Unassociated Document


    Execution
      Version

    
 

    TRANSFER
      AGREEMENT

     

    BY
      AND AMONG

     

    SHUMATE
      INDUSTRIES, INC.,

     

    HEMIWEDGE
      VALVE CORPORATION

     

    AND

     

    TEJAS
      RESEARCH & ENGINEERING, L.P.

     

    


     

    October
      14, 2008

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

       

    

    
      
        	 	 	
                Page

              
	 	 	 
	
                ARTICLE
                  I

              	
                THE
                  TRANSACTIONS

              	
                1

              
	
                1.1

              	
                Assignment
                  and License of the Intellectual Property

              	
                1

              
	
                1.2

              	
                Issuance
                  of Warrants

              	
                1

              
	
                1.3

              	
                No
                  Assumption of Liabilities

              	
                1

              
	 	 	 
	
                ARTICLE
                  II

              	
                THE
                  PURCHASE PRICE

              	
                2

              
	
                2.1

              	
                Purchase
                  Price

              	
                2

              
	 	 	 
	
                ARTICLE
                  III

              	
                CLOSING

              	
                2

              
	
                3.1

              	
                Closing

              	
                2

              
	
                3.2

              	
                Deliveries
                  and Actions by the Sellers

              	
                2

              
	
                3.3

              	
                Deliveries
                  and Actions by Tejas

              	
                3

              
	 	 	 
	
                ARTICLE
                  IV

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE PARTIES

              	
                4

              
	
                4.1

              	
                Representations
                  and Warranties of the Sellers

              	
                4

              
	
                4.2

              	
                Representations
                  and Warranties of Tejas

              	
                7

              
	 	 	 
	
                ARTICLE
                  V

              	
                COVENANTS

              	
                9

              
	
                5.1

              	
                Reasonable
                  Commercial Efforts

              	
                9

              
	
                5.2

              	
                Confidentiality

              	
                10

              
	
                5.3

              	
                Engineering
                  Support

              	
                11

              
	
                5.4

              	
                Subsequent
                  Financing

              	
                11

              
	
                5.5

              	
                Transfer
                  Taxes

              	
                12

              
	 	 	 
	
                ARTICLE
                  VI

              	
                MISCELLANEOUS

              	
                12

              
	
                6.1

              	
                Nature
                  and Survival of Representations

              	
                12

              
	
                6.2

              	
                Notices

              	
                12

              
	
                6.3

              	
                Successors
                  and Assigns

              	
                13

              
	
                6.4

              	
                Governing
                  Law

              	
                13

              
	
                6.5

              	
                Venue;
                  Service of Process

              	
                13

              
	
                6.6

              	
                Headings

              	
                13

              
	
                6.7

              	
                Counterparts
                  and Facsimile Signatures

              	
                13

              
	
                6.8

              	
                Further
                  Assurances

              	
                14

              
	
                6.9

              	
                Amendment
                  and Waiver

              	
                14

              
	
                6.10

              	
                Entire
                  Agreement

              	
                14

              
	
                6.11

              	
                Severability

              	
                14

              
	
                6.12

              	
                Expenses

              	
                14

              
	
                6.13

              	
                Construction

              	
                15

              
	
                6.14

              	
                Definitions

              	
                15

              


      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULES:

     

    
      
        	
                Schedule
                  4.1(c)

              	
                Third
                  Party and Governmental Consents (Sellers)

              
	
                Schedule
                  4.1(f)

              	
                Assets;
                  Encumbrances to be Released at Closing

              
	
                Schedule
                  4.1(h)

              	
                Subsequent
                  Events

              
	
                Schedule
                  4.1(j)

              	
                Capitalization

              
	
                Schedule
                  4.1(k)

              	
                Brokers’
                  Fees

              


      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

         

      

    

    TRANSFER
      AGREEMENT

     

    THIS
      TRANSFER AGREEMENT (this “Agreement”)
      is
      entered into this 15th day of October, 2008, by and among Shumate Industries,
      Inc., a Delaware corporation (“Shumate”),
      Hemiwedge Valve Corporation, a Texas corporation and wholly owned subsidiary
      of
      Shumate (“Hemiwedge”
and,
      together with Shumate, 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,
      Shumate desires to sell to Tejas, and Tejas desires to purchase from Shumate,
      certain common stock purchase warrants of Shumate; 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”).

            


    

     

    
      	
              1.2

            	
              Issuance
                of Warrants.
                On the Closing Date:

            


    

     

    
      	 	
              (a)

            	
              Shumate
                shall deliver (i) to Tejas its Common Stock Purchase Warrants dated
                as of
                the date hereof (“Warrants”)
                to acquire 2,443,269 shares of Shumate’s 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;

            


    

     

    
      	 	
              (b)

            	
              Shumate
                and Tejas 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.

            


    

     

    
      	
              1.3

            	
              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.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

    THE
      PURCHASE PRICE

     

    
      	
              2.1

            	
              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”).

            


    

     

    ARTICLE
      III

    CLOSING

     

    
      	
              3.1

            	
              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.

            


    

     

    
      	
              3.2

            	
              Deliveries
                and Actions by the Sellers.
                At the Closing, the Sellers shall deliver, or cause to be delivered,
                to
                Tejas:

            


    

     

    
      	 	
              (a)

            	
              the
                Assets, free and clear of all Encumbrances, other
                than the Permitted Encumbrances (as defined in the Intellectual Property
                Agreement);

            


    

     

    
      	 	
              (b)

            	
              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;

            


    

     

    
      	 	
              (c)

            	
              the
                Intellectual Property Agreement, duly executed by
                Hemiwedge;

            


    

     

    
      	 	
              (d)

            	
              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
                Shumate;

            


    

     

    
      	 	
              (e)

            	
              the
                Registration Rights Agreement, duly executed by
                Shumate;

            


    

     

    
      	 	
              (f)

            	
              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;

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (g)

            	
              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);
                

            


    

     

    
      	 	
              (h)

            	
              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;


            


    

     

    
      	 	
              (i)

            	
              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;

            


    

     

    
      	 	
              (j)

            	
              an
                originally executed copy of the written opinions of Indeglia & Carney
                and Burleson Cooke 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

            


    

     

    
      	 	
              (k)

            	
              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.
                

            


    

     

    
      	
              3.3

            	
              Deliveries
                and Actions by Tejas.
                At the Closing, Tejas shall deliver, or cause to be delivered, to
                the
                Sellers:

            


    

     

    
      	 	
              (a)

            	
              the
                Purchase Price;

            


    

     

    
      	 	
              (b)

            	
              the
                Intellectual Property Agreement, duly executed by
                Tejas;

            


    

     

    
      	 	
              (c)

            	
              the
                Registration Rights Agreement, duly executed by Tejas;
                and

            


    

     

    
      	 	
              (d)

            	
              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. 

            


    

     

    
      
        
        

      

      
        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:

            


    

     

    
      	 	
              (a)

            	
              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.

            


    

     

    
      	 	
              (b)

            	
              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.

            


    

     

    
      	 	
              (c)

            	
              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.

            


    

     

    
      	 	
              (d)

            	
              Securities
                and Exchange Commission Filings.
                The information filed with the U.S. Securities and Exchange Commission
                (the “SEC”)
                by or on behalf of Shumate (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.

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Financial
                Statements. Except
                as may have been corrected or supplemented in a subsequent SEC Filing,
                the
                financial statements of Shumate 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
                Shumate 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.


            


    

     

    
      	 	
              (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. 

            


    

     

    
      	 	
              (g)

            	
              Intellectual
                Property.
                Neither Shumate 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.

            


    

     

    
      	 	
              (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:

            


    

     

    
      	 	
              (i)

            	
              the
                Sellers have not sold, leased, transferred or assigned any of the
                Assets;

            


    

     

    
      	 	
              (ii)

            	
              no
                Encumbrance has been imposed upon any of the Assets;
                and

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              the
                Sellers have not committed to do any of the
                foregoing.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (j)

            	
              Capitalization;
                Reservation of Common Stock.
                The authorized common stock of Shumate 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. 

            


    

     

    
      	 	
              (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.

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              4.2

            	
              Representations
                and Warranties of Tejas.
                Tejas hereby represents and warrants to the Sellers, as of the date
                hereof, as follows:

            


    

     

    
      	 	
              (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 Shumate.
                Tejas has received and had the opportunity to review all documents
                and any
                other information requested from Shumate, has been given full and
                complete
                access to information regarding Shumate, and has utilized such access
                to
                Tejas’s satisfaction for the purpose of obtaining such information
                regarding Shumate as Tejas has reasonably requested; and, particularly,
                Tejas has been given reasonable opportunity to ask questions of,
                and
                receive answers from, representatives of Shumate 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 Shumate 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. 

            


    

     

    
      
        
        

      

      
        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 SHUMATE 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 SHUMATE 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
                Shumate. 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. 

            


    

     

    
      	 	
              (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.

            


    

     

    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).

            


    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              5.2

            	
              Confidentiality. 

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      
        
        

      

      
        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.

            


    

     

    
      	
              5.3

            	
              Engineering
                Support. 

            


    

     

    
      	 	
              (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:

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	 	
              (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.

            


    

     

    
      	
              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.

            


    

     

    
      
        
        

      

      
        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.

            


    

     

    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.
                

            


    

     

    
      	
              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 Shumate to:
                Shumate
                Industries, Inc., 1011 Beach Airport Road, Conroe, Texas 77301, Attn:
                President, CEO, telecopier number: (936) 539-2990, (ii) if to Hemiwedge
                to: c/o Shumate Industries, Inc., 1011 Beach Airport Road, Conroe,
                Texas
                77301, Attn: President, CEO, telecopier number: (936) 539-2990, and
                in the
                case of clause (i) and (ii) above, with a copy by telecopier only
                to:
                Indeglia & Carney, telecopier number: (949) 851-5940, Attn: Marc A.
                Indeglia, and (iii) if to Tejas to: Tejas Research & Engineering,
                L.P., 9185 Six Pines Drive, The Woodlands, Texas 77380, Attn: Thomas
                Hill,
                telecopier number: (403) 466-8063, with an additional copy by telecopier
                only to: (x) Intervale Capital, LLC, telecopier number: (713) 961-0361,
                Attn: Curtis W. Huff and (y) Fulbright & Jaworski, L.L.P., telecopier
                number: (713) 651-5246, Attn: Gene G. Lewis.
                Tejas and the Sellers agree to promptly advise the other parties
                hereto of
                any change of address from that so set
                forth.

            


    

     

    
      
        
        

      

      
        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).

            


    

     

    
      	
              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).

            


    

     

    
      	
              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.

            


    

     

    
      	
              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.

            


    

     

    
      	
              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.

            


    

     

    
      
        
        

      

      
        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.

     

     

    
      	 	SHUMATE INDUSTRIES, INC.,
for
              itself and as sole shareholder of Hemiwedge Valve
              Corporation
	 	 	 
	 	 	 
	 	By:
              	 
	 	Name: Matthew
              C. Flemming
	 	Title: Chief
              Financial Officer


    

     

     

    
      
        	 	HEMIWEDGE
                VALVE CORPORATION
	 	 	 
	 	 	 
	 	By:
                	 
	 	Name: Matthew
                C. Flemming
	 	Title: Chief
                Financial Officer


      

       

       

      
        
          	 	TEJAS
                  RESEARCH & ENGINEERING, L.P.
	 	 	 
	 	 	 
	 	By:
                  	 
	 	Name: Thomas Hill
	 	Title: Chief Executive
                  Officer


        

         

        
          
            
            

          

          
            
              SIGNATURE
                PAGE TO TRANSFER AGREEMENT