foregoing (any such transaction,
a
“Subsequent
Financing”),
ICLLC shall be given not less than fifteen (15) business days prior
written notice of any proposed Subsequent Financing. ICLLC or its
affiliates who exercise their rights pursuant to this Section
5.4
shall have the right during the fifteen (15) business days following
receipt of the notice to provide, arrange, place, underwrite and/or
otherwise participate in such Subsequent Financing in accordance
with the
terms and conditions set forth in the notice of Subsequent Financing.
In
the event such terms and conditions are modified in a manner that
is more
advantageous to an investor during the notice period, ICLLC shall
be given
prompt notice of such modification and shall have the right during
the
seven (7) business days following the notice of modification to exercise
such right. The Sellers acknowledge that ICLLC and its affiliates
reserve
the right not to participate in any Subsequent Financing and that
the
foregoing is not a commitment by ICLLC or its affiliates to participate
in
any Subsequent Financing; such a commitment would arise only under
a
separate written agreement acceptable to the Sellers and ICLLC and/or
its
affiliates, as applicable.
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11
5.5
|
Transfer
Taxes.
The Sellers shall bear and pay any and all applicable sales and use
Taxes
and similar transfer Taxes payable in connection with the sale,
assignment, transfer or license of the Assets. The Sellers, at their
own
expense, shall file all necessary Tax Returns and other documentation
with
respect to such Taxes, if required by applicable
law.
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ARTICLE
VI
MISCELLANEOUS
6.1
|
Nature
and Survival of Representations.
The representations and warranties of Tejas and the Sellers contained
in
this Agreement shall survive the Closing indefinitely.
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6.2
|
Notices.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing
and,
unless otherwise specified herein, shall be (i) personally served,
(ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service
with
charges prepaid, or (iv) transmitted by hand delivery or facsimile,
addressed as set forth below or to such other address as such party
shall
have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be
deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at
the
address or number designated below (if delivered on a business day
during
normal business hours where such notice is to be received), or the
first
business day following such delivery (if delivered other than on
a
business day during normal business hours where such notice is to
be
received) or (b) on the second business day following the date of
mailing
by express courier service, fully prepaid, addressed to such address,
or
upon actual receipt of such mailing, whichever shall first occur.
The
addresses for such communications shall be: (i) if to Xxxxxxx to:
Xxxxxxx
Industries, Inc., 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxx, Xxxxx 00000, Attn:
President, CEO, telecopier number: (000) 000-0000, (ii) if to Hemiwedge
to: c/x Xxxxxxx Industries, Inc., 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxx,
Xxxxx
00000, Attn: President, CEO, telecopier number: (000) 000-0000, and
in the
case of clause (i) and (ii) above, with a copy by telecopier only
to:
Indeglia & Xxxxxx, telecopier number: (000) 000-0000, Attn: Xxxx X.
Xxxxxxxx, and (iii) if to Tejas to: Tejas Research & Engineering,
L.P., 0000 Xxx Xxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxx 00000, Attn: Xxxxxx
Xxxx,
telecopier number: (000) 000-0000, with an additional copy by telecopier
only to: (x) Intervale Capital, LLC, telecopier number: (000) 000-0000,
Attn: Xxxxxx X. Xxxx and (y) Fulbright & Xxxxxxxx, L.L.P., telecopier
number: (000) 000-0000, Attn: Xxxx X. Xxxxx.
Tejas and the Sellers agree to promptly advise the other parties
hereto of
any change of address from that so set
forth.
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12
6.3
|
Successors
and Assigns.
This Agreement, and all rights and powers granted hereby, will bind
and
inure to the benefit of the parties hereto and their respective successors
and assigns, but neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any of the parties
hereto
without the prior written consent of the other parties hereto. Except
as
set forth in the next preceding sentence, this Agreement is not intended
to confer upon any other Person except the parties hereto any rights
or
remedies hereunder. The parties hereto hereby agree that ICLLC shall
be a
third party beneficiary to this Agreement and shall have the right
to
enforce Sections
1.2(a)(ii),
3.2(a)(ii)
and 5.4.
Notwithstanding the forgoing, Tejas shall have an absolute right
to assign
its rights in whole or in part (a) under this Agreement at any time
prior
to Closing to any of its Affiliates without the Sellers’ prior written
approval and (b) under Section
5.3
at
any time to any assignee or sublicensee of the Hemiwedge Valve Technology
so long as such assignment does not materially increase the obligations
of
the Sellers to provide Engineering Support pursuant to Section
5.3(a)(i)
or
5.3(a)(ii).
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6.4
|
Governing
Law.
This Agreement shall be governed by, and construed in accordance
with, the
laws of the State of Texas (without giving effect to conflict of
laws
principles thereof).
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6.5
|
Venue;
Service of Process.
With respect to any suit, action or proceeding (“Proceeding”)
arising out of or relating to this Agreement each of the parties
hereto
hereby irrevocably (i) submits to the exclusive jurisdiction of the
United
States District Court for the Southern District of Texas and waives
any
objection to venue being laid therein whether based on the grounds
of
forum
non conveniens
or
otherwise and hereby agrees not to commence any such Proceeding other
than
before the United States District Court for the Southern District
of
Texas; provided,
however,
that a party may commence any Proceeding in a court other than the
United
States District Court for the Southern District of Texas solely for
the
purpose of enforcing an order or judgment issued by the United States
District Court for the Southern District of Texas and (ii) consents
to
service of process in any Proceeding by the mailing of copies thereof
by
registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to the Company
or
Holders at their respective addresses referred to in Section
6.2
hereof; provided,
however,
that nothing herein shall affect the right of any party hereto to
serve
process in any other manner permitted by
law.
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6.6
|
Headings.
The headings preceding the text of the sections and subsections hereof
are
inserted solely for convenience of reference and shall not constitute
a
part of this Agreement, nor shall they affect its meaning, construction,
or effect.
|
6.7
|
Counterparts
and Facsimile Signatures.
This Agreement may be executed in any number of counterparts, each
of
which when so executed shall be deemed to be an original and, all
of which
taken together shall constitute one and the same Agreement. In the
event
that any signature is delivered by facsimile transmission, such signature
shall create a valid binding obligation of the party executing (or
on
whose behalf such signature is executed) the same with the same force
and
effect as if such facsimile signature were the original
thereof.
|
13
6.8
|
Further
Assurances.
The parties hereby agree to perform, execute or deliver, or cause
to be
performed, executed or delivered, such further acts, assurances and
instruments as either party may reasonably require to complete or
perfect
the conveyance and transfer to Tejas of all of the Sellers’ right, title
and interest in and to the Assets free and clear of any and all
Encumbrances consistent with this Agreement, and to do any and all
such
further acts and things as may be reasonably necessary to effect
completely the intent of this
Agreement.
|
6.9
|
Amendment
and Waiver.
The parties may by mutual written agreement amend this Agreement
in any
respect; and any party, as to such party, may (a) extend the time
for the
performance of any of the obligations of any other party; (b) waive
any
inaccuracies in representations by any other party; (c) waive compliance
by any other party with any of the agreements contained herein and
performance of any obligations by such other party; and (d) waive
the
fulfillment of any condition that is precedent to the performance
by such
party of any of its obligations under this Agreement. To be effective,
any
such amendment or waiver must be in writing and be signed by the
party
against whom enforcement of the same is
sought.
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6.10
|
Entire
Agreement.
This Agreement and the Schedules hereto, each of which is hereby
incorporated herein, and the other documents executed and delivered
pursuant hereto and contemporaneously herewith, set forth all of
the
representations, warranties, promises, covenants, agreements, conditions,
and undertakings between the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements
and
understandings, inducements or conditions, express or implied, oral
or
written.
|
6.11
|
Severability.
If any term, provision, covenant or restriction of this Agreement
is held
by a court of competent jurisdiction to be invalid, illegal, void
or
unenforceable, the remainder of the terms, provisions, covenants
and
restrictions set forth herein shall remain in full force and effect
and
shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and
employ
an alternative means to achieve the same or substantially the same
result
as that contemplated by such term, provision, covenant or restriction.
It
is hereby stipulated and declared to be the intention of the parties
that
they would have executed the remaining terms, provisions, covenants
and
restrictions without including any of such that may be hereafter
declared
invalid, illegal, void or
unenforceable.
|
6.12
|
Expenses.
Except as otherwise expressly agreed herein, Tejas, on the one hand,
and
the Sellers, on the other hand, will bear their own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated
hereby.
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14
6.13
|
Construction.
Whenever the context requires, the gender of all words used in this
Agreement includes the masculine, feminine and neuter. Terms defined
in
the singular have the corresponding meanings in the plural, and vice
versa. All references to Articles and Sections refer to articles
and
sections of this Agreement, all references to Annexes refer to annexes
to
this Agreement and all references to Schedules refer to Schedules
to this
Agreement, which Exhibits and Schedules are attached hereto and made
a
part hereof for all purposes. A “party” means any of Tejas and the
Sellers, and the “parties” means all of them. The word “includes” or
“including” means “including, but not limited to.” The word “or” will have
the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “hereby,” “herein,” “hereunder” and similar terms in this
Agreement shall refer to this Agreement as a whole and not any particular
section or article in which such words appear. “Shall” and “will” have
equal force and effect. Any reference to a statute, regulation or
law
shall include any amendment thereof or any successor thereto and
any rules
and regulations promulgated thereunder. Currency amounts referenced
herein, unless otherwise specified, are in United States Dollars.
Whenever
this Agreement refers to a number of days, such number shall refer
to
calendar days unless business days are
specified.
|
6.14
|
Definitions.
The following definitions shall be applicable to the terms set forth
herein:
|
(a)
|
“Affiliate”
shall mean, as applied to any Person, any other Person that directly
or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, that
Person.
|
(b)
|
“Governmental
Authority”
shall mean any federal, state, municipal, national or other government,
governmental department, commission, board, bureau, court, agency
or
instrumentality or political subdivision thereof or any entity or
officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each
case
whether associated with a state of the United States, the United
States,
or a foreign entity or government.
|
(c)
|
“Law”
shall mean all constitutions, treaties, statutes, laws, ordinances,
regulations, rules or Orders associated with any Governmental
Authority;
|
(d)
|
“Order”
shall mean any order, writ, rule, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority; and
|
(e)
|
“Person”
shall include an individual, a partnership, a limited liability company,
a
corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or any federal, state, county
or
municipal governmental or quasi-governmental agency, department,
commission, board, bureau, instrumentality or similar entity, foreign
or
domestic, having jurisdiction over any Seller or
Tejas.
|
[SIGNATURES
BEGIN ON THE FOLLOWING PAGE]
15
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and
year first above written.
XXXXXXX INDUSTRIES, INC., for itself and as sole shareholder of Hemiwedge Valve Corporation | ||
By: | ||
Name: Xxxxxxx X. Xxxxxxxx | ||
Title: Chief Financial Officer |
HEMIWEDGE VALVE CORPORATION | ||
By: | ||
Name: Xxxxxxx X. Xxxxxxxx | ||
Title: Chief Financial Officer |
TEJAS RESEARCH & ENGINEERING, L.P. | ||
By: | ||
Name: Xxxxxx Xxxx | ||
Title: Chief Executive Officer |