July 1, 2002
Titan EMS, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
000-000-0000
Attention: Xxxxx Xxxxx, President
SVPC Partners, LLC
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxx, Manager
Re: Amended Letter of Intent that amends that certain Letter of Intent
between the parties respecting the matters covered hereby and
dated June 28, 2002, for the exchange of "restricted" shares of
Ventures-National, Incorporated, a Utah Corporation ("Ventures"),
for all of the issued and outstanding shares of Titan EMS, Inc. a
Delaware corporation ("Titan"), following the merger of SVPC
Partners, LLC, a Delaware Limited Liability Company ("SVPC"), with
and into Titan.
Dear Xx. Xxxxx:
This letter will confirm the following general terms upon which
the Boards of Directors of Ventures and Titan will adopt an Agreement and Plan
of Reorganization (the "Plan of Reorganization") whereby Ventures will
exchange shares of its $0.0001 par value voting stock for all of the issued
and outstanding shares of Titan and whereby Titan will become a wholly-owned
subsidiary of Ventures on the closing of the Plan of Reorganization (the
"Closing").
We propose that a definitive agreement approved by our respective
Boards of Directors be negotiated and executed and which will set forth in
detail our intent, upon the following general terms and conditions.
A. Conditions precedent to the Exchange.
(i) Titan shall amend its Articles of Incorporation to increase
its authorized capital from 1,500 shares of no par value
capital stock to 10,000,000 shares of $0.001 par value
capital stock and to effect a forward split of its 1,500
outstanding shares in an amount to be determined by its
Board of Directors and in its sole discretion;
(ii) Titan shall enter into employment agreements with Xxx Xxxxxx
and Xxxxxxx Xxxx Xxxxxxx on terms agreeable to its Board of
Directors in its sole discretion, and may issue of
"restricted" shares of its common stock for the contribution
of assets to Titan or on an installment basis to these
persons, also on terms agreeable to its Board of Directors
and in its sole discretion;
(iii) Titan may raise a minimum of $150,000 to a maximum of
$2,500,000 by the sale of shares of its common stock to a
limited number of "accredited investors" or "sophisticated
investors" as those terms are defined in Rule 506 of the
Securities and Exchange Commission on terms agreeable to
its Board of Directors and in its sole discretion, and the
total amount of funds to be raised can be increased as
agreed its Board of Directors and in its sole discretion;
(iv) SVPC shall merge with and into Titan on terms agreeable to
the Board of Directors of Titan and the Managers of SVPC and
in their sole discretion;
(v) Irrevocable Children's Trust, the principal stockholder of
Titan, shall convert a portion of certain debt of Titan owed
to it for common stock of Titan as agreed by the Board of
Directors of Titan and Irrevocable Children's Trust and in
their sole discretion;
(vi) Exhibit A is an audited proforma balance sheet at December
31, 2001, that accurately reflects the combination of Titan
and SVPC at December 31, 2001, excluding any computations on
the matters outlined in paragraphs A(ii), (iii) or (v) and
adjustments related to the disposition of SVPC's real estate
($1.9 million asset and equal $1.9 million liability); and
(vii) The merger of SVPC into Titan shall be effective as of June
30, 2002, for accounting purposes.
B. The Exchange.
(i) Ventures shall issue an aggregate of approximately 6,600,000
"restricted" shares of its common stock for all of the
issued and outstanding shares of Titan that are represented
by the aforesaid 1,500 shares of Titan to be forward split
as outlined in paragraph A(i) above and for the shares of
Titan that are received by the members of SVPC in the merger
with Titan, pro rata, among these Titan stockholders; and
Ventures shall issue one share for each other share of Titan
that is outstanding for shares of Titan that are issued
under paragraphs A(ii), (iii) and (v) above.
(ii) At Closing, the pre-Plan of Reorganization existing
stockholders of Ventures shall own approximately 100,000
shares of the total post-Plan of the Reorganization issued
and outstanding shares of Ventures.
(iii) Upon Closing, Titan shall pay to Xxxxxx Services,
Inc.("Xxxxxx Services") $150,000 in consideration of Xxxxxx
Services' payment and personal indemnification of Ventures
and Titan of any and all past liabilities of any type or
nature whatsoever of Ventures existing at Closing, which
will include the expenses of Ventures related to the Plan of
Reorganization as set forth in Exhibit B, and the compromise
and settlement of any amounts due and owing for advances of
Xxxxxx Services or otherwise that were incurred prior to
Closing by Ventures and/or the other expenses set forth in
Exhibit B attached hereto and incorporated herein by
reference;
(iv) Upon execution of this Letter of Intent, Titan or SVPC shall
deposit a retainer of $10,000 to the trust account of
Xxxxxxx X. Xxxxxxxxxx, Esq., which shall be utilized as a
retainer for payment of $20,000 in legal fees associated
with the Plan of Reorganization and the Agreement and Plan
of Merger and related documents respecting the merger of
SVPC with and into Titan, which shall be reviewed by counsel
for SVPC and Titan, and an information statement and related
documentation to change the domicile of Ventures to the
State of Nevada. In the event of the termination of the
Plan of Reorganization or this Letter of Intent for any
reason other than a breach by Ventures, Xxxxxx Services
shall be responsible for returning to Titan the $10,000
retainer from the Xxxxxxx X. Xxxxxxxxxx trust account, less
any fees incurred by Xx. Xxxxxxxxxx in conjunction with the
preparation of the Plan of Reorganization and related
documentation aforesaid or services. The remaining $10,000
shall be payable on Closing of the Plan of Reorganization.
Titan shall also deposit the sum of $2,500 for costs that
may be incurred by Xx. Xxxxxxxxxx in the event that the
parties desire him to provide copies of material
information regarding SVPC, Titan and Ventures to the
potential investors in Titan, which may be purchasing the
securities of Titan as outlined in paragraphs A(ii), (iii)
or (v) above, or the members of SVPC;
(v) Simultaneous with the Closing, the reorganized Ventures
shall(a) engage certain consultants through Xxxxxx Services
and who shall be principals, employees or legal counsel of
Xxxxxx Services to perform certain services over a period of
90 days as shall be outlined in a Consulting Agreement to be
executed and delivered at Closing, in consideration of the
issuance of an aggregate of 100,000 shares of common stock
that are to be registered at no cost to such consultants on
Form S-8 of the Securities and Exchange Commission; and (b)
shall issue certain of the same consultants as Xxxxxx
Services shall designate in the Consulting Agreement an
aggregate of an additional 200,000 shares of common stock
that shall be deemed to be "restricted securities" for
services as shall be outlined in the Consulting Agreement,
subject, however, to these consultants granting the
reorganized Ventures an option to repurchase these 200,000
shares of "restricted securities" for a set price on the
happening of certain agreed upon events, all of which shall
be outlined in the Consulting Agreement;
(vi) Following the Closing, Ventures may enter into consulting
agreements with certain consultants, including Xxxxx
Xxxxxxxx, pursuant to which it may issue shares of its
common stock of the reorganized Ventures and that shall be
issued to such individual consultants under the Consulting
Agreement and which shares shall be registered at no cost to
such consultants on Form S-8 of the Securities and Exchange
Commission; and may grant certain consultants options or
warrants to acquire additional post-Plan of Reorganization
shares of common stock of Ventures, all in the sole
discretion of the new Board of Directors of Ventures to be
designated at the Closing of the Plan of Reorganization;
(vii) The nominees of Titan shall be elected as members of the
Board of Directors and as Executive Officers of Ventures on
Closing, and the current members of the Board of Directors
and Executive Officers of Ventures shall resign, in
seriatim;
(viii) The Plan of Reorganization shall be effective for accounting
purposes as of June 30, 2002, and to the extent that this
cannot be accomplished by the signing and implementation of
this Letter of Intent, the year end of Ventures shall be
changed to the month end of the month in which the Plan of
Reorganization is completed; and
(ix) The exchange between Ventures and Titan is intended to be a
tax-free reorganization under the Internal Revenue Code of
1986, as amended.
C. Definitive Agreement.
The definitive agreement shall include, contain or provide:
(i) Representations and Warranties. Customary and usual
representations and warranties by the parties, and the
principals of Xxxxxx Services shall also provide those
representations and warranties provided by Ventures.
(ii) Opinions of Counsel. For the delivery at Closing of
favorable opinions of counsel for the corporate parties with
respect to customary and usual matters of law covered under
similar plans and parties.
(iii) Financial and Other Information.
(a) The examination and inspection of the books and
records of each of the parties prior to Closing; the
delivery no later than at Closing of customary
schedules listing each party's material contracts;
real and personal properties; pending, threatened and
contemplated legal proceedings; employees; assets and
liabilities, including contingencies and commitments;
and other information reasonably requested;
(b) Each of the parties to provide annual audited
financial statements and interim un-audited financial
statements consisting of a balance sheet and a related
statement of income for the period then ended which
fairly present the financial condition of each as of
their respective dates and for the periods involved,
and such audited statements shall be prepared in
accordance with generally accepted accounting
principles consistently applied, on Closing, for such
period or periods as shall be set forth in the
definitive agreement; and
(c) The financial statements of Ventures shall reflect no
liabilities and no assets at Closing or satisfactory
evidence of payment of all liabilities shall be
provided.
(iv) Conduct of Business of Ventures and Titan Pending Closing.
Until consummation or termination of the Plan of
Reorganization, Ventures and Titan will conduct business
only in the ordinary course and none of the assets of
Ventures or Titan shall be sold or disposed of except in the
ordinary course of business or with the written consent of
the other party.
(v) Other.
(a) Ventures and Titan shall have received all permits,
authorizations, regulatory approvals and third party
consents necessary for the consummation of the Closing
of the Plan of Reorganization, and all applicable
legal requirements shall have been satisfied.
(b) The definitive agreement shall be executed as soon as
practicable, and Ventures shall instruct its legal
counsel to immediately prepare all necessary
documentation upon the execution of this Letter of
Intent.
(c) The Boards of Directors of Ventures and Titan shall
have approved the definitive agreement.
(d) Included in the Plan of Reorganization between
Ventures and Titan shall be a no reverse split clause
that guarantees replacement of the shares of common
stock that are still owned at the time of any such
reverse split by Xxxxxx Services and their associates
in the event that Ventures completes a reverse split
that affects its outstanding common stock within 12
months of Closing, unless prior written consent is
received by Titan by the pre-closing officers and
directors of Ventures.
(e) All notices or other information deemed required or
necessary to be given to any of the parties shall be
given at the following addresses.
Ventures-National Incorporated
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
000-000-0000 phone
000-000-0000 fax
Titan EMS, Inc.
Xxxxx Xxxxx, President
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
000-000-0000 phone
Xxxxxxx X. Xxxxxxxxxx, Esq.
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
000-000-0000 phone
000-000-0000 fax
(f) Any finder's fee or similar payment with respect to
the Plan of Reorganization shall be paid by the party
or parties agreeing tosuch fee or payment.
(g) The definitive agreement shall contain customary and
usual indemnification and hold harmless provisions.
(h) The transactions which are contemplated herein, to the
extent permitted, shall be governed by and construed
in accordance with the laws of the State of the
Nevada.
(i) Each party and its agents, attorneys and
representatives shall have full and free access to the
properties, books and records of the other party (the
confidentiality of which the investigating party
agrees to retain) for purposes of conducting
investigations of the other party.
(j) The substance of any public announcement with respect
to the exchange, other than notices required by law,
shall be approved in advance by all parties or their
duly authorized representatives.
(k) In the event of the abandonment of this Letter of
Intent prior to the execution of the Plan of
Reorganization, except as provided in Section B(iv),
each party shall bear and pay its own costs and
expenses and shall indemnify and hold the other
parties harmless therefrom. Following execution and
delivery of the Plan of Reorganization, it will
control the rights of the parties in this respect.
Except as provided in Section B(iv) , C(v)(i) and E herein, this letter
merely evidences the intention of the parties hereto and is not intended to be
legally binding. The proposed agreement contemplated herein may be terminated
by any of the parties at any time prior to the execution of the definitive
agreement, which shall be controlling thereafter.
D. Counterparts. This Letter of Intent may be executed in any
number of counterparts and each such counterpart shall be deemed to be an
original instrument, but all of such counterparts together shall constitute
but one agreement.
E. Confidentiality. By its execution hereof, Ventures acknowledges
to and agrees with Titan that in the exercise of the several rights granted to
it pursuant to this Letter of Intent, Ventures, and/or its agents and
affiliates, may become familiar with or aware of certain Confidential
Information (as such term is hereinafter defined) disclosed by the Titan or
one or more of its officers, directors, employees, shareholders, partners,
agents or representatives (each of such relationships being defined herein as
an "Affiliate"). Accordingly, Ventures hereby agrees that any and all
Confidential Information disclosed or furnished to it, or to any of its
Affiliates, by Titan or any of its Affiliates, or regarding SVPC, is and shall
remain proprietary to Titan. Neither Ventures, nor any Affiliate of Ventures,
shall have any rights to distribute or divulge any of such Confidential
Information to any third party without Titan's prior consent, or to use any of
such Confidential Information in any way detrimental to Titan or any of its
Affiliates, or in any way which would otherwise destroy, injure or impair any
of Titan's or its Affiliates' rights in or in respect of any such Confidential
Information including, without limitation, by using any of such Confidential
Information to solicit away from Titan any of its employees, contractors,
customers or vendors or other business relationships, or to establish or
assist any person or entity which is or will be, directly or indirectly, in
competition with Titan. For purposes of this Agreement, the term
"Confidential Information" shall mean any and all proprietary information
belonging to Titan, whether tangible or intangible, written or oral,
including, without limitation, any intellectual property rights, books and
records, computer software and files, lists of (or proprietary information
concerning) its customers, suppliers, vendors and other business
relationships, and any other item which may properly be classified as a
protected trade secret. Ventures expressly agrees and understands that its
agreement to abide by the provisions of this Section E constitute a material
part of the consideration inducing Titan to enter into this Letter of Intent
and consider the transactions contemplated herein, and that any violation of
such provisions could create immediate and irreparable harm to Titan. In the
event of any breach of this Section E, the parties hereby agree that, in
addition to whatever other remedies may be available to the Titan, it shall be
entitled to seek injunctive and other equitable relief, and Ventures hereby
waives any bonding or other requirement as a precursor thereto.
If the foregoing correctly sets forth the substance of the
understanding of the parties, please execute this Letter of Intent in
duplicate, retain one copy for your records, and return one to Xxxxxxx X.
Xxxxxxxxxx, Esq. at his address, which is Suite 000 Xxxxxx Xxxxxxxx, 000 Xxxx
000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000; you may send one signed copy by
facsimile transmission to 000-000-0000.
Very truly yours,
Xxxxxx Services, Inc. Ventures-National Incorporated.
By:/s/Xxxx X. Xxxxxx By:/s/Xxxx Xxxxxxxxxx
Xxxxxxx X. Xxxxxx, President Xxxx Xxxxxxxxxx, President
Accepted this 1st day of
July, 2002
Titan EMS, Inc.
A Delaware Corporation
By:/s/Xxxxx Xxxxx-President
Xxxxx Xxxxx, President
Accepted this 1st day of
July, 2002
SVPC Partners, LLC
A Delaware Limited Liability Company
By:/s/Xxxxx Xxxxx-CEO
Xxxxx Xxxxx, President
EXHIBIT A
AUDITED COMBINED PROFORMA BALANCE SHEET FOR
TITAN EMS, INC. AND SVPC PARTNERS, LLC AT DECEMBER 31, 2001
MANUFACTURING HOLDING CORPORATION
PROFORMA BALANCE SHEET (AUDITED) - DECEMBER 31, 2001
Proforma
MHC SVPC Adjustment Proforma
Current Assets:
Cash and cash equivalents $ 294 $ 28,247 $ - $ 28,541
Note receivable 10,000 - - 10,000
Factor receivable - 658,543 - 658,543
Accounts receivable,
net of Allowance for
doubtful account of
$20,000 - 329,794 - 329,794
Inventories - 378,490 - 378,490
Prepaid and other current
assets - 60,989 - 60,989
---------- ---------- ---------- ----------
Total current assets 10,294 1,456,063 - 1,466,357
Property, plant and
equipment, net of
Accumulated depreciation
and Amortization 10,000 4,079,682 - 4,089,682
Other assets 4,282 23,777 - 28,059
---------- ---------- ---------- ----------
24,576 5,559,522 - 5,584,098
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses - 590,024 - 590,024
Loans and notes payable,
including $10,000 to
related party 4,500 3,435,167 - 3,439,667
Current portion of
long-term debt 20,100 116,914 - 137,014
Current portion of
capital lease
Obligations - 102,253 - 102,253
---------- ---------- ---------- ----------
Total current liabilities 24,600 4,244,358 - 4,268,958
Long-term debt, less
current portion - 202,982 - 202,982
Capital lease obligations,
less current Portion - 407,346 - 407,346
Stockholders' equity
Common stock, no par value,
1,500 shares Authorized,
issued and outstanding - - - -
Additional paid in capital - - 1,178,892 1,178,892
Accumulated deficit (24) - (474,056) (474,080)
Members' capital
Capital contribution - 1,178,892 (1,178,892) -
Accumulated deficit - (474,056) 474,056 -
---------- ---------- ---------- ----------
24,576 5,559,522 - 5,584,098
========== ========== ========== ==========
EXHIBIT "B"
The following expenses will be included and paid by Xxxxxx Services
in conjunction with the Plan of Reorganization Pre-Closing, assuming receipt
by the Xxxxxxx X. Xxxxxxxxxx, Esq. Trust Account of the $10,000 retainer, as
per Section B(iv):
Legal work to be completed by Xxxxxxx X. Xxxxxxxxxx, Esq.
Letter of Intent.
Plan of Reorganization and all related consents, minutes and exhibits.
Agreement and Plan of Merger between SVPC and Titan.
Information Statement to Change Domicile.
Certificate of Merger and documentation respecting Change of Domicile.
Execution of Closing documents by Ventures and Titan.
Ventures officers and directors will offer resignations.
The following services will be rendered and expenses paid by Xxxxxx
Services in conjunction with the Plan of Reorganization and further to the
Consulting Agreement, assuming receipt of the $150,000 by Xxxxxx Services as
per Section B(iii):
Post-Plan of Reorganization filings are made, with the following agencies.
National Quotation Bureau ("NQB")-new cusip number.
National Association of Securities Dealers ("NASD")-request new symbol as
Designated by Titan.
Coordination of filing current report on Form 8-K.
S&P filing (without payment of filing fees)
Coordination of delivery of new 15c2-11 to broker.
Coordination of filing of Amended 8-K reflecting consolidated, combined
financials statements of Titan and Ventures within 15 days of transaction.
The following expenses will be included and paid by Titan, in conjunction with
the Plan of Reorganization:
Complete the acquisition of SVPC Ventures LLC prior to Closing;
Order and issue new certificates;
Titan audited Financial Statements (including the combination of SVPC) for the
most recent year end;
Proforma combined balance sheet taking into consideration the Plan of
Reorganization and the SVPC merger; and
Change of the domicile of Ventures and related Proxy/Information Statement to
state selected by the new Board of Directors.
UNANIMOUS CONSENT OF DIRECTORS OF TITAN EMS, INC. IN ACCORDANCE WITH THE
DELAWARE CORPORATIONS ACT
RESOLVED, that the foregoing Amended Letter of Intent and related
reorganization be adopted, ratified and approved, effective as of June 30,
2002, for accounting purposes.
Date: 7/1/02. By/s/Xxxxx X. Xxxxx-President
Xxxxx Xxxxx, President Titan EMS, Inc.
UNANIMOUS CONSENT OF DIRECTORS OF SVPC PARTNERS, LLC, IN ACCORDANCE WITH THE
DELAWARE LIMITED LIABILITY COMPANY ACT
RESOLVED, that the foregoing Amended Letter of Intent and related
reorganization be adopted, ratified and approved, effective as of June 30,
2002, for accounting purposes.
Date: 7/1/02. By/s/Xxxxx X. Xxxxx-CEO
Xxxxx Xxxxx, Manager SVPC Partners, LLC
Date: 7/1/02. By/s/Xxxxx X. Xxxxx-Trustee
Irrevocable Children's Trust by Xxxxx Xxxxx TTE
Date: 7/1/02. By/s/Xxxxx X. Xxxxx-Trustee
Irrevocable Children's Trust No. 2 by Xxxxx Xxxxx
UNANIMOUS CONSENT OF DIRECTORS OF VENTURES-NATIONAL INCORPORATED
IN ACCORDANCE WITH THE UTAH REVISED BUSINESS CORPORATION ACT
RESOLVED, that the foregoing Amended Letter of Intent and related
reorganization be adopted, ratified and approved, effective as of June 30,
2002, for accounting purposes.
Date: 6/29/02. By/s/Xxxx Xxxxxxxxxx
Xxxx Xxxxxxxxxx, President and Director
Date: 7/1/02. By/s/Xxxxx XxXxxxx
Xxxxx XxXxxxx, V.P. and Director
Date: 7/1/02. By/s/Xxxx Xxxxxxx
Xxxx Xxxxxxx, Secretary and Director
