AGREEMENT AND PLAN OF MERGER,
DATED AS OF AUGUST 12, 2002
AMONG
VENTURES NATIONAL INCORPORATED, a Utah corporation,
TITAN EMS ACQUISITION CORP., a Delaware corporation
and
TITAN EMS, INC., a Delaware corporation
AGREEMENT AND PLAN OF MERGER, dated as of August 12, 2002 (the "Agreement"),
among VENTURES-NATIONAL INCORPORATED, a Utah corporation with executive
offices located at 0000 Xxxxx 000 Xxxx, Xxxxx 00X, Xxxx Xxxx Xxxx,
Xxxx 00000 ("VNI"), TITAN EMS ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of VNI with executive offices located at 0000 Xxxxx
000 Xxxx, Xxxxx 00X, Xxxx Xxxx Xxxx, Xxxx 00000 ("Acquisition"), and TITAN
EMS, INC., a Delaware corporation with executive offices located at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 ("Titan"). Titan, in its capacity
as the surviving corporation, is hereinafter sometimes referred to as the
"Surviving Corporation," and Acquisition and Titan are hereinafter sometimes
referred to as the "Constituent Corporations."
INTRODUCTION
Pursuant hereto, and subject to the terms hereof, the parties hereto
intend that Titan shall merge (the "Merger") with Acquisition pursuant to
Section 251 of the General Corporation Law of the State of Delaware (the
"DGCL").
The location of the definition of capitalized and certain other terms
used herein, as well as the first use of such terms herein, is set forth in
Section 9.12 hereof.
I. NAME OF SURVIVING CORPORATION; CERTIFICATE OF INCORPORATION AND BY-LAWS;
BOARD OF DIRECTORS; OFFICERS
Section 1.01 Name of Surviving Corporation
The corporation which shall survive the Merger contemplated hereby is
Titan.
Section 1.02 Certificate of Incorporation and By-laws
The certificate of incorporation and the by-laws of Titan as in effect at
the Effective Time shall, from and after the Effective Time, be the
certificate of incorporation and the by-laws of the Surviving Corporation
until they are amended.
Section 1.03 Board of Directors and Officers
(a) The directors and officers of Titan at the Effective Time
shall be the directors and officers, respectively, of the Surviving
Corporation, each to serve, in each case (subject to the Surviving
Corporation's by-laws), until their respective successors shall have been
elected and qualified.
(b) The directors of VNI immediately prior to the Effective Time
shall irrevocably resign effective as of the close of business on the last day
of the Gap Period (as hereinafter defined) and shall appoint the directors of
Titan at the Effective Time as the directors of VNI commencing at the close of
business on the last day of the Gap Period, each to serve, in each case
(subject to VNI's by-laws), until their respective successors shall have been
elected and qualified. The officers of VNI immediately prior to the Effective
Time shall resign effective at the Effective Time. The directors of VNI
immediately prior to the Effective Time shall appoint the officers of Titan at
the Effective Time as the officers of VNI commencing at the Effective Time,
each to serve, in each case (subject to VNI's by-laws), until their respective
successors shall have been elected and qualified. For purposes of this
Agreement, the term "Gap Period" shall mean the period commencing at the
Effective Time and terminating on the tenth day following the transmission by
VNI to the holders of record of securities of VNI the information referenced
in Section 5.02(r) of this Agreement
2
II. STATUS AND CONVERSION OF SECURITIES
Section 2.01 Stock of Titan
(a) Each share of common stock of Titan, 'Titan Common Stock'
outstanding at the Effective Time shall, subject to compliance with Section
2.01(d), be converted into and exchanged for one share of common stock of VNI
"VNI Common Stock".
(b) Dissenters' Rights. Notwithstanding Section 2.01(a) of this
Agreement, merger consideration shall not be issued in respect of any shares
of Titan Common Stock, the holders of which shall object to the Merger in
writing and demand payment of the value of their shares of Titan Common Stock
pursuant to, and in accordance with, Section 262 of the DGCL and as a result
payment therefor is made. Such holders shall have only the rights provided by
such Section 262.
(c) Surrender and Exchange of Titan Common Stock. Subject to
the provisions of Section 2.01(b) of this Agreement, after the Effective Time,
each holder of an outstanding certificate or certificates (the "Old
Certificates") theretofore representing shares of Titan Common Stock, upon
surrender thereof to Interwest Stock Transfer Company (the "Exchange Agent"),
shall be entitled to receive in exchange therefor a certificate or
certificates (the "New Certificates") for the number of shares of VNI Common
Stock represented by such Old Certificate or Old Certificates, which VNI
agrees to make available to the Exchange Agent as soon as practicable after
the Effective Time, representing the number of shares of VNI Common Stock into
3
and for which the shares of Titan Common Stock theretofore represented by such
surrendered Old Certificates have been converted. No certificates or scrip
for fractional shares of VNI Common Stock will be issued, no VNI stock split
or dividend shall relate to any fractional share interest, and no such
fractional share interest shall entitle the owner thereof to vote or to any
rights of a stockholder of VNI. In lieu of the issuance or recognition of
fractional shares of VNI Common Stock or interests or rights therein, the
Exchange Agent shall round such fraction to the next higher whole number of
shares of VNI Common Stock. Until surrendered and exchanged, each Old
Certificate shall after the Effective Time be deemed for all corporate
purposes, other than the payment of dividends or liquidating or other
distributions, if any, to holders of record of VNI Common Stock, to represent
only the right to receive the number of shares of VNI Common Stock into and
for which the shares of Titan Common Stock theretofore represented by such Old
Certificate shall have been converted. No dividend or liquidating or other
distribution, if any, payable to holders of record of shares of Titan Common
Stock at or after the Effective Time on shares of VNI Common Stock, or payable
subsequent to the Effective Time to holders of record of shares of Titan
Common Stock at a time prior to the Effective Time shall be paid to the
holders of Old Certificates; provided, however, that upon surrender and
exchange of such Old Certificates there shall be paid (subject to the last
sentence of this Section 2.01(c)) to the record holders of the New
Certificates issued in exchange therefor (i) the amount, without interest
thereon, of dividends and liquidating or other distributions, if any, which
theretofore have become payable to holders of record of shares of Titan Common
Stock on or after the Effective Time with respect to the number of whole
shares of VNI Common Stock represented by such New Certificates and (ii) the
amount, without interest thereon, of dividends and liquidating or other
4
distributions, if any, declared by Titan payable to holders of record of
shares of Titan Common Stock at a time prior to the Effective Time, but
payable subsequent to the Effective Time. If outstanding Old Certificates are
not surrendered and exchanged for shares of VNI Common Stock pursuant hereto
prior to two years after the Effective Time (or, in any particular case, prior
to the date before the second anniversary of the Effective Time on which the
shares of VNI Common Stock pursuant hereto and the dividends and liquidating
or other distributions, if any, would otherwise escheat to, or become the
property of, any governmental unit or any agency thereof), (iii) the number of
whole shares of VNI Common Stock into and for which the shares of Titan Common
Stock theretofore represented by such Old Certificates shall have been
converted, (iv) the amount of dividends and liquidating or other
distributions, if any, which theretofore have become payable to holders of
record on or after the Effective Time with respect to such number of whole
shares of VNI Common Stock, (v) the amount of dividends and liquidating or
other distributions, if any, declared by Titan payable to holders of record of
shares of Titan Common Stock at a time prior to the Effective Time, but
payable subsequent to the Effective Time, and (vi) the amount of dividends and
liquidating or other distributions, if any, which subsequently become payable
with respect to such number of whole shares of VNI Common Stock, shall become
the property of VNI (and, to the extent not in its possession, shall be paid
over to it), free and clear of all claims or interest of any other person
previously entitled thereto.
(d) Transfer Taxes. If any New Certificate is to be issued in a
name other than that in which the Old Certificate surrendered for exchange is
issued, the Old Certificate so surrendered shall be properly endorsed and
5
otherwise in proper form for transfer and the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the issuance of the New Certificate in any name other than that of the
registered holder of the Old Certificate surrendered, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(e) Titan Stock Transfers. As of the Effective Time, no
transfer of the shares of Titan Common Stock outstanding prior to the
Effective Time shall be made on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, Old Certificates are presented to
VNI or the Surviving Corporation, they shall be exchanged pursuant to Section
2.01(c).
Section 2.02 Titan Stock Options
At the Effective Time, VNI shall assume each option (each a "Titan Stock
Option") outstanding at the Effective Time granted by Titan prior to the
Effective Time by executing and delivering to such holder an assumption, which
assumption shall read as set forth in Exhibit 2.02 attached to, incorporated
in, and made a part of this Agreement by this reference thereto, and VNI shall
be substituted for Titan with respect to each Titan Stock Option so assumed,
and thereafter, until any event that affects the exercise price, each Titan
Stock Option assumed by VNI as aforesaid shall represent an option to
purchase, instead of Titan Common Stock, the number of whole shares of VNI
Common Stock which equals the number of shares of Titan Common Stock subject
to such option immediately prior to the Effective Time; and the price per
share of VNI Common Stock at which such option shall be exercisable shall
(until any event that affects the exercise price) be an amount (to the next
6
higher whole cent) equal to the option price per share of Titan Common Stock
immediately prior to the Effective Time. Except as aforesaid, the period
during which, and the terms upon which, each Titan Stock Option may be
exercised shall remain unchanged.
Section 2.03 Affiliates of Titan
Each of Titan and VNI agrees that it will use its best efforts to avoid
violating the securities laws of the United States or of any state or other
jurisdiction while pursuing the Merger and the other transactions contemplated
hereby. In connection therewith, Titan agrees that it shall cause,
simultaneous with the execution hereof, all persons who are identified in
Section F of the letter, of even date with this Agreement (the "Titan
Disclosure Letter"), as affiliates of Titan (collectively, the "Titan
Affiliates") within the meaning of Rule 145 under the Securities Act of 1933,
as amended (the "Securities Act"), to enter into an agreement with VNI (and
VNI hereby agrees to enter into such an agreement with each of such persons),
which shall read as set forth in Exhibit 2.03 attached to, incorporated in,
and made a part of this Agreement by this reference thereto, which agreements
shall obligate each such Titan Affiliate, among other things, (a) not to sell
or otherwise dispose of any shares of VNI Common Stock received by such Titan
Affiliate pursuant to this Agreement in violation of the Securities Act or the
rules and regulations thereunder, and (b) to vote all shares of Titan Common
Stock beneficially owned by such Titan Affiliate in favor of the adoption and
approval of this Agreement, the Merger, and the other transactions
contemplated by this Agreement.
7
Section 2.04 Capital Stock of VNI
Except as contemplated by this Agreement, all issued shares of VNI
Common Stock, whether outstanding or held in the treasury of VNI, shall
continue unchanged as shares of capital stock of VNI.
Section 2.05 Capital Stock of Acquisition
All issued shares of capital stock of Acquisition outstanding at the
Effective Time shall be converted into and exchanged for ten shares of common
stock of the Surviving Corporation, except that shares of capital stock of
Acquisition held in Acquisition's treasury shall be canceled.
III. STOCKHOLDER APPROVALS; BOARD OF DIRECTORS' RECOMMENDATIONS; FILING;
EFFECTIVE TIME
Section 3.01 Stockholder Approvals; Board of Directors' Recommendations
Meetings of the stockholders of Acquisition and of Titan shall be held
in accordance with the law of their respective jurisdiction of incorporation
(or actions by written consent in lieu of a meeting of stockholders shall be
executed in accordance with the law of their respective jurisdiction of
incorporation) as promptly as possible, after at least 20 days' prior written
notice thereof to the stockholders of the respective corporations in the case
of a meeting of stockholders, in each case, among other things, to consider
and vote upon the adoption and approval of this Agreement, the Merger, and the
other transactions contemplated by this Agreement. VNI, as the sole
stockholder of Acquisition, shall, prior to the Effective Time, vote all
shares of capital stock of Acquisition in favor of the adoption and approval
of this Agreement, the Merger, and the other transactions contemplated hereby.
If a meeting of stockholders of VNI shall be required, subject to its
fiduciary duty to stockholders, the Board of Directors of VNI shall recommend
8
to its stockholders that this Agreement, the Merger, and the other
transactions contemplated hereby be adopted and approved. In the event that
the stockholders of VNI are required to approve the Merger, subject to Section
2.03 hereof and its fiduciary duty to stockholders, the Board of Directors of
VNI shall recommend to its stockholders that this Agreement, the Merger, and
the other transactions contemplated hereby be adopted and approved.
Section 3.02 Filing; Effective Time
As soon as practicable after the adoption and approval of this
Agreement, the Merger, and the other transactions contemplated by the
respective stockholders of each of VNI, Acquisition, and Titan (as applicable)
(unless one or more of the conditions contained in Articles VII and VIII
hereof have not then been fulfilled or waived, then as soon as practicable
after the fulfillment or waiver of all such conditions), an appropriate
certificate of merger in the form required by the DGCL shall be executed and
filed in the office of the Secretary of State of the State of Delaware, at
which time the Merger shall become effective (the "Effective Time").
IV. CERTAIN EFFECTS OF MERGER
Section 4.01 Effects Under the DGCL
When the Merger becomes effective, the separate existence of Acquisition
shall cease, Acquisition shall be merged into Titan, and the Surviving
Corporation shall possess all the rights, privileges, powers, and franchises
as well of a public as of a private nature, and shall be subject to all the
restrictions, disabilities, and duties of each of the Constituent
Corporations; and all and singular, the rights, privileges, powers, and
franchises of each of the Constituent Corporations, and all property, real,
9
personal, and mixed, and all debts due to either of the Constituent
Corporations on whatever account, as well for stock subscriptions as all other
things in action or belonging to each of the Constituent Corporations shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers, and franchises, and all and every other interest shall be thereafter
as effectually the property of the Surviving Corporation as they were of the
several and respective Constituent Corporations; and the title to any real
estate vested by deed or otherwise, under the laws of the State of Delaware or
any other jurisdiction, in either of the Constituent Corporations, shall not
revert or be in any way impaired by reason of the Merger; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities, and
duties of the respective Constituent Corporations shall thenceforth attach to
the Surviving Corporation, and may be enforced against it to the same extent
as if such debts, liabilities, and duties had been incurred or contracted by
it.
Section 4.02 Reorganization
The Merger is intended to qualify as a reorganization within the meaning
of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal Revenue Code of 1986, as amended
(the "Code"), and this Agreement is intended to be a "plan of reorganization"
within the meaning of the regulations promulgated under Section 368 of the
Code.
V. COVENANTS
Section 5.01 Covenants of Titan
Titan agrees that, unless VNI otherwise agrees in writing:
10
(a) Certificate of Incorporation and By-laws. Until the earlier
of the Effective Time and the abandonment or termination of the Merger
pursuant to Article VII or Article VIII or otherwise (the "Release Time"), no
amendment will be made in the certificate of incorporation or by-laws of
Titan.
(b) Shares and Options. Until the Release Time, no share of
capital stock of Titan, option or warrant for any such share, right to
subscribe to or purchase any such share, or security convertible into, or
exchangeable or exercisable for, any such share, shall be issued or sold by
Titan, otherwise than as may be required upon the exercise of the Titan Stock
Options or as contemplated by, or in connection with, this Agreement.
(c) Dividends and Purchases of Stock. Until the Release Time,
no dividend or liquidating or other distribution or stock split shall be
authorized, declared, paid, or effected by Titan in respect of the outstanding
shares of Titan Common Stock. Until the Release Time, no direct or indirect
redemption, purchase, or other acquisition shall be made by Titan of shares of
Titan Common Stock.
(d) Borrowing of Money. Until the Release Time, Titan shall not
borrow money, guarantee the borrowing of money, engage in any transaction, or
enter into any material agreement other than in connection with the
transactions contemplated hereby or in connection herewith or otherwise
pursuant to the currently outstanding credit line of Titan or in connection
with the execution and delivery by Titan of a lease relating to a facility in
Freemont, California. For purposes of this Agreement, references to
"material", as well as correlative terms (e.g., materially, materiality, etc.)
11
shall be deemed to refer to amounts of US$10,000 or more or effects or
consequences of US$10,000 or more.
(e) Access. Until the Release Time, Titan will afford the
officers, directors, employees, counsel, agents, investment bankers,
accountants, and other representatives of VNI and lenders, investors, and
prospective lenders and investors free and full access to the plants,
properties, books, and records of Titan, will permit them to make extracts
from and copies of such books and records, and will from time to time furnish
VNI with such additional financial and operating data and other information as
to the financial condition, results of operations, businesses, properties,
assets, liabilities, or future prospects of Titan as VNI from time to time may
request. Until the Release Time, Titan will cause the independent certified
public accountants of Titan to make available to VNI and its independent
certified public accountants the work papers relating to the audits of Titan
referred to in Section 6.01(c) of this Agreement.
(f) Conduct of Business. Until the Release Time, Titan will
conduct its affairs so that at the Effective Time no representation or
warranty of Titan will be inaccurate, no covenant or agreement of Titan will
be breached, and no condition in this Agreement will remain unfulfilled by
reason of the actions or omissions of Titan. Except as otherwise consented to
by VNI in writing, until the Release Time, Titan will use its best efforts to
preserve the business operations of Titan intact, to keep available the
services of its present personnel, to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements, and
understandings of Titan, and to preserve the good will of its suppliers,
customers, and others having business relations with any of them. Until the
Release Time, Titan will conduct its affairs in all respects only in the
ordinary course, other than in connection with the matters referenced herein.
12
(g) Advice of Changes. Until the Release Time, Titan will
immediately advise VNI in a detailed written notice of any material fact or
occurrence or any pending or threatened material occurrence of which it
obtains knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or the Titan Disclosure Letter,
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than
in the absence of such fact or occurrence, or which (if existing and known at
the time of the Effective Time) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
(h) Confidentiality. Titan shall use its commercially
reasonable efforts to insure that all confidential information which Titan or
any of its respective officers, directors, employees, counsel, agents,
investment bankers, or accountants may now possess or may hereafter create or
obtain relating to the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of Titan, any affiliate
of Titan, or any customer or supplier of any of them or any such affiliate
shall not be published, disclosed, or made accessible by any of them to any
other person or entity at any time or used by any of them except in the
ordinary course of business and for the benefit of Titan; provided, however,
that the restrictions of this sentence shall not apply (A) after the Merger is
abandoned or terminated pursuant to Article VII or Article VIII or otherwise,
13
(B) as may otherwise be required by law, (C) as may be necessary or
appropriate in connection with the enforcement of this Agreement, or (D) to
the extent the information shall have otherwise become publicly available.
(i) Public Statements. Before Titan releases any information
concerning this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement which is intended for, or may result in, public
dissemination thereof, Titan shall cooperate with VNI, shall furnish drafts of
all documents or proposed oral statements to VNI for comment, and shall not
release any such information without the written consent of VNI, which consent
shall not be unreasonably withheld. Nothing contained herein shall prevent
Titan from releasing any information if required to do so by law.
(j) Other Proposals. Until the Release Time, Titan shall not,
and shall not authorize or permit any officer, director, employee, counsel,
agent, investment banker, accountant, or other representative of Titan,
directly or indirectly, to: (i) initiate contact with any person or entity in
an effort to solicit any Titan Takeover Proposal (as such term is defined in
this Section 5.01(j)); (ii) cooperate with, or furnish or cause to be
furnished any non-public information concerning the financial condition,
results of operations, businesses, properties, assets, liabilities, or future
prospects of Titan, to any person or entity in connection with any Titan
Takeover Proposal; (iii) negotiate with any person or entity with respect to
any Titan Takeover Proposal; or (iv) enter into any agreement or understanding
with the intent to effect any Titan Takeover Proposal. Titan will immediately
give written notice to VNI of the details of any Titan Takeover Proposal of
which Titan becomes aware. As used in this Section 5.01(j), "Titan Takeover
14
Proposal" shall mean any proposal, other than as contemplated by this
Agreement, (v) for a merger, consolidation, reorganization, other business
combination, or recapitalization involving Titan for the acquisition of a 5%
or greater interest in the equity or in any class or series of capital stock
of Titan, for the acquisition of the right to cast 5% or more of the votes on
any matter with respect to Titan or for the acquisition of a substantial
portion of any of the assets of Titan other than in the ordinary course of its
businesses, or (vi) the effect of which may be to prohibit, restrict, or delay
the consummation of the Merger or any of the other transactions contemplated
by this Agreement or impair the contemplated benefits to VNI or Acquisition of
the Merger or any of the other transactions contemplated by this Agreement;
such term shall exclude the transactions contemplated hereby or in connection
herewith.
(k) Consents Without Any Condition. Titan shall not make any
agreement or reach any understanding not approved in writing by VNI as a
condition for obtaining any consent, authorization, approval, order, license,
certificate, or permit required for the consummation of the transactions
contemplated by this Agreement.
(l) Material for Periodic Reporting . Titan shall furnish, or
cause to be furnished, for inclusion in the periodic reports of VNI on Forms
8-K, 10-Q, 10-K, or otherwise (such periodic reports, together with all
financial statements, exhibits, amendments, and supplements thereto, in the
form filed by VNI with the Securities and Exchange Commission (the "SEC")
being hereinafter called the "Periodic Reports"), to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
connection with the Merger, or for inclusion in VNI's filings under state
"blue-sky," securities, or take-over laws, such information about Titan or
15
Titan's security holders as may be required or as may be reasonably requested
by VNI, and shall continue to furnish or cause to be furnished such
information as is necessary to keep such information correct and complete in
all material respect until the Release Time. Titan represents and warrants
that the information that it has furnished to date, taken as a whole, does not
now, and will not at any time prior to the Release Time, (i) contain an untrue
statement of a material fact or (ii) omit to state a material fact required to
be stated therein or necessary to make the statements therein not false or
misleading.
(m) Indemnification. Commencing at the Effective Time, Titan
agrees to indemnify and hold harmless VNI, Acquisition, and VNI's and
Acquisition's officers, directors, employees, agents, and counsel, in each
case past, present, or as they may exist at any time after the date of this
Agreement, and each person, if any, who controls, controlled, or will control
VNI or Acquisition (collectively the "VNI Indemnitees") within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and, if
the Merger is abandoned or terminated pursuant to Article VII or Article VIII
or otherwise except solely as a result of a breach of this Agreement by VNI or
Acquisition, VNI and Acquisition, against any and all losses, liabilities,
claims, damages, and expenses whatsoever (which shall include, for all
purposes of this Section 5.01(m) of this Agreement, but not be limited to
reasonable counsel fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation, in each case whether or not
involving a third party) as and when incurred, arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
16
material fact contained in (A) Periodic Reports or any amendment or supplement
thereto or (B) any application or other document or communication filed with
any governmental authority in connection with the Merger or filed with any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, provided in each case that such untrue statement, alleged
untrue statement, omission, or alleged omission relates to information
furnished by, or on behalf of, or pertaining to, Titan or any Titan security
holder, or (ii) any breach of any representation, warranty, covenant, or
agreement of Titan contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability Titan may otherwise have,
including liabilities arising under this Agreement.
(n) Transfer Taxes. Titan shall timely prepare and file any
declaration or filing necessary to comply with any transfer tax statutes that
require any such filing before the Effective Time.
(o) Employment Agreements. Titan shall use best efforts to
cause the employment agreements between Titan and each of Xxxxx Xxxxxx and
Xxxxxx Xxxxxxx (the "Employment Agreements") to be duly executed and delivered
at or prior to the Effective Time by the parties thereto other than VNI or
Acquisition.
Section 5.02 Covenants of VNI and Acquisition
VNI and Acquisition each agrees that, unless Titan otherwise agrees in
writing:
17
(a) (i) Until the Release Time, no dividend or liquidating or
other distribution or stock split shall be authorized, declared, paid, or
effected by VNI in respect of the outstanding shares of VNI Common Stock.
(ii) Until the Release Time, except as contemplated by this
Agreement, no share of capital stock of VNI or warrant for any such share,
right to subscribe to or purchase any such share, or security convertible
into, or exchangeable or exercisable for, any such share, shall be issued or
sold by VNI.
(b) Access. Until the Release Time, VNI and Acquisition will
afford the officers, directors, employees, counsel, agents, investment
bankers, accountants, and other representatives of Titan free and full access
to the plants, properties, books, and records of VNI and Acquisition, will
permit them to make extracts from and copies of such books and records, and
will from time to time furnish Titan with such additional financial and
operating data and other information as to the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects
of VNI and Acquisition as Titan from time to time may request. Until the
Release Time, VNI and Acquisition will cause the independent certified public
accountants of VNI to make available to Titan and its independent certified
public accountants the work papers relating to the audits of VNI and
Acquisition referred to in Section 6.02(c) of this Agreement.
(c) Conduct of Business. (i) Until the Release Time, VNI and
Acquisition will conduct their respective affairs, so that at the Effective
Time no representation or warranty of VNI or Acquisition will be inaccurate,
no covenant or agreement of VNI or Acquisition will be breached, and no
18
condition in this Agreement will remain unfulfilled by reason of the actions
or omissions of VNI. Until the Release Time, Acquisition will conduct no
affairs except in connection with this Agreement, the Merger, or any of the
other transactions contemplated by this Agreement. Except as otherwise
consented to by Titan in writing and except as otherwise contemplated by this
Agreement, until the Release Time and until the expiration of the Gap Period,
VNI will conduct its affairs in all respects only in the ordinary course.
(ii) During the period commencing at the Effective Time and
terminating at the close of business on the last day of the Gap Period, the
board of directors of VNI shall not do any of the following without the prior
written consent of the Chief Executive Officer of Titan immediately prior to
the Effective Time:
terminate any then officer of VNI appointed pursuant to, and
in accordance with, Section 1.03(b) hereof;
appoint any officers of VNI not appointed pursuant to, and in
accordance with, Section 1.03(b) hereof;
change the duties of any of the foregoing officers from those
duties to which they were subject as officers of Titan immediately
prior to the Effective Time;
appoint or, remove, or accept by registration from any
director of VNI, except pursuant to Section 1.03(b) of this
Agreement;
elect or remove any director or officer of Titan;
hire or terminate any employee of VNI or Titan;
declare any liquidating or other dividend or distribution of
property;
19
authorize any bonus or increase in compensation of any
officer, director, employee, consultant, or agent;
subject VNI or Titan to any indebtedness or other obligation
to which it was not subject immediately prior to the Effective
Time; or
take any other action not in the ordinary course of business
of VNI, giving effect to the Merger.
(d) Advice of Changes. Until the Release Time, VNI will
immediately advise Titan in a detailed written notice of any material fact or
occurrence or any pending or threatened material occurrence of which it
obtains knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or in the VNI Disclosure Letter (as
defined in Section 6.02(a)), which (if existing and known at any time prior to
or at the Effective Time) would make the performance by any party of a
covenant contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or occurrence, or
which (if existing and known at the time of the Effective Time) would cause a
condition to any party's obligations under this Agreement not to be fully
satisfied.
(e) Confidentiality. Each of VNI and Acquisition shall use its
commercially reasonable efforts to insure that all confidential information
which VNI, Acquisition, or any of their respective officers, directors,
employees, counsel, agents, investment bankers, or accountants may now possess
or may hereafter create or obtain relating to the financial condition, results
of operations, businesses, properties, assets, liabilities, or future
prospects of Titan, any affiliate of Titan, or any customer or supplier of or
20
any such affiliate shall not be published, disclosed, or made accessible by
any of them to any other person or entity without the prior written consent of
Titan, which written consent shall not be unreasonably withheld; provided,
however, that the restrictions of this sentence shall not apply (i) as may
otherwise be required by law, (ii) as may be necessary or appropriate in
connection with the enforcement of this Agreement, or (iii) to the extent the
information shall have otherwise become publicly available. VNI and
Acquisition shall, and shall cause all other such persons and entities to,
deliver to Titan all tangible evidence of the confidential information
relating to Titan, any affiliate of Titan, or (insofar as such confidential
information was provided by, or on behalf of, Titan, or any such affiliate of
Titan) any customer or supplier of any of them or any such affiliate to which
the restrictions of the foregoing sentence apply immediately after the
abandonment or termination of the Merger pursuant to Article VII or Article
VIII or otherwise.
(f) Public Statements. Before VNI or Acquisition releases any
information concerning this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement which is intended for or may
result in public dissemination thereof, VNI and Acquisition shall cooperate
with Titan, shall furnish drafts of all documents or proposed oral statements
to Titan for comment, and shall not release any such information without the
written consent of Titan. Nothing contained herein shall prevent VNI or
Acquisition from releasing any information if required to do so by law.
(g) Consents Without Any Condition. Neither VNI nor Acquisition
shall make any agreement or reach any understanding not approved in writing by
Titan as a condition for obtaining any consent, authorization, approval,
21
order, license, certificate, or permit required for the consummation of the
transactions contemplated by this Agreement.
(h) Periodic Reports. VNI and Acquisition shall promptly
prepare all required or, in the reasonable opinion of the parties hereto,
appropriate Periodic Reports relating to this Agreement, the Merger, and the
other transactions contemplated hereby and in connection herewith. VNI and
Acquisition each shall furnish or cause to be furnished, for inclusion in the
Periodic Reports, such information about VNI, Acquisition, and VNI's security
holders as may be required or as may be reasonably requested by Titan, and
shall continue to furnish or cause to be furnished such information as is
necessary to keep such information correct and complete in all material
respects until the Release Time. VNI and Acquisition each represents and
warrants that the information that it has furnished to date, taken as a whole,
does not now, and will not at any time prior to the Release Time, (i) contain
an untrue statement of a material fact or (ii) omit to state a material fact
required to be stated therein or necessary to make the statements therein not
false or misleading. VNI and Acquisition each shall also take any action
required to be taken by it under state "blue-sky," securities, or take-over
laws in connection with the issuance of VNI Common Stock pursuant to the
Merger. The filings made by VNI within the past six years with the SEC were,
if filed under the Exchange Act, prepared in accordance with the then existing
requirements of the Exchange Act and the rules and regulations thereunder and,
if filed under the Securities Act, prepared in accordance with the then
existing requirements of the Securities Act and the rules and regulations
thereunder. Such filings when filed, and the press releases and other public
statements VNI has made subsequent to the last such filing when considered
22
together with such filings, did not at the time of filing or issuance of the
press releases or other public statements, as the case may be, and (with
respect to the press releases and other public statements, when considered
together with such filings) do not now (i) contain an untrue statement of a
material fact or (ii) omit to state a material fact required to be stated
therein or necessary to make the statements therein not false or misleading.
(i) Capital Stock Changes. If, prior to the Release Time, VNI
Common Stock shall be recapitalized or reclassified or VNI shall effect any
stock dividend, stock split, or reverse stock split of VNI Common Stock, then
the shares of VNI Common Stock to be delivered under this Agreement or upon
exercise, conversion, or exchange of any security to be delivered under this
Agreement or assumed by VNI as contemplated by this Agreement shall be
appropriately and equitably adjusted to the kind and amount of shares of stock
and other securities and property to which the holders of such shares of VNI
Common Stock or such other security would have been entitled to receive had
such stock or such other security been issued and outstanding as of the record
date for determining stockholders entitled to participate in such corporate
event.
(j) Transfer Taxes. VNI shall timely prepare and file any
declaration or filing necessary to comply with any transfer tax statutes that
require any such filing before the Effective Time.
(k) Other Proposals. Until the Release Time, neither VNI nor
Acquisition shall, or shall authorize or permit any officer, director,
employee, counsel, agent, investment banker, accountant, or other
representative of VNI or of Acquisition, directly or indirectly, to
23
contemplate or enter into any transaction the effect of which may be to
prohibit, restrict, or delay the consummation of the Merger or any of the
other transactions contemplated by this Agreement or impair the contemplated
benefits to Titan's stockholders of the Merger or any of the other
transactions contemplated by this Agreement.
(l) Reorganization.
(i) Following the Merger, VNI will cause Surviving
Corporation to continue Titan's historic business or to use a significant
portion of Titan's historic business assets in a business, in each case within
the meaning of section 1.368-1(d) of the Treasury Regulations, assuming that
the assets of, and the business conducted by, Titan at the Effective Time
constitute Titan's historic business assets and historic business,
respectively.
(ii) Following the Merger, VNI will not permit Surviving
Corporation to issue additional shares that would result in VNI losing control
of Surviving Corporation within the meaning of section 368(c) of the Code.
(m) Rule 15c2-11. If required, VNI shall use best efforts to
file, within 30 days following the Effective Time, with the National
Association of Securities Dealers, Inc., or its affiliates, all information
required by Rule 15c2-11 under the Exchange Act.
(n) Agreements involving Xxxxxx Services, Inc. (i) At or prior
to the Effective Time, VNI and Xxxxxx Services, Inc., a Utah corporation
("Xxxxxx"), shall enter into an agreement, substantially in the form attached
hereto as Exhibit 5.02(n)(i), pursuant to which, among other things, Titan
shall pay to Xxxxxx fees of $150,000 in consideration of Xxxxxx'x payment and
24
personal indemnification of VNI and Titan of any and all past liabilities of
any type or nature whatsoever of VNI existing at the Effective Time.
(ii) At or prior to the Effective Time, VNI shall enter
into an agreement, substantially in the form of Exhibit 5.02(n)(ii) hereto,
pursuant to which shall (A) engage certain consultants through Xxxxxx and who
shall be principals, employees, or legal counsel of Xxxxxx, to perform the
services described therein during the 90 day period commencing at the
Effective Time.
(o) Consulting Agreement with STAR Associates LLC. At or prior
to the Effective Time, VNI shall enter into the agreements, substantially in
the form of Exhibit 5.02(o)-1 and Exhibit 5.02(o)-2 hereto, pursuant to which
VNI shall engage STAR Associates LLC as a consultant to perform certain
services.
(p) Consulting Agreement with Xxxxxx Xxxx. At or prior to the
Effective Time, VNI shall enter into an agreement, substantially in the form
of Exhibit 5.02(p) hereto, pursuant to which VNI shall engage Xxxxxx Xxxx as a
consultant to perform certain services.
(q) 14f-1 Information. As soon as practicable following the
Effective Time, VNI shall file with the SEC and transmit to its holders of
record the information required by Rule 14f-1 under the Exchange Act, which
filing and information shall be satisfactory in form and substance to Reitler
Xxxxx LLC, counsel to Titan.
(r) Conduct Business Under an Assumed Name and Proxy or
Information Statement. At or prior to the Effective Time, VNI shall apply
with the Department of Commerce of the State of Utah for a "dba" to do
business under the assumed name of "Titan General Holdings." As soon as is
25
reasonably practicable thereafter, VNI shall file a proxy or information
statement with the SEC for delivery to stockholders to consider and act upon
resolutions adopted by the Board of Directors of VNI to change the domicile of
VNI to the State of Delaware and its name to "Titan General Holdings, Inc." or
such other state and such other name as shall be selected by resolutions of
the newly designated and elected Board of Directors of VNI.
VI. REPRESENTATIONS AND WARRANTIES
Section 6.01 Certain Representations and Warranties of Titan
Giving effect to the transactions contemplated in Section 7.01(q)
hereby, Titan represents and warrants to VNI and Acquisition as follows:
(a) Organization and Qualification. Titan owns no subsidiary or
affiliate corporation or owns any interest in any other enterprise (whether or
not such enterprise is a corporation). Section A of the Titan Disclosure
Letter correctly sets forth as to Titan its place of incorporation, principal
place of business, jurisdictions in which it is qualified to do business, and
the businesses which it presently conducts and which it contemplates
conducting. Titan is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation, with all
requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the businesses in
which it is now engaged and the businesses in which it contemplates engaging.
26
Titan is duly qualified to transact the businesses in which it is engaged and
is in good standing as a foreign corporation in every jurisdiction in which
its ownership, leasing, licensing, or use of property or assets or the conduct
of its businesses makes such qualification necessary.
(b) Capitalization. The authorized capital stock of Titan
consists of 10,000,000 shares of Titan Common Stock, of which 6,880,490 shares
are outstanding at the date hereof. Each such outstanding share of Titan
Common Stock is validly authorized, validly issued, fully paid, and
nonassessable, has not been issued and is not owned or held in violation of
any preemptive or similar right of stockholders and is owned by the owner set
forth in Section A of the Titan Disclosure Letter, in each case free and clear
of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of Titan or any
security or other instrument convertible into, exercisable for, or
exchangeable for capital stock of Titan, other than the Titan Stock Options.
There is outstanding no security or other instrument convertible into or
exercisable or exchangeable for capital stock of Titan. The shares of Titan
Common Stock to be issued upon exercise of the Titan Stock Options are validly
authorized and, when the Titan Stock Options are exercised in accordance with
their terms, such shares of Titan Common Stock issued upon such exercise will
be validly issued, fully paid, and nonassessable.
(c) Financial Condition. Titan has delivered to VNI true and
correct copies of the following: balance sheets of Titan as of December 31,
2001. Such balance sheet presents fairly the financial condition, assets,
liabilities, and stockholders' equity of Titan as of its date. The financial
27
statements referred to in this Section 6.01(c) have been prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved and are in accordance
with the books and records of Titan. Except as otherwise contemplated by this
Agreement, since December 31, 2001:
(i) There has at no time been a material adverse change in
the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Titan.
(ii) Titan has not authorized, declared, paid, or effected
any dividend or liquidating or other distribution in respect of
its capital stock or any direct or indirect redemption, purchase,
or other acquisition of any stock of Titan.
(iii) The operations and businesses of Titan has been
conducted in all respects only in the ordinary course, except for
the transactions contemplated hereby and in connection herewith
and acquisitions by Titan of assets from General Electric Capital
Corporation.
(iv) There has been no accepted purchase order or
quotation, arrangement, or understanding for future sale of the
products or services of Titan which Titan expects will not be
profitable.
(v) Titan has not suffered an extraordinary loss (whether
or not covered by insurance) or waived any right of substantial
value.
28
There is no fact known to Titan which materially adversely affects or in the
future (as far as Titan can reasonably foresee) may materially adversely
affect the financial condition, results of operations, business, properties,
assets, liabilities, or future prospects of Titan or the Surviving
Corporation; provided, however, that Titan expresses no opinion as to
political or economic matters of general applicability. Titan has made known,
or caused to be made known, to the accountants or auditors who have prepared,
reviewed, or audited the aforementioned financial statements all material
facts and circumstances which could affect the preparation, presentation,
accuracy or completeness thereof.
(d) Tax and Other Liabilities. Titan does not have any material
liability of any nature, accrued or contingent, including, without limitation,
liabilities for federal, state, local, or foreign taxes and penalties,
interest, and additions to tax ("Taxes"), and liabilities to customers or
suppliers, other than the following:
(i) Liabilities for which full provision has been made on
the balance sheet and the notes thereto (the "Last Titan Balance
Sheet") as of December 31, 2001 (the "Last Titan Balance Sheet
Date") referred to in Section 6.01(c); and
(ii) Other liabilities arising since the Last Titan Balance
Sheet Date and prior to the Effective Time in the ordinary course
of business (which shall not include liabilities to customers on
account of defective products or services) or in connection with
the transactions contemplated hereby or in connection herewith
which are not inconsistent with the representations and warranties
of Titan or any other provision of this Agreement.
29
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last Titan Balance Sheet are sufficient for all
accrued and unpaid Taxes of Titan, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the Last Titan Balance Sheet
Date or now in effect, for the period ended on such date and for all fiscal
periods prior thereto. The execution, delivery, and performance of this
Agreement by Titan will not cause any Taxes to be payable other than by the
stockholders of Titan or cause any lien, charge, or encumbrance to secure any
Taxes to be created either immediately or upon the nonpayment of any Tax other
than on the properties or assets of the stockholders of Titan. Titan has
filed, or has requested an extension for, all federal, state, local, and
foreign tax returns required to be filed by it; has delivered to VNI a true
and correct copy of each such return which was filed in the past one year; has
paid (or has established on the Last Titan Balance Sheet a reserve for) all
Taxes, assessments, and other governmental charges payable or remittable by it
or levied upon it or its properties, assets, income, or franchises which are
due and payable; and has delivered to VNI a true and correct copy, of any
report as to adjustments received by it from any taxing authority during the
past one year and a statement, as to any litigation, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in
prospect with respect to any such report or the subject matter of such report.
(e) Litigation and Claims. Except as set forth in Section H of
the Titan Disclosure Letter, there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation
pending, threatened, or, to the best of Titan's knowledge, in prospect (or any
30
basis therefor known to Titan), with respect to Titan or any of their
respective businesses, properties, or assets. Titan is not affected by any
present or threatened strike or other labor disturbance nor to the knowledge
of Titan is any union attempting to represent any employee of Titan as
collective bargaining agent. Titan is not in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree which
violation or default would have a material adverse effect upon Titan; nor is
Titan required to take any action in order to avoid such violation or default.
(f) Properties. Titan does not own any legal or equitable
interest in any real property. Titan has good title to all other properties
and assets material to Titan, used in its business or owned by it (except real
and other properties and assets as are held pursuant to leases or licenses
described in Section B or C of the Titan Disclosure Letter), free and clear of
all liens, mortgages, security interests, pledges, charges, and encumbrances
(except such as are listed in Section D of the Titan Disclosure Letter).
(i) All accounts and notes receivable reflected on the Last
Titan Balance Sheet, or arising since the Last Titan Balance Sheet
Date, have been collected, or are and will be good and
collectible, in each case at the aggregate recorded amounts
thereof without right of recourse, defense, deduction, return of
goods, counterclaim, offset, or set off on the part of the
obligor, and, if not collected, can reasonably be anticipated to
be paid within 60 days of the date incurred.
(ii) All inventory of raw materials and work in process of
31
Titan is usable, and all inventory of finished goods is good and
marketable, on a normal basis in the existing product lines of
Titan. In no event do such inventories represent more than a one-
month supply measured by the volume of sales or use for the year
ended December 31, 2001. All inventory is merchantable and fit
for the particular purpose for which it is intended.
(iii) Attached as Section B of the Titan Disclosure Letter
is a true and complete list of the classes of all tangible
properties and assets owned by Titan or leased or licensed by
Titan from or to a third party (including inventory but not
including Intangibles, as defined in Section 6.01(i)), and with
respect to such properties and assets leased or licensed by Titan
from or to a third party, a description of such lease or license.
All such properties and assets (including Intangibles) owned by
Titan are reflected on the Last Titan Balance Sheet (except for
acquisitions subsequent to the Last Titan Balance Sheet Date and
prior to the Effective Time which are either noted in Section B or
C of the Titan Disclosure Letter or are approved in writing by
VNI). All real and other tangible properties and assets owned by
Titan or leased or licensed by Titan from or to a third party are
in good and usable condition (reasonable wear and tear which is
not such as to affect adversely the operation of the business of
Titan excepted).
(iv) To the best of Titan's knowledge, no real property
owned by Titan or leased or licensed by Titan from or to a third
party lies in an area which is, or will be, subject to zoning,
32
use, or building code restrictions which would prohibit, and, to
the best of Titan's knowledge, no state of facts relating to the
actions or inaction of another person or entity or his or its
ownership, leasing, or licensing of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, or licensing of such real property in the
businesses in which Titan is now engaged or the businesses in
which it contemplates engaging.
(v) The properties and assets (including Intangibles) owned
by Titan (other than those leased or licensed by Titan to a third
party) or leased or licensed by Titan from a third party
constitute all such properties and assets which are necessary to
the business of Titan as presently conducted or as it contemplates
conducting.
(vi) Titan has not caused or permitted its businesses
properties, or assets to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce, or
process any Hazardous Substance (as such term is defined in this
Section 6.01(f)(vi)) except in compliance with all applicable
laws, rules, regulations, orders, judgments, and decrees, and has
not caused or permitted the Release (as such term is defined in
this Section 6.01(f)(vi)) of any Hazardous Substance on or off the
site of any property of Titan. The term "Hazardous Substance"
shall mean any hazardous waste, as defined by 42 U.S.C. Section
6903(5), any hazardous substance, as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant, as defined by 42 U.S.C.
Section 9601(33), and all toxic substances, hazardous materials, or
33
other chemical substances regulated by any other law, rule, or
regulation. The term "Release" shall have the meaning set forth in
42 U.S.C. (22).
(g) Contracts and Other Instruments. Section E of the Titan
Disclosure Letter contains a true and correct statement of the information
required to be contained therein regarding material contracts, agreements,
instruments, leases, licenses, arrangements, or understandings with respect to
Titan. Titan has furnished to VNI (i) the certificate of incorporation (or
other charter document) and by-laws of Titan and all amendments thereto, as
presently in effect, certified by the Secretary of such corporation and (ii)
the following: (A) true and correct copies of all material contracts,
agreements, and instruments referred to in Section E of the Titan Disclosure
Letter; (B) true and correct copies of all material leases and licenses
referred to in Section B or C of the Titan Disclosure Letter; and (C) true and
correct written descriptions of all material supply, distribution, agency,
financing, or other arrangements or understandings referred to in Section E of
the Titan Disclosure Letter. Titan is not party to any employment agreement
with any employee thereof, other than the Employment Agreements. Subject to
the transactions contemplated by Section 7.01(q) of this Agreement, to the
best of Titan's knowledge, none of Titan or any other party to any such
contract, agreement, instrument, lease, or license is now or expects in the
future to be in violation or breach of, or in default with respect to
complying with, any term thereof, and each such material contract, agreement,
instrument, lease, or license is in full force and is (to the best of Titan's
knowledge in the case of third parties) the legal, valid, and binding
obligation of the parties thereto and (subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of creditors' rights
generally) is enforceable as to them in accordance with its terms. Each such
material supply, distribution, agency, financing, or other arrangement or
understanding is a valid and continuing arrangement or understanding; none of
Titan or any other party to any such arrangement or understanding has given
notice of termination or taken any action inconsistent with the continuance of
such arrangement or understanding; and the execution, delivery, and
performance of this Agreement will not prejudice any such arrangement or
understanding in any way. Titan enjoys peaceful and undisturbed possession
under all leases and licenses under which it is operating. Titan is not party
to or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had or, to the best of Titan's knowledge, may in the future have a
material adverse effect on the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of Titan and
the Surviving Corporation. Titan has not engaged within the last five years
in, is engaging in, or intends to engage in any transaction with, or has had
within the last five years, now has, or intends to have any contract,
agreement, instrument, lease, license, arrangement, or understanding with, any
stockholder of Titan, any director, officer, or employee of Titan (except for
employment agreements listed in Section E of the Titan Disclosure Letter and
employment and compensation arrangements described in Section F of the Titan
Disclosure Letter and contracts with individuals to be named director
following the Effective Time), any relative or affiliate of any stockholder of
Titan, any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder of Titan, any such director, officer, or
employee, or any such relative or affiliate then had or now has a 5% or
greater equity or voting or other substantial interest, other than those
listed and so specified in Section E of the Titan Disclosure Letter. The
stock ledgers and stock transfer books and the minute book records of Titan
relating to all issuances and transfers of stock by Titan and all proceedings
of the stockholders and the Board of Directors and committees thereof of Titan
since their respective incorporations made available to VNI's counsel are the
original stock ledgers and stock transfer books and minute book records of
Titan or exact copies thereof. Titan is not in violation or breach of, or in
default with respect to, any term of its certificate of incorporation (or
other charter document) or by-laws.
(h) Pension Plans; Employees.
(i) Titan does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of
Employee Benefit Plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or
34
has any obligation to, or customary arrangement with, employees
for bonuses, incentive compensation, vacations, severance pay,
sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or
written, except as set forth in Section F of the Titan Disclosure
Letter. Titan has furnished to VNI: (A) true and correct copies,
of all documents evidencing plans, obligations, or arrangements
referred to in Section F of the Titan Disclosure Letter (or true
and correct written summaries of such plans, obligations, or
arrangements to the extent not evidenced by documents) and true
and correct copies, so initialed, of all documents evidencing
trusts, summary plan descriptions, and any other summaries or
descriptions relating to any such plans; (B) the two most recent
annual reports (Form 5500's), if any, including all schedules
thereto and the most recent annual and periodic accounting of
related plan assets with respect to each Employee Benefit Plan;
(C) the two most recent actuarial valuations with respect to each
Pension Plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA; and (D) the most recent determination letter
issued by the Internal Revenue Service with respect to each
Pension Plan.
(ii) If any Employee Benefit Plan of Titan were to be
terminated on the day prior to the Effective Time, (A) no
liability under Title IV of ERISA would be incurred by Titan or
the Surviving Corporation and (B) all Accrued Benefits (as defined
in this Section 6.01(h)(ii)) to such day prior to the Effective
Time (whether or not vested) would be fully funded in accordance
with the assumptions contained in the regulations of the Pension
Benefit Guaranty Corporation governing the funding of terminated
35
defined benefit plans. For purposes of the preceding sentence and
this Section 6.02(h)(ii), "Accrued Benefits" shall include the
value of disability, pre-retirement, and death benefits, and all
supplements, subsidized, ancillary, and optional forms of
benefits. All Accrued Liabilities (for contributions or
otherwise) (as defined in this Section 6.01(h)(ii)) of Titan as of
the Effective Time to each Employee Benefit Plan and with respect
to each obligation to, or customary arrangement with, employees
for bonuses, incentive compensation, vacations, severance pay,
sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or
written, have been paid or accrued for all periods ending prior to
the Effective Time and no payment to any Employee Benefit Plan or
with respect to any such obligation or arrangement since the Last
Titan Balance Sheet Date has been disproportionately large
compared to prior payments. For purposes of the preceding
sentence and this Section 6.02(h)(ii), "Accrued Liabilities" shall
include a pro rata contribution to each Employee Benefit Plan or
with respect to each such obligation or arrangement for that
portion of a plan year or other applicable period which commences
prior to, and ends after, the Effective Time, and Accrued
Liabilities for any portion of a plan year or other applicable
period shall be determined by multiplying the liability for the
entire such year or period by a fraction, the numerator of which
is the number of days preceding the Effective Time in such year or
period and the denominator of which is the number of days in such
year or period, as the case may be.
36
(iii) There has been no violation of the reporting and
disclosure requirements imposed either under ERISA or the Code for
which a penalty has been or may be imposed with respect to any
Employee Benefit Plan of Titan. There has been no breach of
fiduciary duty or responsibility with respect to any Employee
Benefit Plan of Titan. No Employee Benefit Plan of Titan or
related trust has any liability of any nature, accrued or
contingent, including without limitation liabilities for Taxes,
other than for routine payments to be made in due course to
participants and beneficiaries, except as set forth in Section F
of the Titan Disclosure Letter. Titan does not have any formal
plan or commitment, whether or not legally binding, to create any
additional or modify any existing Employee Benefit Plan or benefit
obligation or arrangement described in Section 6.01(h)(i). Each
Employee Benefit Plan of Titan which is a group health plan within
the meaning of Section 5000(b)(1) of the Code is and has been
maintained in full compliance with the applicable requirements of
Section 4980B of the Code. Other than the health care
continuation requirements of Section 4980B of the Code, Titan does
not have any obligation to provide post-retirement medical
benefits or life insurance coverage or any deferred compensation
benefits to any present or former employees. There is no
litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending, threatened, or (to
the best of Titan's knowledge) in prospect (or any basis therefor
known to Titan) with respect to any Employee Benefit Plan of Titan
37
or related trust or with respect to any fiduciary, administrator,
or sponsor (in its capacity as such) of any Employee Benefit Plan.
No Employee Benefit Plan of Titan or related trust and no such
obligation or arrangement is in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree,
which violation or default would have a material adverse effect
thereon nor is Titan, any Employee Benefit Plan of Titan, or any
related trust required to take any action in order to avoid any
such violation or default. No event has occurred, is (to the best
of Titan's knowledge) threatened or about to occur which would
constitute a prohibited transaction under Section 406 of ERISA.
(iv) Each Pension Plan maintained for the employees of
Titan has been qualified, from its inception, under Section 401(a)
of the Code and any related trust has been an exempt trust for
such period under Section 501 of the Code. Each Pension Plan has
been operated in accordance with its terms. No Pension Plan which
is subject to Title IV of ERISA has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code.
No investigation or review by the Internal Revenue Service is
currently pending or (to the knowledge of Titan) is contemplated
in which the Internal Revenue Service has asserted or may assert
that any Pension Plan is not qualified under Section 401(a) of the
Code or that any related trust is not exempt under Section 501 of
the Code. Neither Titan, nor any organization to which Titan is a
successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has divested itself of any entity maintaining or
with an obligation to contribute to any Pension Plan which had an
"amount of unfunded benefit liabilities," as defined in Section
4001(a)(18) of ERISA, at the time of such divestiture. No
38
assessment of any federal taxes with respect to any Employee
Benefit Plan of Titan has been made or (to the knowledge of Titan)
is contemplated against Titan, or any related trust of any Pension
Plan of Titan and nothing has occurred which would result in the
assessment of unrelated business taxable income under the Code
with respect to any Employee Benefit Plan of Titan. Form 5500's
have been timely filed with respect to all Pension Plans of Titan.
No event has occurred or (to the knowledge of Titan) is threatened
or about to occur which would constitute a reportable event within
the meaning of Section 4043(b) of ERISA. No notice of termination
has been filed by the plan administrator pursuant to Section 4041
of ERISA or issued by the Pension Benefit Guaranty Corporation
pursuant to Section 4042 of ERISA with respect to any Pension Plan
of Titan.
(v) Titan does not currently contribute to and since
September 16, 1980 has not effectuated either a complete or
partial withdrawal from any multiemployer Pension Plan within the
meaning of Section 3(37) of ERISA.
(vi) Section F of the Titan Disclosure Letter contains a
true and correct statement of the names, relationship with Titan,
present rates of compensation (whether in the form of salary,
bonuses, commissions, or other supplemental compensation now or
hereafter payable), and aggregate compensation for the fiscal year
ended December 31, 2001 of (A) each director, officer, or other
employee of Titan whose aggregate compensation for the fiscal year
ended December 31, 2001 exceeded US$100,000 or whose aggregate
compensation presently exceeds the rate of US$100,000 per annum
and (B) all sales agents, dealers, or distributors of Titan.
39
Since December 31, 2001, Titan has not changed the rate of
compensation of any of its directors, officers, employees, agents,
dealers, or distributors, nor has any Employee Benefit Plan or
program of Titan been instituted or amended to increase benefits
thereunder. There is no contract, agreement, plan, arrangement,
or understanding covering any person that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible by Titan by reason of Section 280G of the
Code.
(i) Patents, Trademarks, Et Cetera. Titan does not own or have
pending, and is not licensed or otherwise permitted to use, any material
patent, patent application, trademark, trademark application, tradename,
service xxxx, copyright, copyright application, franchise, trade secret,
computer program (in object or source code form or otherwise), or other
intangible property or asset (collectively, "Intangibles"), other than as
described in Section C of the Titan Disclosure Letter. Each Intangible is
validly issued and is currently in force and uncontested in all jurisdictions
in which it is used or in which such use is contemplated. Section C of the
Titan Disclosure Letter contains a true and correct listing of: (i) all
Intangibles which are owned (either in whole or in part), used by, or licensed
to Titan or which otherwise relate to the businesses of Titan, and a
description of each such Intangible which identifies its owner, registrant, or
applicant; (ii) all contracts, agreements, instruments, leases, and licenses
and identification of all parties thereto under which Titan owns or uses any
Intangible (whether or not under license from third parties), together with
the identification of the owner, registrant, or applicant of each such
Intangible; (iii) all contracts, agreements, instruments, leases, and licenses
and identification of all parties thereto under which Titan grants the right
to use any Intangible; and (iv) all validity, infringement, right-to-use, or
40
other opinions of counsel (whether in-house or outside) which concern the
validity, infringement, or enforceability of any Intangible owned or
controlled by a party other than Titan which relates to the businesses,
properties, or assets of Titan. Except as specified in Section C of the Titan
Disclosure Letter: (v) Titan is the sole and exclusive owner or licensee of,
and (other than those licensed by Titan to a third party) has the right to
use, all Intangibles; (vi) no Intangible is subject to any order, judgment,
decree, contract, agreement, instrument, lease, or license restricting the
scope of the use thereof; (vii) during the last five years, Titan has not been
charged with, and has not charged others with, unfair competition,
infringement of any Intangible, or wrongful use of confidential information,
trade secrets, or secret processes; and (viii) Titan is not using any
patentable invention, confidential information, trade secret, or secret
process of others. There is no right under any Intangible necessary to the
businesses of Titan as presently conducted or as it contemplates conducting,
except such as are so designated in Section C of the Titan Disclosure Letter.
Titan has not infringed, is not infringing, and has not received notice of
infringement in respect of the Intangibles or asserted Intangibles of others,
nor has Titan been advised by counsel or others that it is infringing or may
infringe the Intangibles or asserted Intangibles of others if any currently
contemplated business activity is effectuated. To the knowledge of Titan,
there is no infringement by others of Intangibles of Titan. As far as Titan
can foresee, there is no Intangible or asserted Intangible of others which may
materially adversely affect the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of Titan.
All contracts, agreements, instruments, leases, and licenses pertaining to
Intangibles to which Titan is a party, or to which any of its businesses,
41
properties, or assets are subject, are in compliance with all laws, rules,
regulations, orders, judgments, and decrees binding on Titan or to which any
of its businesses, properties, or assets are subject. "Titan" is the only
xxxx, design, or name used by Titan to identify, respectively, its products,
businesses, or services. Neither any stockholder of Titan, any director,
officer, or employee of Titan, any relative or affiliate of any stockholder of
Titan or any such director, officer, or employee, nor any other corporation or
enterprise in which any stockholder of Titan, any such director, officer, or
employee, or any such relative or affiliate had or now has a 5% or greater
equity or voting or other substantial interest, possesses any Intangible which
relates to the businesses of Titan.
(j) Questionable Payments. Neither Titan, nor any director,
officer, agent, employee, or other person associated with, or acting on behalf
of, Titan, nor any stockholder of Titan has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment.
(k) Authority to Merge. Titan has all requisite power and
authority to execute, deliver, and perform this Agreement. All necessary
corporate proceedings of Titan have been duly taken to authorize the
execution, delivery, and performance of this Agreement by Titan, other than
approval of the holders of the requisite number of shares of Titan Common
Stock. This Agreement has been duly authorized, executed, and delivered by
Titan, constitutes the legal, valid, and binding obligation of Titan, and is
enforceable as to Titan in accordance with its terms. Except as otherwise set
forth in this Agreement, no consent, authorization, approval, order, license,
42
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal
is required by Titan for the execution, delivery, or performance of this
Agreement by Titan. No consent of any party to any material contract,
agreement, instrument, lease, license, arrangement, or understanding to which
Titan is a party, or to which its or any of its businesses, properties, or
assets are subject, is required for the execution, delivery, or performance of
this Agreement (except such consents referred to in Section E of the Titan
Disclosure Letter); and the execution, delivery, and performance of this
Agreement will not (if the consents referred to in Section E of the Titan
Disclosure Letter are obtained prior to the Effective Time) violate, result in
a breach of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default
under, entitle any party to receive rights or privileges that such party was
not entitled to receive immediately before this Agreement was executed under,
or create any obligation on the part of Titan or the Surviving Corporation to
which it was not subject immediately before this Agreement was executed under,
any term of any such material contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the certificate of incorporation (or other charter document) or by-laws of
Titan, or (if the provisions of this Agreement are satisfied) violate, result
in a breach of, or conflict with any law, rule, regulation, order, judgment,
or decree binding on Titan or to which any of its businesses, properties, or
assets are subject. Except as set forth in Section J of the Titan Disclosure
Letter, neither Titan nor any of its officers, directors, employees, or agents
has employed any broker or finder or incurred any liability for any fee,
commission, or other compensation payable by any person on account of alleged
employment as a broker or finder, or alleged performance of services as a
broker or finder, in connection with or as a result of this Agreement, the
Merger, or the other transactions contemplated by this Agreement. At the
43
Effective Time, the Surviving Corporation will have good and marketable title
in fee simple absolute to all the real properties and good title to all other
properties and assets used in the business of Titan or owned by Titan (except
real and other properties and assets held pursuant to leases or licenses
described in Sections B and C of the Titan Disclosure Letter), free and clear
of all liens, mortgages, security interests, pledges, charges, and
encumbrances (except those listed in Section D of the Titan Disclosure
Letter).
(l) Insurance. All policies of fire and other insurance against
casualty and other losses and public liability insurance carried by Titan are
described in Section I of the Titan Disclosure Letter (including the risks
covered and limits of such policies) and are in full force and effect. A full
and complete copy of each such insurance policy has been provided to VNI, and
such policies are summarized in Section I of the Titan Disclosure Letter. All
premiums in respect of such policies for which premium notices have been
received have been paid in full as the same become due and payable. Titan
hase not failed to give any notice or present any claim under any insurance
policy in due and timely fashion. There are no actual claims or claims
threatened in writing against Titan which could come within the scope of such
coverage nor are any such policies currently threatened with cancellation.
There are no outstanding requirements or recommendations by any insurance
company that issued a policy with respect to any of the assets, the
businesses, or operations of Titan or by any Board of Fire Underwriters or
other body exercising similar functions or by any governmental authority
requiring or recommending any repairs or other work to be done on, or with
respect to, any of the assets of Titan or requiring or recommending any
equipment or facilities to be installed on any premises from which the
44
respective businesses of Titan is conducted or in connection with any of the
respective assets thereof. Titan does not have any knowledge of any material
proposed increase in applicable insurance rates or of any conditions or
circumstances applicable to the businesses thereof which might result in such
increases. No such policy is terminable by virtue of the transactions
contemplated by this Agreement.
(m) Business Conducted in No Other Name. All business of Titan
has been conducted in its and for their benefit and there are no parties
related or affiliated with Titan, either directly or indirectly, which are
competing for the business of Titan. Titan conducts business in the following
name: "Titan".
(n) Customers and Suppliers. Other than in the ordinary course
of business, there has been no termination or cancellation of any relationship
between Titan and any material supplier, or any customer or group of customers
which, individually or in the aggregate, represented more than five percent of
the gross revenues of Titan taken as a whole during the fiscal year ended
December 31, 2001, nor is there any reason to believe that any such
terminations of such magnitudes are pending or threatened.
(o) Completeness of Disclosure. No representation or warranty
by Titan in this Agreement contains, or at the Effective Time will contain, an
untrue statement of material fact or omits or at the Effective Time will omit
to state a material fact required to be stated therein or necessary to make
the statements made not misleading. Notwithstanding the foregoing, such
representations and warranties by Titan shall be deemed to comply with, and
not be in breach or contravention of, or in default with respect to the
immediately preceding sentence to the extent that such representations and
warranties shall at the Effective Time be untrue in any material respect or
45
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading as a result of any transaction
contemplated hereby or in connection herewith.
Section 6.02 Certain Representations and Warranties of VNI and
Acquisition VNI and Acquisition each represents and warrants to Titan as
follows:
(a) Organization and Qualification. VNI owns all the
outstanding shares of capital stock of Acquisition. Other than Acquisition,
neither VNI nor Acquisition has a subsidiary or affiliate corporation or owns
any interest in any other enterprise (whether or not such enterprise is a
corporation). Section A of the letter, of even date herewith (the "VNI
Disclosure Letter") also correctly sets forth as to VNI and as to Acquisition
its place of incorporation, principal place of business, and the jurisdictions
in which it is qualified to do business. Each of VNI and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with all requisite power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use its properties and
assets and to carry on the businesses in which it is now engaged and the
businesses in which it contemplates engaging. Each of VNI and Acquisition is
duly qualified to transact the businesses in which it is engaged and is in
good standing as a foreign corporation in every jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of
its businesses makes such qualification necessary.
46
(b) Capitalization. The authorized capital stock of VNI
consists of 950,000,000 shares of VNI Common Stock, of which 99,211 shares are
outstanding. Each of such outstanding shares of VNI Common Stock and each
outstanding share of capital stock of Acquisition is validly authorized,
validly issued, fully paid, and nonassessable, has not been issued and is not
owned or held in violation of any preemptive or similar right of stockholders
and by the owner set forth in Section A of the VNI Disclosure Letter in the
case of VNI, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting trusts.
Except as described in Section A of the VNI Disclosure Letter, there is no
commitment, plan, or arrangement to issue, and no outstanding option, warrant,
or other right calling for the issuance of, any share of capital stock of VNI
or of Acquisition or any security or other instrument convertible into,
exercisable for, or exchangeable for capital stock of VNI or of Acquisition.
Except as described in Section A of the VNI Disclosure Letter, there is
outstanding no security or other instrument convertible into or exchangeable
for capital stock of VNI or of Acquisition.
(c) Financial Condition. VNI has filed with the SEC true and
correct copies of the following: audited balance sheets of VNI as of June 30,
2000, 2001, and 2002, and audited statements of income, statements of
stockholders' equity, and statements of cash flows of VNI for the years ended
June 30, 2001 and 2002. Each such balance sheet presents fairly the financial
condition, assets, liabilities, and stockholders' equity of VNI and
Acquisition as of its date; each such statement of income and statement of
stockholders' equity presents fairly the results of operations of VNI and
Acquisition for the period indicated; and each such statement of cash flows
presents fairly the information purported to be shown therein. The financial
statements referred to in this Section 6.02(c) have been prepared in
47
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and are in accordance with the books and
records of VNI and Acquisition. Since June 30, 2002:
(i) There has at no time been a material adverse change in
the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of VNI or
Acquisition.
(ii) Neither VNI nor Acquisition has authorized, declared,
paid, or effected any dividend or liquidating or other
distribution in respect of its capital stock or any direct or
indirect redemption, purchase, or other acquisition of any stock
of VNI or Acquisition.
(iii) The operations and businesses of VNI and Acquisition
have been conducted in all respects only in the ordinary course,
except as discussed in filings made by VNI with the SEC listed in
Section I of the VNI Disclosure Letter.
There is no fact known to VNI or Acquisition which materially adversely
affects or in the future (as far as VNI or Acquisition can reasonably foresee)
may materially adversely affect the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects
of VNI or of Acquisition; provided, however, that VNI and Acquisition express
no opinion as to political or economic matters of general applicability. VNI
and Acquisition have made known, or caused to be made known, to the accountant
or auditors who have prepared, reviewed, or audited the aforementioned
financial statements all material facts and circumstances which could affect
the preparation, presentation, accuracy, or completeness thereof.
48
(d) Tax and Other Liabilities. Neither VNI nor Acquisition has
any material liability of any nature, accrued or contingent, including without
limitation liabilities for Taxes and liabilities to customers or suppliers,
other than the following:
(A) Liabilities for which full provision has been made on
the consolidated balance sheet and the notes thereto (the "Last
VNI Balance Sheet") as of June 30, 2002 (the "Last VNI Balance
Sheet Date") referred to in Section 6.02(c);
(B) Other liabilities arising since the Last VNI Balance
Sheet Date and prior to the Effective Time in the ordinary course
of business (which shall not include liabilities to customers on
account of defective products or services) which are not
inconsistent with the representations and warranties of VNI or any
other provision of this Agreement; and
(C) The items described in Section H of the VNI Disclosure
Letter.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last VNI Balance Sheet are sufficient for all
accrued and unpaid Taxes of VNI and Acquisition, whether or not due and
payable and whether or not disputed, under tax laws, as in effect on the Last
VNI Balance Sheet Date or now in effect, for the period ended on such date and
for all fiscal periods prior thereto. The execution, delivery, and
performance of this Agreement by VNI and Acquisition will not cause any Taxes
to be payable other than by the stockholders of Titan or cause any lien,
charge, or encumbrance to secure any Taxes to be created either immediately or
upon the nonpayment of any Tax other than on the properties or assets of the
stockholders of Titan. Subject to Section H of the VNI Disclosure Letter, the
Internal Revenue Service has audited and settled or the statute of limitations
49
has run upon all federal income tax returns of VNI and Acquisition for all
taxable years up to and including the taxable year ended June 30, 2002. Each
of VNI and Acquisition has filed all federal, state, local, and foreign tax
returns required to be filed by it; has delivered to Titan a true and correct
copy of each such return which was filed in the past six years; has paid (or
has established on the Last VNI Balance Sheet a reserve for) all Taxes,
assessments, and other governmental charges payable or remittable by it or
levied upon it or its properties, assets, income, or franchises which are due
and payable; and has delivered to Titan a true and correct copy of any report
as to adjustments received by it from any taxing authority during the past six
years and a statement as to any litigation, governmental or other proceeding
(formal or informal), or investigation pending, threatened, or in prospect
with respect to any such report or the subject matter of such report.
(e) Litigation and Claims. Except as described in Section G of
the VNI Disclosure Letter, there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation
pending, to the best of VNI's knowledge, threatened, or in prospect (or any
basis therefor known to VNI or Acquisition) with respect to VNI or Acquisition
or any of their respective businesses, properties, or assets. Neither VNI nor
Acquisition is affected by any present or threatened strike or other labor
disturbance nor to the knowledge of VNI or Acquisition is any union attempting
to represent any employee of VNI or of Acquisition as collective bargaining
agent. Neither VNI nor Acquisition is in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree which
violation or default would have a material adverse effect on VNI or
Acquisition; nor is VNI or Acquisition required to take any action in order to
avoid such violation or default.
50
(f) Properties. Neither VNI nor Acquisitions owns any real
property. VNI and Acquisition has good title to all personal properties and
assets material to VNI and Acquisition taken as a whole and used in their
businesses or owned by them (except real and other properties and assets
material to VNI and Acquisition taken as a whole as are held pursuant to
leases or licenses described in Section B or C of the VNI Disclosure Letter),
free and clear of all liens, mortgages, security interests, pledges, charges,
and encumbrances (except such as are listed in Section D of the VNI Disclosure
Letter).
(i) Attached as Section B of the VNI Disclosure Letter is a
true and complete list of all tangible properties and assets owned
by VNI and Acquisition or leased or licensed by VNI or by
Acquisition from or to a third party (including inventory but not
including Intangibles), and with respect to such properties and
assets leased or licensed by VNI or by Acquisition from or to a
third party, a description of such lease or license. All such
properties and assets (including Intangibles) owned by VNI or by
Acquisition are reflected on the Last VNI Balance Sheet (except
for acquisitions subsequent to the Last VNI Balance Sheet Date and
prior to the Effective Time which are either noted in Section B or
C of the VNI Disclosure Letter or are approved in writing by
Titan). All tangible properties and assets owned by VNI or by
Acquisition or leased or licensed by VNI or by Acquisition from or
to a third party are in good and usable condition (reasonable wear
and tear which is not such as to affect adversely the operation of
the businesses of VNI or of Acquisition excepted).
51
(ii) To the best of VNI's knowledge, no real property
leased or licensed by VNI or by Acquisition from or to a third
party lies in an area which is, or will be, subject to zoning,
use, or building code restrictions which would prohibit, and, to
the best of VNI's knowledge, no state of facts relating to the
actions or inaction of another person or entity or his or its
ownership, leasing, or licensing of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, or licensing of such real property in the
businesses in which VNI or Acquisition is now engaged or the
businesses in which they contemplate engaging.
(iii) The properties and assets (including Intangibles)
owned by VNI and Acquisition (other than those leased or licensed
by VNI or Acquisition to a third party) or leased or licensed by
VNI or Acquisition from a third party constitute all such
properties and assets which are necessary to the businesses of VNI
or Acquisition as presently conducted.
(iv) Neither VNI nor Acquisition has caused or permitted
their respective businesses, properties, or assets to be used to
generate, manufacture, refine, transport, treat, store, handle,
dispose of, transfer, produce, or process any Hazardous Substance
except in compliance with all applicable laws, rules, regulations,
orders, judgments, and decrees, and has not caused or permitted
the Release of any Hazardous Substance on or off the site of any
property of VNI or Acquisition.
52
(g) Contracts and Other Instruments. Section D of the VNI
Disclosure Letter contains a true and correct statement of the information
required to be contained therein regarding material contracts, agreements,
instruments, leases, licenses, arrangements, or understandings with respect to
VNI and Acquisition, identifying whether the matter disclosed therein relates
to VNI or to Acquisition. VNI has filed with the SEC or furnished to Titan
(i) the certificate of incorporation (or other charter document) and by-laws
of VNI and Acquisition and all amendments thereto, as presently in effect, and
(ii) the following: (A) true and correct copies of all material contracts,
agreements, and instruments referred to in Section D of the VNI Disclosure
Letter; (B) true and correct copies of all material leases and licenses
referred to in Section B or C of the VNI Disclosure Letter; and (C) true and
correct written descriptions of all material supply, distribution, agency,
financing, or other arrangements or understandings referred to in Section D of
the VNI Disclosure Letter. To the best of VNI's knowledge, neither VNI nor
Acquisition nor (to the knowledge of VNI or Acquisition) any other party to
any such material contract, agreement, instrument, lease, or license is now or
expects in the future to be in violation or breach of, or in default with
respect to complying with, any term thereof, and each such material contract,
agreement, instrument, lease, or license is in full force and is (to the best
of VNI's knowledge in the case of third parties) the legal, valid, and binding
obligation of the parties thereto and (subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of creditors' rights
generally) is enforceable as to them in accordance with its respective terms.
Each such material supply, distribution, agency, financing, or other
arrangement or understanding is a valid and continuing arrangement or
understanding; neither VNI, Acquisition, nor any other party to any such
arrangement or understanding has given notice of termination or taken any
action inconsistent with the continuance of such arrangement or understanding;
53
and the execution, delivery, and performance of this Agreement will not
prejudice any such arrangement or understanding in any way. Each of VNI and
Acquisition enjoys peaceful and undisturbed possession under all material
leases and licenses under which it is operating. Neither VNI nor Acquisition
is party to or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had or (to the knowledge of VNI or Acquisition) may in the future
have a material adverse effect on the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects
of VNI or of Acquisition or of the Surviving Corporation. Neither VNI nor
Acquisition has engaged within the last five years in, is engaging in, or
intends to engage in any transaction with, or has had within the last five
years, now has, or intends to have any material contract, agreement,
instrument, lease, license, arrangement, or understanding with, any
stockholder of VNI, any director, officer, or employee of VNI or of
Acquisition (except for employment agreements listed in Section D of the VNI
Disclosure Letter and employment and compensation arrangements described in
Section E of the VNI Disclosure Letter), any relative or affiliate of any
stockholder of VNI or of any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder of VNI, any such director,
officer, or employee, or any such relative or affiliate then had or now has a
5% or greater equity or voting or other substantial interest, other than those
listed and so specified in Section D of the VNI Disclosure Letter. The stock
ledgers and stock transfer books relating to all issuances and transfers of
stock by VNI and Acquisition and the minute book records of VNI and
Acquisition and all proceedings of the stockholders and the Board of Directors
and committees thereof of VNI and Acquisition since their respective
incorporations made available to Titan's counsel are the original stock
ledgers and stock transfer books and minute book records of VNI and
Acquisition or exact copies thereof. Neither VNI nor Acquisition is in
violation or breach of, or in default with respect to, any term of its
certificate of incorporation (or other charter document) or by-laws.
54
(h) Employees.
(i) Neither VNI nor Acquisition has, or contributes to, any
pension, profit-sharing, option, other incentive plan, or any
other type of Employee Benefit Plan, or has any obligation to, or
customary arrangement with, employees for bonuses, incentive
compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund,
or other benefits, whether oral or written, except in the ordinary
course of business or as set forth in Section E of the VNI
Disclosure Letter. VNI has filed with the SEC or furnished to
Titan: (A) true and correct copies of all documents evidencing
plans, obligations, or arrangements referred to in Section E of
the VNI Disclosure Letter (or true and correct written summaries
of such plans, obligations, or arrangements to the extent not
evidenced by documents) and true and correct copies of all
documents evidencing trusts, summary plan descriptions, and any
other summaries or descriptions relating to any such plans; and
(B) the two most recent annual reports (Form 5500's), if any,
including all schedules thereto and the most recent annual and
periodic accounting of related plan assets with respect to each
Employee Benefit Plan of VNI or Acquisition. Neither VNI nor
Acquisition maintains, or contributes to, any Pension Plan.
(ii) If any Employee Benefit Plan of VNI or of Acquisition
were to be terminated on the day prior to the Effective Time, (A)
no liability under Title IV of ERISA would be incurred by VNI or
55
Acquisition and (B) all Accrued Benefits to such day prior to the
Effective Time (whether or not vested) would be fully funded in
accordance with the assumptions contained in the regulations of
the Pension Benefit Guaranty Corporation governing the funding of
terminated defined benefit plans. All Accrued Liabilities (for
contributions or otherwise) of VNI or Acquisition as of the
Effective Time to each Employee Benefit Plan of VNI or Acquisition
and with respect to each obligation to or customary arrangement
with employees for bonuses, incentive compensation, vacations,
severance pay, sick pay, sick leave, insurance, service award,
relocation, disability, tuition refund, or other benefits, whether
oral or written, have been paid or accrued for all periods ending
prior to the Effective Time and no payment to any Employee Benefit
Plan of VNI or Acquisition or with respect to any such obligation
or arrangement since the Last VNI Balance Sheet Date has been
disproportionately large compared to prior payments.
(iii) There has been no violation of the reporting and
disclosure requirements imposed either under ERISA or the Code for
which a penalty has been or may be imposed with respect to any
Employee Benefit Plan of VNI or of Acquisition. There has been no
breach of fiduciary duty or responsibility with respect to any
Employee Benefit Plan of VNI or Acquisition. No Employee Benefit
Plan of VNI or Acquisition or related trust has any liability of
any nature, accrued or contingent, including without limitation
liabilities for Taxes, other than for routine payments to be made
in due course to participants and beneficiaries, except as set
56
forth in Section E of the VNI Disclosure Letter. Neither VNI nor
Acquisition has any formal plan or commitment to create any
additional or modify any existing Employee Benefit Plan of VNI or
Acquisition or benefit obligation or arrangement described in
Section 6.02(h)(i). Each Employee Benefit Plan of VNI or
Acquisition which is a group health plan within the meaning of
Section 5000(b)(1) of the Code is and has been maintained in full
compliance with the applicable requirements of Section 4980B of
the Code. Other than the health care continuation requirements of
Section 4980B of the Code, neither VNI nor Acquisition has any
obligation to provide post-retirement medical benefits or life
insurance coverage or any deferred compensation benefits to any
present or former employees. There is no litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or (to the best of VNI's
knowledge) in prospect (or any basis therefor known to VNI or
Acquisition) with respect to any Employee Benefit Plan or related
trust of VNI or Acquisition or with respect to any fiduciary,
administrator, or sponsor (in its capacity as such) of any such
Employee Benefit Plan. No Employee Benefit Plan of VNI or
Acquisition or related trust and no such obligation or arrangement
is in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree nor is VNI, Acquisition,
any Employee Benefit Plan of VNI or Acquisition, or any related
trust required to take any action in order to avoid violation or
default. No event has occurred or (to the knowledge of VNI or
Acquisition) is threatened or about to occur which would
constitute a prohibited transaction under Section 406 of ERISA.
57
(iv) No assessment of any federal taxes with respect to any
Employee Benefit Plan of VNI or Acquisition has been made or (to
the knowledge of VNI or Acquisition) is contemplated against VNI,
Acquisition, or any related trust and nothing has occurred which
would result in the assessment of unrelated business taxable
income under the Code with respect to any Employee Benefit Plan of
VNI or Acquisition. No event has occurred or (to the knowledge of
VNI or Acquisition) is threatened or about to occur which would
constitute a reportable event within the meaning of Section
4043(b) of ERISA.
(v) Neither VNI nor Acquisition currently contributes to,
or since September 26, 1980 has effectuated, either a complete or
partial withdrawal from any multiemployer Pension Plan within the
meaning of Section 3(37) of ERISA.
(vi) Section E of the VNI Disclosure Letter contains a true
and correct statement of the names, relationship with VNI or
Acquisition, present rates of compensation (whether in the form of
salary, bonuses, commissions, or other supplemental compensation
now or hereafter payable), and aggregate compensation for the
fiscal year ended June 30, 2001 of (A) each director, officer, or
other employee of VNI or of Acquisition whose aggregate
compensation for the fiscal year ended June 30, 2001 exceeded
$10,000 or whose aggregate compensation presently exceeds the rate
of US$10,000 per annum and (B) all sales agents, dealers, or
distributors of VNI or of Acquisition. Since June 30, 2001,
neither VNI nor Acquisition has changed the rate of compensation
of any of its directors, officers, employees, agents, dealers, or
distributors, nor has any Employee Benefit Plan or program been
58
instituted or amended to increase benefits thereunder. There is
no contract, agreement, plan, arrangement, or understanding
covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by
VNI or Acquisition by reason of Section 280G of the Code.
(i) Patents, Trademarks, Et Cetera. Neither VNI nor Acquisition
owns or has pending, or is licensed or otherwise permitted to use, any
material Intangibles, other than as described in Section C of the VNI
Disclosure Letter. Each Intangible is validly issued and is currently in
force and uncontested in all jurisdictions in which it is used or in which
such use is contemplated. Section C of the VNI Disclosure Letter contains a
true and correct listing of: (i) all Intangibles which are owned (either in
whole or in part), used by, or licensed to VNI or Acquisition or which
otherwise relate to the businesses of VNI or Acquisition, and a description of
each such Intangible which identifies its owner, registrant, or applicant;
(ii) all contracts, agreements, instruments, leases, and licenses and
identification of all parties thereto under which VNI or Acquisition owns or
uses any Intangible (whether or not under license from third parties),
together with the identification of the owner, registrant, or applicant of
each such Intangible; (iii) all contracts, agreements, instruments, leases,
and licenses and identification of all parties thereto under which VNI or
Acquisition grants the right to use any Intangible; and (iv) all validity,
infringement, right-to-use, or other opinions of counsel (whether in-house or
outside) which concern the validity, infringement, or enforceability of any
Intangible owned or controlled by a party other than VNI or Acquisition which
relates to the businesses, properties, or assets of VNI or Acquisition.
Except as specified in Section C of the VNI Disclosure Letter, to the
59
knowledge of VNI: (v) VNI or Acquisition, as the case may be, is the sole and
exclusive owner or licensee of, and (other than those exclusively licensed by
VNI or Acquisition to a third party) has the right to use, all Intangibles;
(vi) no Intangible is subject to any order, judgment, decree, contract,
agreement, instrument, lease, or license restricting the scope of the use
thereof; (vii) during the last five years, neither VNI nor Acquisition has
been charged with, or has charged others with, unfair competition,
infringement of any Intangible, or wrongful use of confidential information,
trade secrets, or secret processes; and (viii) neither VNI nor Acquisition is
using any patentable invention, confidential information, trade secret, or
secret process of others. There is no right under any Intangible necessary to
the businesses of VNI or of Acquisition as presently conducted or as they
contemplate conducting, except such as are so designated in Section C of the
VNI Disclosure Letter. Except as described in Section C of the VNI Disclosure
Letter, neither VNI nor Acquisition has infringed, is infringing, or has
received notice of infringement in respect of the Intangibles or asserted
Intangibles of others, nor has VNI or Acquisition been advised by counsel or
others that it is infringing or may infringe the Intangibles or asserted
Intangibles of others if any currently contemplated business activity is
effectuated. To the knowledge of VNI or Acquisition there is no infringement
by others of Intangibles of VNI or Acquisition. As far as VNI or Acquisition
can reasonably foresee, there is no Intangible or asserted Intangible of
others which may materially adversely affect the financial condition, results
of operations, businesses, properties, assets, liabilities, or future
prospects of VNI or of Acquisition. All material contracts, agreements,
instruments, leases, and licenses pertaining to Intangibles to which VNI or
Acquisition is a party, or to which any of their respective businesses,
properties, or assets are subject, are in compliance in all material respects
with all laws, rules, regulations, orders, judgments, and decrees binding on
VNI or Acquisition or to which any of their respective businesses, properties,
60
or assets are subject. VNI or Acquisition has reserved the corporate "dba"
fictitious name "Titan General Holdings, Inc." in the states of Nevada and
Utah and intends to use such name to identify, respectively, its products,
businesses, or services following the Effective Time. Neither any stockholder
of VNI, any director, officer, or employee of VNI or of Acquisition, any
relative or affiliate of any stockholder of VNI, any such director, officer,
or employee, nor any other corporation or enterprise in which any stockholder
of VNI, any such director, officer, or employee, or any such relative or
affiliate had or now has a 5% or greater equity or voting or other substantial
interest, possesses any Intangible which relates to the businesses of VNI or
Acquisition.
(j) Questionable Payments. Neither VNI, Acquisition, nor any
director, officer, agent, employee, or other person associated with, or acting
on behalf of, VNI or Acquisition, nor any stockholder of VNI has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment.
(k) Authority to Merge. VNI and Acquisition, as applicable,
each has all requisite power and authority to execute, deliver, and perform
this Agreement, and each of the Employment Agreements (together, the
"Transaction Agreements"). All necessary corporate proceedings of VNI or
Acquisition have been duly taken to authorize the execution, delivery, and
performance of the Transaction Agreements by VNI and Acquisition (other than
61
approval of the holders of the requisite number of shares of VNI Common Stock
in the case of this Agreement, if required). This Agreement has been duly
authorized, executed, and delivered by VNI and Acquisition, constitutes the
legal, valid, and binding obligation of VNI and Acquisition, and is
enforceable as to them in accordance with its terms. Each of the Employment
Agreements has been duly authorized by Acquisition and, upon the execution and
delivery thereof by Acquisition and the satisfaction of the conditions set
forth therein, will constitute legal, valid, and binding obligation of the
Surviving Corporation enforceable as to it in accordance with its term.
Except as otherwise set forth in this Agreement, no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental authority or any
court or other tribunal is required by VNI or Acquisition for the execution,
delivery, or performance of this Agreement by VNI or Acquisition. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by VNI or Acquisition for
the execution, delivery, or performance of any Employment Agreement by
Acquisition. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which VNI or
Acquisition is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of any Transaction Agreement (except such consents
referred to in Section D of the VNI Disclosure Letter); and the execution,
delivery, and performance of the Transaction Agreements will not (if the
consents referred to in Section D of the VNI Disclosure Letter are obtained
prior to the Effective Time) violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to receive
rights or privileges that such party was not entitled to receive before any
62
such Transaction Agreement was executed under, or create any obligation on the
part of VNI or Acquisition to which it was not subject immediately before this
Agreement was executed under, any term of any such material contract,
agreement, instrument, lease, license, arrangement, or understanding, or
violate or result in a breach of any term of the certificate of incorporation
(or other charter document) or by-laws of VNI or Acquisition, or (if the
provisions of this Agreement are satisfied) violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
VNI or Acquisition or to which any of their respective businesses, properties,
or assets are subject, which violation or breach would have a material adverse
effect on VNI and Acquisition taken as a whole. Neither VNI, Acquisition, nor
any of their respective officers, directors, employees, or agents has employed
any broker or finder or incurred any liability for any fee, commission, or
other compensation payable by any person on account of alleged employment as a
broker or finder, or alleged performance of services as a broker or finder, in
connection with or as a result of this Agreement, the Merger, or the other
transactions contemplated by this Agreement.
(l) Status of VNI Common Stock To Be Issued. Assuming without
investigation that the shares of Titan Common Stock at the Effective Time will
be validly authorized, validly issued, fully paid, and nonassessable, the
shares of VNI Common Stock to be issued in the Merger are validly authorized
and, when the Merger has become effective and the shares of VNI Common Stock
have been duly delivered pursuant to the terms of this Agreement, such shares
of VNI Common Stock will be validly issued, fully paid, and nonassessable, and
will not be issued or owned or held in violation of any preemptive or similar
right of stockholders.
63
(m) Insurance. All policies of fire and other insurance against
casualty and other losses and public liability insurance carried by VNI and
Acquisition are described in Section F of the VNI Disclosure Letter (including
the risks covered and limits of such policies) and are in full force and
effect. All premiums in respect of such policies for which premium notices
have been received have been paid in full as the same become due and payable.
VNI and Acquisition have not failed to give any notice or present any claim
under any insurance policy in due and timely fashion. There are no actual
claims or claims threatened in writing against VNI or Acquisition which could
come within the scope of such coverage nor are any such policies currently
threatened with cancellation. There are no outstanding requirements or
recommendations by any insurance company that issued a policy with respect to
any of the respective assets, the businesses, or operations of VNI or
Acquisition or by any Board of Fire Underwriters or other body exercising
similar functions or by any governmental authority requiring or recommending
any repairs or other work to be done on, or with respect to, any of the
respective assets of VNI or Acquisition or requiring or recommending any
equipment or facilities to be installed on any premises from which the
respective businesses of VNI or Acquisition is conducted or in connection with
any of the respective assets thereof. VNI and Acquisition do not have any
knowledge of any material proposed increase in applicable insurance rates or
of any conditions or circumstances applicable to the respective businesses
thereof which might result in such increases. No such policy is terminable by
virtue of the transactions contemplated by this Agreement.
(n) Trading Matters. At the date hereof and at the Effective
Time:
64
(i) the VNI Common Stock is and shall be included for
quotation on the OTC Bulletin Board;
(ii) VNI has and shall have performed or satisfied all of
its undertakings to, and of its obligations and requirements with,
the SEC; and
(iii) VNI is not, and shall not be, in default of any
undertaking to, or obligation or requirement with, the OTC
Bulletin Board.
(o) Reorganization.
(i) Neither VNI nor Acquisition has taken or agreed to take
any action (other than actions contemplated by this Agreement) that could
reasonably be expected to prevent the Merger from constituting a
"reorganization" under section 368(a) of the Code. VNI is not aware of any
agreement, plan, or other circumstance that could reasonably be expected to
prevent the Merger from so qualifying.
(ii) VNI has no plan or intention to liquidate Surviving
Corporation following the merger or close Surviving Corporation to sell or
otherwise dispose of any assets of Titan acquired in the merger, except for
dispositions made in the ordinary course of business or transfers described in
section 368(a)(2)(C) of the Code and the Treasury Regulations issued
thereunder.
(iii) VNI has no plan or intention to reacquire, and, to
VNI's knowledge, no person related to VNI within the meaning of Treasury
Regulations Section 1.368-1. has a plan or intention to acquire, any of the
VNI Common Stock issued in the Merger.
65
(p) Completeness of Disclosure. No representation or warranty
by VNI or Acquisition in this Agreement contains or and at the Effective Time
will contain an untrue statement of material fact or omits or at the Effective
Time will omit to state a material fact required to be stated therein or
necessary to make the statements made not misleading.
(q) Period Reporting. The VNI Common Stock has been registered
under Section 12 of the Exchange Act and VNI is subject to the periodic
reporting requirements of Section 13 of the Exchange Act. VNI has heretofore
provided to Titan true, complete, and correct copies of all forms, reports,
schedules, statements, and other documents required to be filed by it under
the Exchange Act since at least June 30, 2001 as such documents have been
amended since the time of the filing thereof (the "VNI SEC Documents"). The
VNI SEC Documents, including, without limitation, any financial statements and
schedules included therein, at the time filed or, if subsequently amended, as
so amended, (i) did not contain any untrue statement of a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) complied in all respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder. The financial statements included in the VNI SEC Documents
complied when filed as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited financial statements, as permitted by the rules and
regulations of the SEC) and fairly present, subject in the case of the
unaudited financial statements, to customary year end audit adjustments, the
66
financial position of VNI and its subsidiaries, if any, as at the dates
thereof and the results of its operations and cash flows.
VII. CONDITIONS; ABANDONMENT AND TERMINATION
Section 7.01 Right of VNI and Acquisition to Abandon
VNI's and Acquisition's Boards of Directors shall have the right
to abandon or terminate the Merger if any of the following conditions shall
not be true or shall not have occurred, as the case may be, as of the
specified date or dates:
(a) Accuracy of Representations and Compliance With Conditions.
Subject to Section 6.01(o) hereof, all representations and warranties of Titan
contained in this Agreement shall be accurate when made and, in addition,
shall be accurate as of the Effective Time as though such representations and
warranties were then made in exactly the same language by Titan and regardless
of knowledge or lack thereof on the part of Titan or changes beyond its
control; as of the Effective Time Titan shall have performed and complied with
all covenants and agreements and satisfied all conditions required to be
performed and complied with by it at or before the Effective Time,
respectively, by this Agreement; and VNI and Acquisition shall have received a
certificate executed by the chief executive officer and the chief financial
officer of Titan, dated the Effective Time, to that effect.
(b) Certificates from Titan. VNI and Acquisition shall have
received at the Effective Time certificates executed by the chief executive
officer and the chief financial officer of Titan as of such dates, to the
effect that they have carefully examined the Periodic Reports, and any
amendment or supplement thereto, and, to the best of their knowledge, (i)
neither the Periodic Reports, nor any amendment or supplement thereto (A)
contains an untrue statement of a material fact or (B) omits to state a
67
material fact required to be stated therein or necessary to make the
statements therein not false or misleading, provided in each case that such
untrue statement or omission relates to information furnished by or on behalf
of, or pertaining to, Titan or any Titan security holder, (ii) since the date
hereof, no event with respect to Titan or any Titan security holder has
occurred which should have been set forth in an amendment to any Periodic
Report, or a supplement to any Periodic Report which has not been set forth in
such an amendment or supplement, and (iii) any contract, agreement,
instrument, lease, or license regarding Titan required to be filed as an
exhibit to any Periodic Report has been filed with the SEC as an exhibit to or
has been incorporated as an exhibit by reference into such Periodic Report.
(c) Opinion of Titan's Counsel. VNI and Acquisition shall have
received at the date hereof and at the Effective Time, opinion of Reitler
Xxxxx LLC, counsel for Titan, dated as of such dates, addressed to VNI and
Acquisition, in form attached hereto as Exhibit 7.01(c).
In giving the foregoing opinions, such counsel may rely on other
opinions, may make those assumptions, and may take those qualifications
theretofore agreed to by VNI.
(d) Accountants' Letter. Titan shall have delivered to VNI and
Acquisition at the Effective Time, letters from Stonefield Xxxxxxxxx Inc.,
dated as of those dates, addressed to VNI and Acquisition, in form and
substance satisfactory to VNI and Acquisition.
(e) Other Closing Documents. Titan shall have delivered to VNI
and Acquisition at or prior to the Effective Time such other documents
(including certificates of officers of Titan) as VNI may reasonably request in
order to enable VNI and Acquisition to determine whether the conditions to
68
their obligations under this Agreement have been met and otherwise to carry
out the provisions of this Agreement.
(f) Review of Proceedings. All actions, proceedings,
instruments, and documents required by Titan to carry out this Agreement or
incidental thereto and all other related legal matters shall be subject to the
reasonable approval of Xxxxxxx Xxxxxxxxxx, Esq., counsel to VNI and
Acquisition, and Titan shall have furnished such counsel such documents as
such counsel may have reasonably requested for the purpose of enabling them to
pass upon such matters.
(g) Legal Action. At the Effective Time, there shall not be
pending any legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
(h) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree
proposed, promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of VNI, (i) makes this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement illegal, (ii) results in a delay
in the ability of Titan, VNI, or Acquisition to consummate the Merger or any
of the other transactions contemplated by this Agreement beyond December 31,
2002, (iii) requires the divestiture by VNI of a material portion of the
business of either VNI and Acquisition taken as a whole, or of Titan, (iv)
imposes material limitations on the ability of VNI effectively to exercise
69
full rights of ownership of shares of the Surviving Corporation including the
right to vote such shares on all matters properly presented to the
stockholders of the Surviving Corporation, or (v) otherwise prohibits,
restricts, or delays consummation of the Merger or any of the other
transactions contemplated by this Agreement or impairs the contemplated
benefits to VNI or Acquisition of this Agreement, the Merger, or any of the
other transactions contemplated by this Agreement.
(i) Trading Matters. If required thereby, the OTC Bulletin
Board shall, at or prior to the Effective Time, have approved the inclusion
thereon of the VNI Common Stock to be issued in the Merger.
(j) Governmental Approval. The parties to this Agreement shall
have obtained at or prior to the Effective Time all unconditional written
approval to this Agreement and to the execution, delivery, and performance of
this Agreement by each of them of relevant governmental authorities having
jurisdiction over VNI, Acquisition, or Titan or the subject matter of this
Agreement.
(k) "Blue-Sky" Law Compliance. At or prior to the Effective
Time, VNI and Acquisition shall have made all filings, and taken all actions,
necessary to comply with all applicable "blue-sky" laws with regard to the
issuance of VNI Common Stock as contemplated by this Agreement other than the
filing of Form D up to 15 days following the Effective Time. Without limiting
the generality of the foregoing, any prescribed periods within which a "blue-
sky" or securities law administrator may disallow VNI's or Acquisition's
notice of reliance on an exemption from such state's requirements, shall have
elapsed at or prior to the Effective Time.
70
(l) Contractual Consents Needed. The parties to this Agreement
shall have obtained at or prior to the Effective Time all consents required
for the consummation of the Merger and the other transactions contemplated by
this Agreement from any unrelated third party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
is a party, or to which any of them or any of their respective businesses,
properties, or assets are subject.
(m) Employment Agreements. Each of the Employment Agreements
shall have been duly authorized, executed, and delivered by the parties
thereto at or prior to the Effective Time; shall at the Effective Time be in
full force, valid, and binding upon the parties thereto; and shall (subject to
applicable bankruptcy, insolvency, and other laws affecting the enforceability
of creditors' rights generally) be enforceable by them in accordance with
their terms at the Effective Time, and no employee therein at any time from
the execution thereof until immediately after the Effective Time shall have
been in violation of or in default in complying with any material term
thereof.
(n) Material Adverse Change. There shall not have been any
material adverse change in the condition (financial or otherwise), operations,
business, assets, liabilities, earnings or prospects of Titan since the date
hereof.
(o) Due Diligence. VNI and Acquisition shall conduct a due
diligence review of Titan, including, without limitation, a review of the
Titan Disclosure Letter and the documents referenced therein delivered prior
to the Effective Time, and shall be reasonably satisfied with the result of
such review.
71
(p) Financing. At or prior to the Effective Time, Titan shall
have consummated a private offering of shares of Titan Common Stock exempt
from registration under Section 5 of the Securities Act to a limited number of
"accredited investors" or "sophisticated investors" as those terms are defined
in Rule 501 of the Securities and Exchange Commission. The offering price per
share of Titan Common Stock shall be $1.50.
(q) Asset Contributions. (i) At or prior to the Effective
Time, SVPC Partners, LLC, a Delaware limited liability company ("SVPC"), shall
have contributed to Titan certain of its assets pursuant to the Contribution
Agreement and Assignment and Assumption of Liabilities, substantially in the
form of Exhibit 7.01(q)(i) hereto.
(ii) At or prior to the Effective Time, Xxxxx Xxxxxx shall
have contributed to Titan certain pursuant to the Contribution Agreement,
Assignment and Assumption of Liabilities, substantially in the form of Exhibit
7.01(q)(ii) hereto.
(r) Debt Conversion. At or prior to the Effective Time Forest
Home Investors I, LLC and Phoenix Business Trust, Lenders of Titan, shall
convert certain indebtedness of Titan owed to it (which the principal amount
of the date hereof was $10,000.00 and $185,734.60, respectively) into an
aggregate of 6,667 shares and 123,823 shares, respectively, of Titan Common
Stock.
Section 7.02 Right of Titan to Abandon
Titan's Board of Directors shall have the right to abandon or
terminate the Merger if any of the following shall not be true or shall not
have occurred, as the case may be, as of the specified date or dates:
(a) Accuracy of Representations and Compliance With Conditions.
All representations and warranties of VNI and Acquisition contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as
72
of the Effective Time as though such representations and warranties were then
made in exactly the same language by VNI and Acquisition and regardless of
knowledge or lack thereof on the part of VNI and Acquisition or changes beyond
their control; as of the Effective Time, VNI and Acquisition shall have
performed and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by them at or before the
Effective Time by this Agreement; and Titan shall have received certificates
executed by the chief executive officer and the chief financial officer of VNI
and the chief executive officer and the chief financial officer of
Acquisition, dated the Effective Time, to that effect.
(b) Certificates from VNI and Acquisition. Titan shall have
received at the Effective Time, certificates executed by the chief executive
officer and the chief financial officer of VNI and the chief executive officer
and the chief financial officer of Acquisition, dated as of such dates, to the
effect that they have carefully examined the Periodic Reports, and any
amendment or supplement thereto, and, to the best of their knowledge, (i)
neither any Periodic Report, nor any amendment or supplement thereto (A)
contains an untrue statement of a material fact or (B) omits to state a
material fact required to be stated therein or necessary to make the
statements therein not false or misleading, provided in each case that such
untrue statement or omission relates to information furnished by or on behalf
of, or pertaining to, VNI, Acquisition, or any VNI security holder, (ii) since
the date of the filing of any Periodic Report, no event with respect to VNI,
Acquisition, or any VNI security holder has occurred which should have been
set forth in an amendment or a supplement to such Periodic Report which has
not been set forth in such an amendment or supplement, and (iii) any contract,
agreement, instrument, lease, or license regarding VNI or Acquisition required
73
to be filed as an exhibit to any Periodic Report has been filed as an exhibit
to or has been incorporated as an exhibit by reference into such Periodic
Report.
(c) Opinion of VNI's and Acquisition's Counsel. Titan shall
have received at the date hereof and at the Effective Time opinions of Xxxxxxx
Xxxxxxxxxx, Esq., counsel to VNI and Acquisition, dated as of such dates,
addressed to Titan, in the form attached hereto as Exhibit 7.02(c).
In giving such opinion, Xxxxxxx Xxxxxxxxxx, Esq. may rely upon
those matters, may rely on other opinions, may make those assumptions, and may
take those qualifications heretofore agreed to by Titan.
(d) Other Closing Documents. VNI and Acquisition shall have
delivered to Titan at or prior to the Effective Time such other documents
(including certificates of officers of VNI or of Acquisition) as Titan may
reasonably request in order to enable Titan to determine whether the
conditions to its obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
(e) Review of Proceedings. All actions, proceedings,
instruments, and documents required by VNI or Acquisition to carry out this
Agreement or incidental thereto and all other related legal matters shall be
subject to the reasonable approval of Reitler Xxxxx LLC, counsel to Titan, and
VNI or Acquisition shall have furnished such counsel such documents as such
counsel may have reasonably requested for the purpose of enabling them to pass
upon such matters.
74
(f) Legal Action. At the Effective Time there shall not be
pending any legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
(g) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree
proposed, promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Titan, (i) makes this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement illegal, (ii) results in a delay
in the ability of VNI, Acquisition, or Titan to consummate the Merger or any
of the other transactions contemplated by this Agreement beyond December 31,
2001, or (iii) otherwise prohibits, restricts, or delays consummation of the
Merger or any of the other transactions contemplated by this Agreement or
impairs the contemplated benefits to the stockholders of Titan of this
Agreement, the Merger, or any of the other transactions contemplated by this
Agreement.
(h) Trading Matters. (i) If required, the OTC Bulletin Board
shall, at or prior to the Effective Time, have approved the inclusion of the
VNI Common Stock to be issued in the Merger.
(ii) The VNI Common Stock shall be included for quotation
on the OTC Bulletin Board.
75
(i) Governmental Approval. The parties to this Agreement shall
have obtained at or prior to the Effective Time all unconditional written
approval to this Agreement and to the execution, delivery, and performance of
this Agreement by each of them of relevant governmental authorities having
jurisdiction over VNI, Acquisition, or Titan or the subject matter of this
Agreement.
(j) "Blue Sky" Law Compliance. At or prior to the Effective
Time, VNI and Acquisition shall have made all filings, and taken all actions,
necessary to comply with all applicable "blue-sky" laws with regard to the
issuance of VNI Common Stock as contemplated by this Agreement other than the
filing of Form D up to 15 days following the Effective Time. Without limiting
the generality of the foregoing, any prescribed periods within which a "blue
sky" or securities law administrator may disallow VNI's or Acquisition's
notice of reliance on an exemption from such state's requirements, shall have
elapsed at or prior to the Effective Time.
(k) Contractual Consents Needed. The parties to this Agreement
shall have obtained at or prior to the Effective Time all consents required
for the consummation of the Merger and the other transactions contemplated by
this Agreement from any unrelated third party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
is a party, or to which any of them or any of their respective businesses,
properties, or assets are subject.
(l) Employment Agreements. Each of the Employment Agreements
shall have been duly authorized, executed, and delivered by the parties
thereto at or prior to the Effective Time; shall at the Effective Time be in
full force, valid, and binding upon the parties thereto; and shall (subject to
applicable bankruptcy, insolvency, and other laws affecting the enforceability
76
of creditors' rights generally) be enforceable by them in accordance with
their terms at the Effective Time, and no employee therein at any time from
the execution thereof until immediately after the Effective Time shall have
been in violation of or in default in complying with any material term
thereof.
(m) Due Diligence. Titan shall conduct a due diligence review
of VNI and Acquisition, including, without limitation, a review of the VNI
Disclosure Letter and the documents referenced therein delivered prior to the
Effective Time, and same shall be satisfactory in the reasonable opinion of
Titan.
VIII. ADDITIONAL TERMS OF ABANDONMENT
Section 8.01 Mandatory Abandonment
The Merger shall be abandoned or terminated if:
(a) in the event that the meeting of stockholders of VNI
referred to in Section 3.01 is required, the holders of at least a majority of
the shares of VNI Common Stock outstanding and entitled to vote at such
meeting of stockholders shall not have voted in favor of the adoption and
approval of this Agreement, the Merger, and the other transactions
contemplated hereby; or
(b) the holders of at least a majority of the shares of Titan
Common Stock outstanding and entitled to vote at the meeting of stockholders
of Titan referred to in Section 3.01 shall not have voted in favor of the
adoption and approval of this Agreement, the Merger, and the other
transactions contemplated hereby.
77
Section 8.02 Optional Abandonment
In addition to the provisions of Article VII, the Merger may be
abandoned or terminated at or before the Effective Time notwithstanding
adoption and approval of this Agreement, the Merger, and the other
transactions contemplated hereby by the stockholders of the parties hereto:
(a) by mutual agreement of the Boards of Directors of VNI,
Acquisition, and Titan;
(b) at the option of VNI's and Acquisition's Boards of Directors
or Titan's Board of Directors, if the Effective Time shall not have occurred
on or before December 31, 2002;
(c) at the option of VNI's and Acquisition's Boards of
Directors, if facts exist which render impossible compliance with one or more
of the conditions set forth in Section 7.01 and such are not waived by VNI;
and
(d) at the option of Titan's Board of Directors, if facts exist
which render impossible compliance with one or more of the conditions set
forth in Section 7.02 and such are not waived by Titan.
Section 8.03 Effect of Abandonment
If the Merger is abandoned or terminated as provided for in Article VII
or in this Article VIII, except for Sections 5.01(h), 5.01(m), and 5.02(e),
and Article IX, this Agreement shall forthwith become wholly void and of no
further force or effect without liability on the part of either party to this
78
Agreement or on the part of any officer, director, controlling person (if
any), employee, counsel, agent, or stockholder thereof; provided, however,
that nothing in this Section 8.03 shall release VNI, Acquisition, or Titan or
any officer, director, controlling person (if any), employee, counsel, agent,
or stockholder thereof from liability for a willful failure to carry out its
respective obligations under this Agreement.
IX. MISCELLANEOUS
Section 9.01 Further Actions
At any time and from time to time, each party agrees, at its expense, to
take such actions and to execute and deliver such documents as may be
reasonably necessary to effectuate the purposes of this Agreement.
Section 9.02 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement could not adequately
be compensated by money damages, any party shall be entitled, either before or
after the Effective Time, in addition to any other right or remedy available
to it, to an injunction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement, and, in either
case, no bond or other security shall be required in connection therewith, and
the parties hereby consent to the issuance of such an injunction and to the
ordering of specific performance.
Section 9.03 Survival; Knowledge
The covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall not survive the Effective Time,
except for those contained in or made pursuant to Sections 2.01, 5.01(m), and
Article IX. The statements contained in any document executed by VNI or
Acquisition relating hereto or delivered to Titan in connection with the
79
transactions contemplated hereby or thereby, or in any statement, certificate,
or other instrument delivered by or on behalf of VNI or Acquisition pursuant
hereto or thereto or delivered to Titan in connection with the transactions
contemplated hereby or thereby shall be deemed representations and warranties,
covenants and agreements, or conditions, as the case may be, of VNI and
Acquisition hereunder for all purposes of this Agreement (including all
statements, certificates, or other instruments delivered pursuant hereto or
thereto or delivered in connection with this Agreement, the Merger, or any of
the other transactions contemplated hereby or thereby). The statements
contained in any document executed by Titan relating hereto or delivered to
VNI or Acquisition in connection with the transactions contemplated hereby or
thereby, or in any statement, certificate, or other instrument delivered by or
on behalf of Titan pursuant hereto or thereto or delivered to VNI or
Acquisition in connection with the transactions contemplated hereby or thereby
shall be deemed representations and warranties, covenants and agreements, or
conditions, as the case may be, of Titan hereunder for all purposes of this
Agreement (including all statements, certificates, or other instruments
delivered pursuant hereto or thereto or delivered in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby or
thereby). For the purposes of this Agreement, where an entity represents and
warrants a fact "to its knowledge" or "to the best of its knowledge" it shall
have imputed to its knowledge only the actual conscious awareness of facts or
other information, without investigation, of the executive officers and the
chief financial officer of the entity and its subsidiaries. Where an
individual represents and warrants a fact "to the best of the individual's
knowledge" the individual shall have imputed to that individual only the
actual conscious awareness of facts or other information, without
investigation, of that individual.
80
Section 9.04 Modification
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof (except as provided in Section 9.03) and
supersedes all existing agreements among them concerning such subject matter.
This Agreement may be amended prior to the Effective Time (notwithstanding
stockholder adoption and approval) by a written instrument executed by VNI,
Acquisition, and Titan with the approval of their respective Boards of
Directors; provided, however, that no such amendment shall, without
stockholder adoption and approval by an appropriate vote by stockholders of
the Constituent Corporation whose stockholders have been adversely affected,
change the number of shares of VNI Common Stock which may be issued pursuant
to this Agreement, or materially and adversely affect the rights of VNI or
Titan stockholders. No amendment to accelerate or postpone the Effective Time
shall be deemed to change such number of shares or affect adversely the rights
of the VNI or Titan stockholders.
Section 9.05 Notices
All notices under this Agreement must be in writing and addressed, if to
VNI or Acquisition, to its corporate secretary, and if to Titan, to its chief
executive officer. Any notice or other communication in connection with this
Agreement shall be deemed to have been given (i) if personally delivered to a
party, when so delivered, (ii) (A) if by certified mail, three business days
after mailing or (B) if by Federal Express or other recognized next day
carrier timely posted for next business day delivery, the next business day
following such timely posting, to the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9.05),
or (iii) if by facsimile, once transmitted (provided that the appropriate
answer back or telephonic confirmation is received), if to VNI at 0000 Xxxxx
00
000 Xxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000 and if to Titan at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx XX 00000. Either party may change the address or
facsimile number to which notices or other communications hereunder are to be
delivered by giving the other party notice in the manner set forth. A copy of
all notices to VNI or Acquisition shall be simultaneously provided to Xxxxxxx
X. Xxxxxxxxxx, Esq., Suite 205, 455 East 000 Xxxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000 (fax number 000-000-0000) by the same means of delivery as it is
given to VNI or Acquisition. A copy of all notices to Titan shall be
simultaneously provided to Reitler Xxxxx LLC, 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx Xxxxx (fax number 212-371-
5500) by the same means of delivery as it is given to Titan.
Section 9.06 Waiver
Any waiver by any party of a breach of any term of this Agreement shall
not operate as or be construed to be a waiver of any other breach of that term
or of any breach of any other term of this Agreement. The failure of a party
to insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing and be authorized by a
resolution of the Board of Directors or by an officer of the waiving party.
No party shall have the right to waive compliance with Section 8.01, the
second sentence of Section 9.04, or this sentence.
Section 9.07 Binding Effect
The provisions of this Agreement shall be binding upon and inure to the
benefit of VNI, Acquisition, and Titan and their respective successors and
assigns and shall inure to the benefit of each VNI indemnitee and each Titan
82
indemnitee and its successors and assigns (if not a natural person) and his
assigns, heirs, and personal representatives (if a natural person).
Section 9.08 No Third-Party Beneficiaries
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement except for
the Titan stockholders with respect to Sections 2.01 and 6.02(l), and except
as provided in Section 9.07.
Section 9.09 Severability
If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances,
provided, however, that the economic and legal substance of the transactions
contemplated by this Agreement are not affected in any way materially adverse
to any party hereto.
Section 9.10 Headings
The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
Section 9.11 Counterparts; Governing Law
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflict of laws. Any action, suit, or proceeding arising out of, based on,
or in connection with this Agreement, any document relating hereto or
delivered in connection with the transactions contemplated hereby, any
statement, certificate, or other instrument delivered by or on behalf of, or
delivered to, any party hereto or thereto in connection with the transactions
83
contemplated hereby or thereby, any breach of this Agreement or such other
document, the Merger, or the other transactions contemplated hereby or thereby
may be brought only in the state courts of the State of Utah located in Salt
Lake County, or in the United States District Court for the District of Utah,
Central Division, and each party covenants and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit, or proceeding,
any claim that it is not subject personally to the jurisdiction of such court
if it has been duly served with process, that its property is exempt or immune
from attachment or execution, that the action, suit, or proceeding is brought
in an inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
Section 9.12 Certain Definitions.
Defined First Used
Accrued Benefits 6.01(h)(ii) 6.01(h)(ii)
Accrued Liabilities 6.01(h)(ii) 6.01(h)(ii)
Acquisition Preamble Preamble
Additional Merger
Consideration 2.01(a)(i)(C) 2.01(a)(i)(C)
Agreement Preamble Preamble
Code 4.02 4.02
Constituent Corporations Preamble Preamble
Coverage 5.02(i)(iii) 5.02(i)(iii)
DGCL Introduction Introduction
Effective Time 3.02 1.02
84
Employee Benefit Plan 6.01(h)(i) 6.01(h)(i)
Employment Agreements 5.01(o) 5.02(i)(ii)
ERISA 6.01(h)(i) 6.01(h)(i)
Exchange Act 5.01(l) 5.01(l)
Exchange Agent 2.01(c) 2.01(c)
Gap Period 1.03(b) 1.03(b)
Hazardous Substance 6.01(f)(vi) 6.01(f)(vi)
Intangibles 6.01(i) 6.01(i)
Xxxxxx 5.01(n) 5.01(p)
Joint Proxy Statement/
Prospectus 5.01(l) 5.01(l)
Last Titan Balance Sheet 6.01(d)(i) 6.01(d)(i)
Last Titan Balance Sheet Date 6.01(d)(i) 6.01(d)(i)
Last VNI Balance Sheet 6.02(d)(i) 6.02(d)(i)
Last VNI Balance Sheet Date 6.02(d)(i) 6.02(d)(i)
Material 5.01(d) 5.01(d)
Merger Introduction Introduction
New Certificates 2.01(c) 2.01(c)
New Policy 5.02(i)(iii) 5.02(i)(iii)
Old Certificates 2.01(c) 2.01(c)
Pension Plan 6.01(h) 6.01(h)
Period Reports 5.01(l) 5.01(l)
Release 6.01(f)(vi) 6.01(f)(vi)
Release Time 5.01(a) 5.01(a)
SEC 5.01(l) 5.01(l)
Securities Act 2.03 2.03
Stop Order 7.01(s) 7.01(s)
85
Surviving Corporation Preamble Preamble
SVPC 7.01(q) ---
Taxes 6.01(d) 6.01(d)
Titan Preamble Preamble
Titan Affiliates 2.03 2.03
Titan Common Stock 2.01(a)(i) 2.01(a)(i)
Titan Disclosure Letter 2.03 2.03
Titan Indemnitees 5.02(i)(iv) 5.02(i)(iv)
Titan Stock Options 2.02 2.02
Titan Subsidiary 6.01(a) 6.01(a)
Titan Takeover Proposal 5.01(j) 5.01(j)
Transaction Agreements 6.02(k) 6.02(k)
VNI Preamble Preamble
VNI Capital Stock 2.05 2.05
VNI Common Stock 2.01(a)(i)(A) 2.01(a)(i)(A)
VNI Designee 1.03 1.03
VNI Disclosure Letter 6.02(a) 5.02(d)
VNI Indemnitees 5.01(m) 5.01(m)
VNI Preferred Stock 6.02(b) 2.05
VNI SEC Documents 6.02(q) 6.02(q)
86
IN WITNESS WHEREOF, this Agreement has been executed by duly
authorized officers of each of the parties hereto as of the date first above
written.
Attest VENTURES-NATIONAL INCORPORATED
/s/ Xxxx Xxxxxxx By /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxx Name: Xxxx Xxxxxxxxxx
Title: Secretary Title: President
Attest: TITAN EMS ACQUISITION CORP.
/s/ Xxxx Xxxxxxx By /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxx Name: Xxxx Xxxxxxxxxx
Title: Secretary Title: President
Attest: TITAN EMS, INC.
/s/ Xxxxxxx Xxxx Xxxxxxx By /s/ Xxxxx X. Xxxxx
Name: Xxxxxxx Xxxx Xxxxxxx Name: Xxxxx X. Xxxxx
Title: Secretary Title: Chairman
87
TABLE OF CONTENTS
Page
I. NAME OF SURVIVING CORPORATION; CERTIFICATE OF INCORPORATION
AND BY-LAWS; BOARD OF DIRECTORS; OFFICERS 1
1.01 Name of Surviving Corporation 1
1.02 Certificate of Incorporation and By-laws 2
1.03 Board of Directors and Officers 2
II. STATUS AND CONVERSION OF SECURITIES 3
2.01 Stock of Titan 3
(b) Dissenters' Rights 3
(c) Surrender and Exchange of Titan Common Stock; Payment of
Additional Merger Consideration 3
(d) Transfer Taxes 5
(e) Titan Stock Transfers 6
2.02 Assumption of Titan Stock Options 6
2.03 Affiliates of Titan 7
2.04 Capital Stock of VNI 7
2.05 Capital Stock of Acquisition 8
III. STOCKHOLDER APPROVALS; BOARD OF DIRECTORS' RECOMMENDATIONS;
FILING; EFFECTIVE TIME 8
3.01 Stockholder Approvals; Board of Directors' Recommendations 8
3.02 Filing; Effective Time 9
IV. CERTAIN EFFECTS OF MERGER 9
4.01 Effects Under the DGCL 9
4.02 Reorganization 10
V. COVENANTS 10
5.01 Covenants of Titan 10
(a) Certificate of Incorporation and By-laws 10
(b) Shares and Options 11
(c) Dividends and Purchases of Stock 11
(d) Borrowing of Money 11
(e) Access 11
(f) Conduct of Business 12
(g) Advice of Changes 12
(h) Confidentiality 13
(i) Public Statements 13
(j) Other Proposals 14
(k) Consents Without Any Condition 15
(l) Material for Periodic Reporting 15
(m) Indemnification 16
(n) Transfer Taxes 17
(o) Employment Agreements 17
5.02 Covenants of VNI and Acquisition 17
(b) Access 18
(c) Conduct of Business 18
(d) Advice of Changes 20
(e) Confidentiality 20
(f) Public Statements 21
(g) Consents Without Any Condition 21
(h) Periodic Reports 21
(i) Capital Stock Changes 23
(j) Transfer Taxes 23
(k) Other Proposals 23
(l) Reorganization 23
(m) Rule 15c2-11 24
(n) Agreements involving Xxxxxx Services, Inc. 24
(o) Consulting Agreement with STAR Associates LLC 25
(p) Consulting Agreement with Xxxxxx Xxxx 25
(q) 14f-1 Information 25
(r) Conduct Business Under an Assumed Name and Proxy or
Information Statement 25
VI. REPRESENTATIONS AND WARRANTIES 26
6.01 Certain Representations and Warranties of Titan 26
(a) Organization and Qualification 26
(b) Capitalization 27
(c) Financial Condition 27
(d) Tax and Other Liabilities 29
(e) Litigation and Claims 30
(f) Properties 31
(g) Contracts and Other Instruments 33
(h) Pension Plans; Employees 36
(i) Patents, Trademarks, Et Cetera 41
(j) Questionable Payments 43
(k) Authority to Merge 43
(l) Insurance 45
(m) Business Conducted in No Other Name 46
(n) Customers and Suppliers 46
(o) Completeness of Disclosure 46
6.02 Certain Representations and Warranties of VNI and
Acquisition 47
(a) Organization and Qualification 47
(b) Capitalization 48
(c) Financial Condition 48
(d) Tax and Other Liabilities 50
(e) Litigation and Claims 51
(f) Properties 52
(g) Contracts and Other Instruments 54
(h) Employees 56
(i) Patents, Trademarks, Et Cetera 60
(j) Questionable Payments 62
(k) Authority to Merge 63
(l) Status of VNI Common Stock To Be Issued 65
(m) Insurance 65
(n) Trading Matters 66
(o) Reorganization 66
(p) Completeness of Disclosure 67
(q) Period Reporting 67
VII. CONDITIONS; ABANDONMENT AND TERMINATION 68
7.01 Right of VNI and Acquisition to Abandon 68
(a) Accuracy of Representations and Compliance With
Conditions 68
(b) Certificates from Titan 69
(c) Opinion of Titan's Counsel 70
(d) Accountants' Letter 70
(e) Other Closing Documents 70
(f) Review of Proceedings 70
(g) Legal Action 71
(h) No Governmental Action 71
(i) Trading Matters 72
(j) Governmental Approval 72
(k) Blue-Sky Law Compliance 72
(l) Contractual Consents Needed 72
(m) Employment Agreements 73
(n) Material Adverse Change 73
(o) Due Diligence 73
(p) Financing 73
(q) Asset Contributions 73
(r) Debt Conversion 74
7.02 Right of Titan to Abandon 74
(a) Accuracy of Representations and Compliance With
Conditions 74
(b) Certificates from VNI and Acquisition 75
(c) Opinion of VNI's and Acquisition's Counsel 75
(d) Other Closing Documents 76
(e) Review of Proceedings 76
(f) Legal Action 76
(g) No Governmental Action 77
(h) Trading Matters 77
(i) Governmental Approval 77
(j) Blue Sky Law Compliance 78
(k) Contractual Consents Needed 78
(l) Employment Agreements 78
(m) Due Diligence 79
VIII. ADDITIONAL TERMS OF ABANDONMENT 79
8.01 Mandatory Abandonment 79
8.02 Optional Abandonment 79
8.03 Effect of Abandonment 80
IX. MISCELLANEOUS 81
9.01 Further Actions 81
9.02 Availability of Equitable Remedies 81
9.03 Survival; Knowledge 81
9.04 Modification 82
9.05 Notices 83
9.06 Waiver 84
9.07 Binding Effect 84
9.08 No Third-Party Beneficiaries 84
9.09 Severability 85
9.10 Headings 85
9.11 Counterparts; Governing Law 85
9.12 Certain Definitions 86
