CONTRIBUTION AGREEMENT AND ASSIGNMENT AND ASSUMPTION OF LIABILITIES,
dated as of August 6, 2002, between TITAN EMS, INC., a Delaware corporation
with executive offices located at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000 ("Titan"); and SVPC PARTNERS, LLC, a Delaware limited liability company
with executive offices located at 0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx, XX 00000
("SVPC").
The parties hereto hereby agree as follows:
1. Contribution. SVPC hereby contributes to Titan all of the
properties and assets of SVPC, including the books and records of SVPC
(collectively, the "Contributed Assets"), except those identified in Schedule
1A hereto, in each case, except as set forth in Schedule 1B hereto, free and
clear of all liens, mortgages, security interests, pledges, charges,
encumbrances and required consents. In exchange therefor, simultaneously with
the execution hereof, Titan is issuing to SVPC 800,000 shares (the "Shares")
of common stock, par value $0.001 per share (the "Titan Common Stock"), of
Titan.
Assignment and Assumption of Liabilities.
(a) SVPC hereby assigns, transfers, and conveys to Titan, and its
successors and assigns, the rights of SVPC pursuant to, and in connection
with, each of the agreements set forth in Schedule 2(a) hereto.
(b) Titan hereby assumes, and agrees to perform, all of the Seller's
liabilities (including the obligations in, under, and pursuant to each of the
agreements set forth in Schedule 2(a) hereto), excluding those identified in
Schedule 2(b) hereto.
3. Representations and Warranties.
(a) Titan hereby represents and warrants as follows: (i) it has full
power and authority to execute and deliver this Agreement and that this
Agreement is the legal, valid, and binding obligation thereof, enforceable in
accordance with its terms; (ii) the Shares are validly authorized and issued,
fully paid, and non-assessable, have not been issued and are not owned or held
in violation of any preemptive or similar right of stockholders, and are free
and clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts; (iii) except as set forth in
Schedule 3(a) hereto, other than the Shares, Titan has no securities
outstanding; (iv) except as set forth in Schedule 3(a) hereto, 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, or exchangeable or
exercisable for capital stock of Titan; (v) except as set forth in Schedule
3(a) hereto, there is outstanding no security or other instrument convertible
into, or exercisable or exchangeable for, capital stock of Titan; and (vi)
this Agreement and the performance hereof shall not 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 rights and privileges that such party was not receiving or entitled
to receive immediately before this Agreement was executed under, or create any
obligation on the part of Titan that it was not paying or obligated to pay
immediately before this Agreement was executed under, any term of any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the articles of
incorporation (or other charter document) or by-laws of Titan, or violate,
result in a breach of, or conflict with any applicable law, rule, regulation,
order, judgment, or decree binding on Titan or to which it or any of its
respective businesses, properties, or assets are subject, which violation or
breach could have a material adverse effect on Titan.
(b) SVPC hereby represents and warrants as follows: (i) it has full
power and authority to execute and deliver this Agreement and that this
Agreement is the legal, valid, and binding obligation thereof, enforceable in
accordance with its terms; (ii) SVPC has good title to Contributed Assets,
free and clear of all liens, mortgages, security interests, pledges, charges,
and encumbrances, except as set forth in Schedule 1B hereto; (iii) this
Agreement and the performance hereof shall not 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
rights and privileges that such party was not receiving or entitled to receive
immediately before this Agreement was executed under, or create any obligation
on the part of SVPC that it was not paying or obligated to pay immediately
before this Agreement was executed under, any term of any such contract,
agreement, instrument, lease, license, arrangement, or understanding, or
violate or result in a breach of any term of the operating agreement or other
constitutional, organizational, or charter document of SVPC, or violate,
result in a breach of, or conflict with any applicable law, rule, regulation,
order, judgment, or decree binding on SVPC or to which it or any of its
respective businesses, properties, or assets are subject, which violation or
breach could have a material adverse effect on SVPC; and (iv) it has obtained
all consents required in order to execute and perform this Agreement and the
transactions contemplated hereby and in connection herewith, under and
pursuant to the agreements described in Schedule 2(a) hereto.
4. Post-Closing Adjustment. If and to the extent SVPC fails to
obtain any of the required consents set forth on Schedule 1B on or prior to
December 31, 2002, SVPC shall surrender to Titan for cancellation such number
of Shares having an aggregate value (based on an agreed value of $1.50 per
share) equal to the damage, if any, resulting from such failure as agreed
between the parties; provided, however, that if the parties fail to agree on
the amount of such damage, the dispute shall be submitted to binding
arbitration to be determined on an expedited basis by one arbitrator selected
by the parties in accordance with the rules and procedures of the American
Arbitration Association, which arbitration shall take place in San Francisco,
California or such other place as the parties may agree. The parties shall
each bear their own costs in connection with the arbitration; provided that
the direct costs of the arbitration shall be borne equally by the parties.
5. Further Assurances. The parties hereto shall deliver to each other
simultaneously with the execution hereof such other documents (including
certificates of officers, letters of transmittals, bills of sale, etc.) as the
other party hereto may reasonably request in order to enable the other party
to evidence the transactions contemplated hereby and in connection herewith.
6. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without reference to
rules regarding conflicts of law.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
TITAN EMS, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive
Officer
SVPC PARTNERS, LLC,
by Irrevocable Children's Trust, Member
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Trustee
Schedule 1A
Land and Buildings identified as 3555 and 0000 Xxxxxx Xxxx
Schedule 1B
Orbotech, identified as loan SJ-A0113 as part of account #200046392
Orbotech, identified as loan 3011R1
Citigroup, Lease/Loan identified as 885841, 697643, and 697642
Excellon, identified as account 121776-001 (final payment pending)
Ford Credit, Loan on Ford Focus
Titan EMS, Inc. (Lease to be terminated upon completion of this Agreement.)
CSI\LaSalle Term Loan. CSI/LaSalle has agreed to release this lien upon
payment of $250,000 the source of which is Titan's PPM, subject to its
appraisal of the equipment. To the extent Titan incurs any damage related
hereto, Paragraph 4 herein shall control.
Schedule 2(a)
Lease: 0000 Xxxxxx Xxxxxx, Xxxxx, Xxxxx, XX with S&K Enterprises
Lease: 00000 Xxx Xxxx Xxxxxxx Xxxx., Xxxxxxx, XX with Longmeadow Partners
Apartment: 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx, XX with Nantucket Apartments
Loan: Ford Focus Automobile
Postage Machine, Pitney Bows
Credit Card Machine, CIT
Lease: Titan EMS, Inc. (to be terminated)
Orbotech, identified as loan SJ-A0113 as part of account #200046392
Orbotech, identified as loan 3011R1
Citigroup, Lease/Loan identified as 885841, 697643, and 697642
Excellon, identified as account 121776-001 (final payment pending)
Member Loan from Irrevocable Children's Trust
Loan/Guarantee portion of the LaSalle/CSI Term Loan to be subsequently
converted into equity in Titan.
Schedule 2(b)
LaSalle, Circuit Systems, Inc. Term Loan (not including an amount equal to the
guarantee obligations of Ohio Investors of Wisconsin, LLC which will
subsequently be converted to equity).
Schedule 3(a)
1. Irrevocable Children's Trust is the holder of 5,800,000 shares of Titan
Common Stock.
2. Upon the effectiveness of this Contribution Agreement, Titan, pursuant to a
Contribution Agreement and Assignment and Assumption of Liabilities,
dated as of the date hereof, between Titan and Xxxxx Xxxxxx, shall issue
50,000 shares of Titan Common Stock to Xx. Xxxxxx.
3. Upon the effectiveness of this Contribution Agreement, Titan intends to
convert $185,234.60 and $10,000 of indebtedness owing to Phoenix
Business Trust and Forest Home Investors I LLC, respectively, into
shares of Titan Common Stock at a price per share of $1.50.
4. Options to purchase 350,000 shares of Titan Common Stock at a price of
$1.50 per share exercisable through July 31, 2007 to be issued to Xxxxx
Xxxxxx.
5. Options to purchase 360,000 shares of Titan Common Stock at a price of
$1.50 per share exercisable through July 31, 2007 to be issued to Xxxxxxx Xxxx
Xxxxxxx.
6. Xxxxx Xxxxxxxx to receive 100,000 shares of Titan Common Stock in respect
of past services.
7. Contemplated merger with Titan Acquisition Corp.
