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EXHIBIT 10.9
CONTRIBUTION AND INDEMNIFICATION AGREEMENT
THIS CONTRIBUTION AND INDEMNIFICATION AGREEMENT (this "Agreement"),
dated as of August 14, 1998, is entered into by and among each of the
undersigned (each a "Company" and collectively, the "Companies").
R E C I T A L S:
1. Industrial Holdings, Inc., Bolt Manufacturing Co., Inc., American
Rivet Company, Inc., LSS-Lone Star-Houston, Inc., Manifold Valve Services, Inc.
and Xxx Machinery Movers, Inc. (collectively, "Borrowers") have or are obtaining
credit from Xxxxxx Financial, Inc. ("Xxxxxx") pursuant to loan documents listed
on Annex I (the "Loan Documents").
2. Such credit will inure to the direct and material benefit of the
Companies as affiliates of Borrowers who conduct their business as part of a
common enterprise with Borrowers.
3. Concurrently herewith, the Companies have executed and delivered to
Xxxxxx their Guaranty ("Guaranty") pursuant to which the Companies jointly and
severally guarantee the full and prompt payment and performance of the
Indebtedness of Borrowers.
4. The Companies wish to enter into this Contribution Agreement to
effect an equitable sharing of their risk in respect of the Indebtedness.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Capitalized terms used in this Contribution Agreement to the extent
not otherwise defined herein shall have the same meanings as in the Loan
Documents.
2. If any Company makes a payment in respect of the Indebtedness, it
shall have the rights of contribution and reimbursement set forth below against
the other Companies and shall be indemnified as set forth below; provided that
no Company shall enforce its rights to any payment by exercising its rights of
contribution, reimbursement or indemnification unless and until all the
Indebtedness shall have been indefeasibly paid in full.
3. If any Company makes a payment in respect of the Indebtedness that
is greater than its Pro Rata Percentage (hereinafter defined) of the
Indebtedness, calculated as of the date such payment is made, the Companies
making such payment shall have the right to receive from each of the other
Companies, and the other Companies jointly and severally agree to pay to such
Company, when permitted by paragraph 2 hereof, an amount such that the net
payments made by the Companies in respect of the Indebtedness shall be shared
among the Companies pro rata in proportion to their respective Pro Rata
Percentages of the Indebtedness. The Companies hereby jointly and severally
indemnify each of the other Companies and jointly and severally agree to hold
each of them harmless from and against any and all amounts which any such
Company shall ever be required to pay in respect of the Indebtedness in excess
of such Company's respective Pro Rata Percentage of the Indebtedness.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Company that shall accrue pursuant
to this Agreement shall be paid nor shall it be deemed owed pursuant to this
Agreement or any Loan Documents unless and until all of the Indebtedness shall
be indefeasibly paid in full. As used herein, the term "Pro Rata Percentage"
shall mean, for each Company, the percentage derived by dividing (a) the amount
by which the fair saleable value of its assets on July 31, 1998 exceeds its
liabilities (without giving effect to the Guaranty) (such excess for each
Company, its "Net Worth"), by (b) the Net Worth of all of the Companies.
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4. If any Company makes any payment in respect of the Indebtedness, the
Company making such payment shall have the right to receive from the other
Companies, an amount equal to such payment net of any amounts received by such
Company from any other Company. Notwithstanding anything to the contrary
contained in this paragraph or in this Agreement, no liability or obligation of
a Company that shall accrue pursuant to this Agreement shall be paid or shall be
deemed owed pursuant to this Agreement or any Loan Documents unless and until
all of the Indebtedness shall be indefeasibly paid in full.
5. Each Company represents and warrants to each other Company and to
their respective successors and assigns that:
(1) the execution, delivery and performance by each party hereto of
this Contribution Agreement are within such Company's corporate power,
have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the articles
or certificate of incorporation or bylaws or other organizing document
of such party or of any agreement, judgment, injunction, order, decree
or other instrument binding upon such party or result in the creation
or imposition of any lien, security interest or other charge or
encumbrance on any asset of such Company;
(2) this Agreement constitutes a legal, valid and binding agreement
of each Company, enforceable against such Company in accordance with
its terms; and
(3) such Company has adequate capital to conduct its business as a
going concern, as presently conducted and as proposed to be conducted,
will be able to meet its obligations hereunder and in respect of its
other existing and future indebtedness and liabilities as and when the
same shall be due and payable, and is not insolvent (as that term is
defined in 11 U.S.C. ss. 101 or applicable law) and will not be
rendered insolvent by its obligations hereunder, and the foregoing
representation is supported by such Company's financial statements and
records, internal projections and forecasts.
6. No failure or delay by any Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and non-exclusive of any rights or remedies
provided by law.
7. Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the parties
hereto and consented to by Xxxxxx.
8. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS.
10. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when a counterpart hereof shall have been signed by all the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE XXX GROUP, INC., a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
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XXX MACHINERY SALES, INC., a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
U.S. CRATING, INC., a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
FIRST TEXAS CREDIT CORPORATION, a
Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
XXXXXXXX ENGINEERING COMPANY, a Texas
corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
PIPELINE VALVE SPECIALTY, INC., a Texas
corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
PHILFORM, INC., a Michigan corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
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GHX, INCORPORATED, a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
REGAL MACHINE TOOL, INC., a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
WHIR ACQUISITION, INC., a Texas corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
XXXXXX PUMP AND SUPPLY, INC., a Louisiana
corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
GHX, INCORPORATED OF LOUISIANA, a Louisiana
corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
XXXXXX INDUSTRIES, INC., a Delaware
corporation
By: /s/ XXXXXXXXX X. XXXXX
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
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UNITED WELLHEAD SERVICES, INC.
By:
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Name: Xxxxxxxxx X. Xxxxx
Title: Vice President
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Annex I
[See attached Closing Checklist]
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