VirTra 8K Entry into a Material Definitive Agreement | VTSI 11 Jan 06

AGREEMENT OF MERGER

This agreement of merger (the“Agreement”) is dated as ofJanuary ____, 2006, between VirTra Systems, Inc., a Texas corporation (“VTSI”) and Virtra Merger Corporation, a Texas corporation (“VMC”), upon the terms and conditions which follow.

Recitals

The chief executive officers of VTSI and Altatron International, Inc.,Chrysalis Manufacturing Corporation d/b/aAltatron EMS, Dynalyst Manufacturing Corporation, andSuntech Circuits signed a letter of intent of merger onOctober 24, 2005. VMC has been subsequently incorporated to facilitate the merger of the acquired companies intoVTSI.

B. Prior to the execution of thisAgreement,Altatron International, Inc.,Chrysalis Manufacturing Corporation d/b/aAltatron EMS, andDynalyst Manufacturing Corporation merged intoVMC, withVMC as thesurviving corporation and all of the outstandingcapital stock or of those corporations changed into shares ofVMC.VTSI andVMC desire to proceed with the execution of thisAgreement withoutSuntech for the time being, although it is the intent of the parties to thisAgreement, as well as the management ofSuntech, to complete theMerger withSuntech as soon as may reasonably be practical.

C. The boards of directors ofVTSI andVMC deem it advisable and in the best interests of their corporations and their respective shareholders to consummate, and have approved, including for purposes of section 5.03 of the “Texas Law,” the business combination transactions provided for in thisAgreement, in whichVMC will merge with and into VTSI, withVTSI continuing as thesurviving corporation (the“Merger”), and all of the issued and outstanding shares of all the companies will be converted into shares of common stock, par value $0.005 per share, ofVTSI, all as more fully set forth below.

For federal income tax purposes, it is intended that theMerger shall qualify as a “reorganization” within the meaning of section 368(a) of theInternal RevenueCode of 1986, as amended (the“Code”) and the parties intend to adopt thisAgreement as a “plan of reorganization” under section 368(a) of theCode and the associatedTreasury Regulations.

Each company desires to make certain representations, warranties, and agreements in connection with theMerger, and also to prescribe various conditions to theMerger.

The boards of directors of each corporation have approved and adopted thisAgreement.

Capitalized terms that are not proper nouns are defined in section13 below.

Accordingly, the parties agree as follows:

1. THEMERGER

1.1.

TheMerger and Its Effect. Subject to the terms and conditions of thisAgreement, at theEffective Time (as defined below),VMC shall be merged with and intoVTSI, which shall be the surviving corporation (VTSI, as the party to theMerger surviving theMerger, is sometimes referred to as the“Surviving Corporation”), in accordance with thisAgreement and which as of theEffective Date shall be governed by Texas Law. Upon the effectiveness of theMerger: (a) the separate corporate existence ofVM C shall cease;(b) the Surviving Corporation shall possess all of the rights, privileges, powers, immunities, purposes, and franchises, both public and private, ofVMC;(c) all real and personal property, tangible and intangible, of every kind and description belonging toVMC shall be vested in the Surviving Corporation without further act or deed, and title to any real estate vested inVMC shall not revert or in any way be impaired by reason of theMerger;(d) the Surviving Corporation shall be liable for all the obligations andLiabilities ofVMC, and any claim existing or action or proceeding pending by or againstVMC may be enforced againstVTSI; and(e) neither the rights of creditors nor any “Liens” upon the property ofVMC shall be impaired by theMerger.

1.2.

Effective Time of theMerger. Upon the satisfaction or waiver of the conditions set forth in sections8 and 9, and the “Closing” of theMerger in accordance with section3, the parties shall cause articles of merger meeting the requirements of section5.04 of the Texas Law to be properly executed and filed in accordance with the terms of thisAgreement and the applicable provisions of Texas Law. TheMerger shall become effective at the time of the filing of the articles of merger as provided above, or at such later time as the parties have agreed upon and designated in such filing as the effecti ve time of theMerger (the“Effective Time”).

1.3.

Articles of Incorporation and Bylaws of Surviving Corporation. From and after theEffective Time, the articles of incorporation of the Surviving Corporation shall be the articles of incorporation of VTSI as in effect immediately prior to the Effective Date with the amendments set forth in Schedule 1.3, and the bylaws of the Surviving Corp. shall be the bylaws ofVTSI as in effect immediately prior to theEffective Time, in each case until further amended.

1.4.

Directors of theSurviving Corporation. At theEffective Time, the individuals listed on Schedule1.4 shall serve as the sole directors of the Surviving Corporation.

1.5.

Officers of theSurviving Corporation. At theEffective Time, the individuals listed on Schedule1.5 shall serve as the sole officers of the Surviving Corporation.

1.6.

Fiscal Year. The fiscal year of the Surviving Corporation shall end on the 31st day ofDecember.

2. CONVERSION OF SHARES;EFFECTIVE DATE

2.1.

Manner and Basis of Conversion. At theEffective Date, and in theMerger,

2.1.1.

each of the 141,841 outstanding shares of preferred stock of VMC shall be changed into one share of Series A Preferred Stock of VTSI;

2.1.2.

each outstanding share of common stock inVMC shall be changed into a number of shares ofVTSI determined by dividing 7,803,795 by such aggregate number of shares ofVMC outstanding; and

452027v1

2.1.3.

each then-current outstanding share ofVTSI shall be changed into a number of new shares ofVTSI, determined by dividing 8,512,920 by the then-current number ofVTSI shares outstanding.

The parties intend that application of the foregoing provisions of this section shall result in 16,316,715 shares of common stock and 141,841 shares of Series A Preferred Stock of VTSI outstanding after theMerger, of which 7,803,795 shares of common stock shall be held by former holders ofVMC common stock as of theEffective Time, 8,512,920 shares of common stock shall be held by holders of VTSI common stock as of the Effective Time, and 141,841 shares of Series A Preferred Stock shall be held by former holders of VMC preferred stock. Each share of Series A Preferred Stock will be initially convertible into 8.9 shares of VTSI common stock, so that upon conversion the holders of such preferred stock would be entitled to receive 1,259,548 shares of VTSI common stock.

2.2.

Convertible Securities. The “Convertible Securities” ofVTSI outstanding at theEffective Time shall remain outstanding after theEffective Time. Terms and conditions of such Convertible Securities, other than the exercise price or conversion price and number of shares issuable upon conversion or exercise (and terms and conditions determined by reference to such matters), shall remain unchanged. and the exercise price or conversion price and number of shares issuable upon conversion or exercise (and terms and conditions determined by reference to such matters) shall be adjusted as set forth in the instruments governing such Convertible Securities.

2.3.

No Fractional Shares. No fractional VTSI Shares shall be issued; but rather, each fractional VTSI Share that would otherwise be issuable by virtue of the merger will be rounded up to a whole VTSI Share. All of the VTSI Shares issuable pursuant to section2 and the VTSI Shares issuable as a result of rounding upVTSI Shares are referred to as the“VTSI Merger Shares.”

2.4.

Procedure for Conversion of Share Certificates. Each holder of record of a stock certificate which prior to theEffective Time represented shares in either of the companies will be entitled to receive fromVTSI, upon proper surrender of such stock certificate(s) toVTSI or its transfer agent, the VTSI Merger Shares in accordance with section2.1.

2.5.

No Further Transactions. The stock transfer books ofVMC shall be closed as of theEffective Date, and no further registrations of transfers shall be made thereafter on the records ofVMC.

2.6.

Rights of Holders. No dividends shall be paid on any VTSI Merger Shares until the certificates evidencing such VTSI Merger Shares shall have been surrendered as required by section2.4 above.

3. CLOSING

TheMerger shall be consummated at a closing (the"Closing") at the offices ofVTSI,440 North Center, Arlington,Texas 76011, or at such other place as may be agreed by the parties. TheClosing shall take place on the tenth day following the meeting of the stockholders ofVTSI andVMC specified in sections8.4 and 9.4, whichever is later, or such other later date as may be agreed by the parties. At theClosing, the articles of merger provided for by section 1.2 shall be filed in the office of the Secretary of State ofTexas.

452027v1

4. REPRESENTATIONS AND WARRANTIES OFVTSI

VTSI represents and warrants to all the other companies that, except as disclosed on any schedule:

4.1.

Existence; Good Standing;Corporate Authority. VTSI is a corporation duly organized, validly existing and in good standing under the laws of theState of Texas and has the corporate power and lawful authority to own, lease, and operate its assets, properties, and business, and to carry on its business in all material respects as now conducted.

4.2.

Qualification. VTSI is duly qualified as a foreign corporation to transact business in the jurisdictions set forth in Schedule4.2, which are the only jurisdictions where the nature of its business or the ownership of its assets makes such qualification necessary, except as set forth on Schedule4.2 or where the failure to so qualify would nothave a “Material Adverse Effect” onVTSI.

4.3.

Authority. VTSI has the requisite corporate power and authority to execute, deliver, and perform its obligations under thisAgreement, every other document oragreement to be executed byVTSI under thisAgreement (each a“Transaction Document”) and to consummatethe transactions contemplated hereby. The execution and delivery of thisAgreement byVTSI and the performance byVTSI of its obligations, the execution and delivery of each of the Transactions Documents, and the performance of its obligations andthe consummation of the transactions conte mplated hereby have been duly authorized by the board of directors ofVTSI, and all other necessary corporate action on the part ofVTSI, other than the adoption and approval of thisAgreement by the stockholders ofVTSI, and no other corporate proceedings on the part ofVTSI are necessary to authorize thisAgreement, the Transaction Documents, andthe transactions contemplated hereby (assuming due authorization, execution, and delivery by the other party or parties). ThisAgreement has been duly and validly executed and delivered byVTSI and constitutes a legal, valid, and binding obligation ofVTSI, enforceable against it in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reor ganization, moratorium, or other laws affecting the enforcement of creditors’ rights generally, or by general principles of equity. Each Transaction Document has been, or, as of theEffective Time, will have been, duly and validly authorized, executed, and delivered byVTSI, and constitutes or will constitute as of such date a legally valid and binding obligation ofVTSI, enforceable against it in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the enforcement of creditors' rights generally or by general principles of equity.

4.4.

Capitalization. On the date of thisAgreement,VTSI's authorized“Capital Stock” consists of 100,000,000 common shares, of which 65,207,760 shares were issued and outstanding as of the date of the Agreement, and 2,000,000 preferred shares, of which none have been issued. No other class ofCapital Stock ofVTSI is authorized or outstanding. All of the issued and outstanding shares are duly authorized and are legally and validly issued, fully paid, and nonassessable.

4.5.

VTSI Convertible Securities. On the date of thisAgreement, except as set forth in Schedule4.5,(a) there are no outstanding Convertible Securities to acquire anyCapital Stock

452027v1

ofVTSI;(b) there are no shares ofCapital Stock ofVTSI reserved or set aside as treasury shares for any purpose and no stockholder ofVTSI has preemptive rights; and(c) there are no voting trusts or other agreements or understandings with respect to the voting of shares of any class ofCapital Stock ofVTSI, except as contemplated by thisAgreement.

4.6.

Subsidiaries. VTSI has no Subsidiaries. Except as set forth in Schedule4.6,VTSI is not a party to any partnership or joint ventureagreement or arrangement and does not own any equity interest in any other corporation, partnership or other entity.

4.7.

Certificate of Incorporation and Bylaws. VTSI has made available to all of the other parties true, correct, and complete copies of the certificate of incorporation and bylaws ofVTSI, and all amendments as of the date of thisAgreement.

4.8.

No Conflicts. Except as disclosed in Schedule4.8, neither the execution and delivery of thisAgreement and the Transaction Documents, nor the performance byVTSI of its obligations, northe consummation of the transactions contemplated hereby, will:(i) conflict withVTSI’s certificate of incorporation or bylaws;(ii) violate any material statute, law, ordinance, rule, or regulation applicable toVTSI or any of its properties or assets; or(iii) violate, breach, be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the term ination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation ofVTSI, or result in the creation or imposition of any Lien upon any properties, assets, or business ofVTSI under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, or otheragreement or commitment or any order, judgment, or decree to whichVTSI is a party or by whichVTSI or any ofits assets or properties is bound or encumbered, or give any Person the right to requireVTSI to purchase or repurchase any notes, bonds or instruments of any kind except, in each case, for such violations, conflicts, defaults, or other occurrences which would not have, and would not reasonably be expected tohave, a Material Adverse Eff ect.

4.9.

No consents required. Except(i) for the filing of the articles of merger pursuant to Texas Law,(ii) for theVTSI stockholder approval (as set forth below) or(iii) with respect to matters set forth in Schedule4.8, no consent, approval, or authorization of, permit from, or declaration, filing, or registration with, any governmental or regulatory authority, or any other person is required to be made or obtained byVTSI in connection with the execution, delivery, and performance of thisAgreement, the Transaction Documents andthe consummation of the transactions contemplated hereby except where the fa ilure to obtain such consent, approval, authorization, permit, or declaration or to make such filing or registration wouldnothave a Material Adverse Effect.

4.10.

Financial Statements. VTSI has previously providedVMC with copies of itsAnnual Report onForm 10-KSB, and its most recentQuarterly Report onForm 10-QSB, each as filed with the Securities in Exchange Commission. The financial statements included in such reports (the"VTSI Financial Statements") were prepared in accordance with GAAP consistently applied throughout the periods indicated and fairly presentthe financial position, results of operations, and changes in stockholders' equity ofVTSI as at and for the respective periods stated in such statements.

4.11.

No Material Adverse Change. Except as set forth in Schedule4.11,sinceSeptember 30, 2005 (the"VTSIBalance Sheet Date”),VTSI has conducted its business in all

452027v1

material respects only in the ordinary and usual course and except for its continuing to incur losses and depletion of its cash assets, there has been no material adverse change in the assets,liabilities, properties, business, or condition, financial or otherwise, ofVTSI, and no event or condition exists or has occurred which would, so far as reasonably can be foreseen at this time,have a Material Adverse Effect, nor has there been any damage, destruction, or loss materially affecting the assets, properties, business, or condition ofVTSI, whether or not covered by insurance.

4.12.

Tax Matters. Except as set forth in Schedule4.12, the total amounts accrued on the books and records ofVTSI on both the VTSIBalance Sheet Date and theEffective Date represent and will represent adequate provisions, in accordance with GAAP, for the payment of all federal, state, county, local, foreign, and other income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax, property tax, employment, and payroll related tax, and all other taxes and import duties, including any penalties or interest, whether or not measured in whole or in part by income, whether disputed or not, which are hereafter found to be, or to have been, due with respect to the conduct of the business ofVTSI during all per iods covered by the“VTSI Financial Statements” and during the period subsequent and up to and through the date of theClosing. Except as disclosed in Schedule4.12 or as wouldnothave a Material Adverse Effect,VTSI has timely filed, on or before the relevant due dates (including any extensions of time to file), all income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax, employment and payroll related tax, property tax, and all other tax returns and reports whichVTSI is required by law to file, all of which were properly prepared on a reasonable basis. Except as disclosed in Schedule4.12,VTSI has paid or provided for all taxes shown to be due on such returns and any amendments. Except as disclosed in Schedule4.12, ther e are no unpaid deficiencies or other assessments of tax, interest, or penalties owed byVTSI.

4.13.

Compliance with Laws. (a) Except as is set forth in Schedule4.13,VTSI is in compliance with, and has not received notice from any Governmental Authority alleging a violation by it of, any federal, state, county, local or foreign, statute, law, ordinance, regulation, or order(i) applicable to it or its business, or(ii) which otherwise is applicable to it involving the manufacture, production, storage, possession, sale, delivery, or distribution of any of its products or services;(b) VTSI has not received any directives or orders from any Governmental Authority related to or affecting any of its products or f acilities;(c) VTSI has all licenses,permits, orders, authorizations, notifications, and approvals of any Governmental Authority material to the conduct of its business as presently conducted (collectively, the"Permits"); and(d) all materialPermits, the loss of whichcouldhave a Material Adverse Effect, are listed in Schedule4.13 and are in full force and effect, no violations are or have been recorded in respect of anyPermit which currently have orcouldhave a Material Adverse Effect, and no proceeding is pending, or, to the best knowledge ofVTSI, threatened, to revoke or limit anyPermit, the loss of whichcouldhave a Material Adverse Effect.

4.14.

No Defaults Under Loan Agreements. Except as set forth in Schedule4.14,VTSI is not in default under any “Contractual Obligation” relating to borrowed money to which it is a party or by which it orits material assets or properties is bound, nor does any condition exist which with notice or lapse of time or both would constitute such default, and each such contract or otheragreement relating to borrowed money is in full force and effect. Except as set forth in Schedule4.14, there is noagreement, contract, or instrument to whichVTSI is a party

452027v1

and which evidences, individually or, in the case of related transactions, collectively, indebtedness ofVTSI for money borrowed.

4.15.

Litigation. Except as set forth in Schedule4.15,VTSI is not a party to, nor, to its knowledge, threatened with, any litigation or judicial, administrative, or arbitration proceeding or investigation. Except as set forth in Schedule4.14, there is no dispute with any Person under contract withVTSI whichhas a Material Adverse Effect onVTSI, or is reasonably likelytohave a Material Adverse Effect onVTSI, and there is no present or toVTSI’s knowledge, threatened walkout, strike, or any other similar occurrence.

4.16.

Agreements.Schedule4.16 lists or refers to all of the following types of contracts and other agreements (whether oral or written) that are not otherwise disclosed in thisAgreement and that provide for payments by or toVTSI in excess of $10,000(a) to whichVTSI is a party or(b) by or to whichVTSI orits assets or properties are bound or subject: (i) contracts and other agreements with any current or former officer, director, employee, consultant, or stockholder, including, without limitation, all non-competition agreements with employees;(ii) contracts and other agreements for the sale of products or services;(iii) contracts and other agreements for the purchase or acquisition of products, materials, supplies, equipment, merchandise, or services;(iv) joint venture agreements relating to its assets, properties, or business or by or to which it orits assets or properties are bound or subject;(v) warehousing, distributorship, representative, management, marketing, sales agency, or advertising agreements; and(vi) any other material contract or other agreement not made in the ordinary course of business (other than those reflected in any other schedule). All of the contracts and other agreements set forth in Schedule4.16 are (except as set forth in said schedule) in full force and effect in accordance with their respective terms, andVTSI is not in default, nor does any condition exist which with notice or lapse of t ime or both would constitute a default byVTSI, in any material respect, under any of them, nor, to the knowledge ofVTSI, is any other party to any such contract or otheragreement in default in any material respect on the date of thisAgreement. On the date of thisAgreement,VTSI is not a party to or bound by any contracts or other agreements (other than those identified on a Schedule to thisAgreement) which it believes either individually or in the aggregate have orcouldhave a Material Adverse Effect onVTSI.

4.17.

Real Estate. Except as set forth in Schedule4.17,VTSI does not own or lease any real property. Schedule4.17 sets forth a list of: (i) all leases, subleases, or other agreements under whichVTSI is lessor or lessee of any real property. Schedule4.17 includes, without limitation, the location of the property, the names of the lessor and lessee, and any affiliation or other association betweenVTSI and the lessor and lessee. Such leases, subleases, and other agreements are in full force and effect and, with respect toVTSI’s performance, no default, or event which, with notice or lapse of time or both, would constitute a default, in any material respect byVTSI, has occurred.

The real estate owned or leased byVTSI is not subject in any material respect to unlawful contamination from any substance or material presently identified as toxic or hazardous by any “Environmental Laws” andVTSI has not caused or suffered to occur a material spillage or other discharge of any “Hazardous Materials” within the meaning of any Environmental Law or otherwise conducted operations which could reasonably lead to the imposition of any Lien upon any real property owned or leased byVTSI or any material fine uponVTSI pursuant to any Environmental Law.

452027v1

4.18.

Officers, Directors and Employees. Schedule4.18 sets forth as of this date of the name and total annual compensation of each officer and director ofVTSI, and each employee and consultant ofVTSI, who is compensated at a rate in excess of $60,000 per annum. Except for employment agreements described in Schedule4.18,VTSI is not a party to any “Contractual Obligation” which could obligateVTSI to pay severance or other similar compensation to an officer, director, employee, or other Person solely as a result of theMerger or other transactions contemplated.

4.19.

Intellectual property.

4.19.1.

Schedule4.19 contains a complete and accurate list and summary description, including any royalties paid or received byVTSI, of all contracts relating to theIntellectual Property Assets to whichVTSI is a party or by whichVTSI is bound (the"VTSI Intellectual Property Assets"), except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $5,000 under whichVTSI is the licensee. There are no outstanding and, toVTSI's knowledge, no threatened, disputes, or disagreements with respect to any suchagreement.

4.19.2.

Ownership ofIntellectual Property Assets. Except as set forth on Schedule4.19:

4.19.2.1.

VTSI is the owner of all right, title, and interest in and to each of the VTSI Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use without payment to a third party all of the VTSI Intellectual Property Assets; and

4.19.2.2.

all former and current employees ofVTSI have executed written contracts withVTSI that assign toVTSI all rights to any inventions, improvements, discoveries, or information relating to the business ofVTSI. No employee ofVTSI has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other thanVTSI.

4.19.3.

Patents

4.19.3.1.

Schedule4.19 contains a complete and accurate list and summary description of allPatents held byVTSI (the"VTSI Patents").

4.19.3.2.

Except as set forth in Schedule4.19, all of such issued VTSI Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use),and are not subject to any maintenance fees or taxes or actions falling due within 90 days after the date ofClosing.

4.19.3.3.

Except as set forth in Schedule4.19, no VTSI Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding, and there is not toVTSI's knowledge any potentially interfering patent or patent application of any third party.

4.19.3.4.

Except as set forth in Schedule4.19, no VTSI Patent is infringed or, toVTSI's knowledge, has been challenged or threatened in any way. Except as set forth in Schedule4.19, none of the products manufactured and sold, nor any process or know-

452027v1

how used, byVTSI infringes or is alleged to infringe any patent or other proprietary right of any other Person.

4.19.3.5.

Except as set forth in Schedule4.19, all products made, used, or sold under thePatents have been marked with the proper patent notice.

4.19.4.

Trademarks

4.19.4.1.

Schedule4.19 contains a complete and accurate list and summary description of all VTSI Marks registered with theUnited States Patent and Trademark Office (the"VTSI Marks").

4.19.4.2.

Except as set forth in Schedule4.19, all VTSI Marks that have been registered with theUnited States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable,and are not subject to any maintenance fees or taxes or actions falling due within 90 days after theClosing.

4.19.4.3.

Except as set forth in Schedule4.19, no VTSI Mark has been or is now involved in any opposition, invalidation, or cancellation, and no such action is known byVTSI to be threatened with respect to any of the VTSI Marks.

4.19.4.4.

Except as set forth in Schedule4.19,VTSI does not know of any potentially interfering trademark or trademark application of any third party.

4.19.4.5.

Except as set forth in Schedule4.19, no VTSI Mark is infringed or, toVTSI's knowledge, has been challenged or threatened in any way. None of the VTSI Marks used byVTSI infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.

4.19.4.6.

Except as set forth in Schedule4.19, all products and materials containing aMark bear the proper federal registration notice where permitted by law.

4.19.5.

Copyrights

4.19.5.1.

Schedule4.19 contains a complete and accurate list and summary description of allCopyright registrations held byVTSI (the"VTSI Copyrights").

4.19.5.2.

Except as set forth in Schedule4.19, all the VTSI Copyrights which have been registered and are currently in compliance with formal legal requirements, are valid and enforceable,and are not subject to any maintenance fees or taxes or actions falling due within 90 days after the date ofClosing.

4.19.5.3.

Except as set forth in Schedule4.19, no VTSI Copyright is infringed or, toVTSI's knowledge, has been challenged or threatened in any way. None of the subject matter of any of theCopyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party.

4.19.6.

Trade Secrets

4.19.6.1.

Except as set forth in Schedule4.19, with respect to eachTrade Secret ofVTSI, the documentation relating to suchTrade Secret is current, accurate, and

452027v1

sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual.

4.19.6.2.

Except as set forth in Schedule4.19,VTSI has taken all reasonable precautions to protect the secrecy, confidentiality, and value of itsTrade Secrets. VTSI has good title and an absolute (but not necessarily exclusive) right to use itsTrade Secrets. VTSI'sTrade Secrets are not part of the public knowledge or literature, and have not toVTSI's knowledge been used, divulged, or appropriated either for the benefit of any Person (other thanVTSI) or toVTSI's detriment. NoTrade Secret ofVTSI is subject to any adverse claim or has been challenged or threatened in any way.

4.20.

Products. VTSI has furnishedVMC with representative information describingVTSI products and services.

4.21.

Liens. VTSI owns outright and has good and marketable title to all of its tangible property, including, without limitation, all of the tangible property reflected on the Balance Sheets included in the VTSI Financial Statements, in each case free and clear of any Lien, except as set forth on Schedule4.21 and except for:(i) immaterial tangible property,(ii) assets and properties disposed of, or subject to purchase or sales orders, in the ordinary course of business since theBalance Sheet Date,(iii) Liens securing taxes, assessments, governmental charges or levies, or the claims of materialmen, carriers, landlords, and like persons, wh ich are not yet due and payable, and(iv) minor Liens of a character which do not substantially impair the assets or properties ofVTSI or materially detract from its business.

4.22.

Liabilities. As at the date of thisAgreement,VTSI did not have any material direct or indirect indebtedness or uninsured liability accrued, absolute, or contingent (and likely of occurring) or otherwise, including, without limitation,liabilities on account of taxes, other governmental charges or lawsuits brought, whether or not of a kind required by GAAP to be set forth, accrued, reserved for or reflected in a financial statement ("Liabilities"), which have not been adequately accrued, reserved for or reflected in the VTSI Financial Statements, exceptLiabilities(i) incurred since the VTSIBalance Sheet Da te in the ordinary course of business,(ii) incurred in connection with thisAgreement,(iii) of the type expressly referred to elsewhere in thisAgreement or(iv) has disclosed in Schedule4.22.

4.23.

Employee Benefit Plans. Schedule4.23 sets forth a true and complete list of all written and oral pension, profit sharing, retirement, deferred compensation, stock purchase, stock option, incentive compensation, bonus, vacation, severance, sickness or disability, hospitalization, individual and group health and accident insurance, individual and group life insurance, and other materialemployee benefit plans, programs, commitments, or funding arrangements maintained byVTSI, (individually referred to as an"Employee Benefit Plan" and collectively referred to as"Employee Benefit Plans") to whichVTSI is a party, or under whichVTSI has any obligations, present or future (other tha n obligations to pay current wages, salaries or sales commissions terminable on notice of 30 days or less) in respect of, or which otherwise cover or benefit, any of the current or former officers, employees or sales representatives (whether or not employees) ofVTSI, or their beneficiaries. VTSI has delivered or made available to the other parties true and complete copies of all documents, as they may have been amended to today’s date, embodying the terms of itsEmployee Benefit Plans.

Except for theEmployee Benefit Plans identified in Schedule4.23, there is no "employee pension benefit plan", "employee welfare benefit plan," or "employee benefit plan" within the

452027v1

meaning of sections3(1), 3(2) and 3(3) of “ERISA.” NoEmployee Benefit Plan to whichVTSI or any “ERISAAffiliate” has maintained or contributed to is subject toTitle IV of ERISA, or section 412 of theCode.

VTSI does not maintain and has not maintained a plan which meets the safe harbor requirements of section 414(n)(5) of theCode andVTSI has not made any representations (including oral representations) with respect to the existence of such a plan to any customers, clients, employees, or any other person. VTSI does not maintain and has not maintained any "voluntary employees' beneficiary association" within the meaning of section 501(c)(9) of theCode.

Except as set forth in Schedule4.23, eachEmployee Benefit Plan described in Schedule4.23 is in full force and effect in accordance with its terms and there are no material actions, suits, or claims pending (other than routine claims for benefits) or, toVTSI’s knowledge, threatened, against anyEmployee Benefit Plan or any fiduciary, andVTSI has performed all material obligations required to be performed by it under, and is not in default under or in violation of, anyEmployee Benefit Plan, in any material respect, andVTSI is in compliance in all material respects with the requirements prescribed by all statutes, laws, ordinances, orders or governmental rules or regulations applicable to theEmployee Benefit Plans, including, without limitation, ERISA and theCode. NeitherVTSI nor any other "party-in-interest," as defined in section3(14) ofERISA, has engaged in any "prohibited transaction," as defined in section406 ofERISA, which could subject anyEmployee Benefit Plan,VTSI, orVMC, or any officer, director, partner, or employee ofVTSI orVMC, or any fiduciary of anyEmployee Benefit Plan to a material penalty or excise tax imposed under section502(i) ofERISA and section 4975 of theCode.

4.24.

Potential Conflicts of Interest. Except as disclosed in Schedule4.24, no officer or director ofVTSI:(i) owns, directly or indirectly, any interest in (excepting not more than 5% stock holdings for investment purposes in securities of publicly held and traded companies) or is an officer, director, employee, or consultant of any entity which is a competitor, lessor, lessee, customer, or supplier ofVTSI;(ii) has any interest, direct or indirect, in any material property or assets ofVTSI (except in his capacity as a stockholder ofVTSI);(iii) owns directly or indirectly, in whole or in part, any material copyright, trademark, trade name, service mark, franchise, patent, inven tion, permit, license, secret, or confidential information of the nature requiring a license for use byVTSI whichVTSI is using or the use of which is necessary for the business ofVTSI; or(iv) has any material cause of action or other claim whatsoever against, or owes any material amount to,VTSI, except for claims in the ordinary course of business (such as for accrued vacation pay, accrued benefits underEmployee Benefit Plans, expense advances, and similar matters).

4.25.

Full Disclosure. None of the information supplied or to be supplied byVTSI for inclusion in the documents to be prepared in connection with the transactions contemplated by thisAgreement including, without limitation,(i) documents to be filed with the SEC,(ii) filings pursuant to any state securities and blue sky laws, and(iii) filings made in connection with obtaining the approvals of “Governmental Authorities,” contain or will contain, at the time such documents are filed with any federal or state regulatory authority and/or at the time they are distributed to the stockholders ofVTSI, any untrue statements of a material fact or omit to state any material fact necessary in order to make the statements not misleading.

452027v1

4.26.

Information inProxy Statement. Information supplied byVTSI for inclusion or incorporation by reference in the “Proxy Statement,” at the date mailed to the parties’ stockholders and at the time of the parties’ stockholders meeting contemplated hereby, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated, or necessary in order to make the statements, in light of the circumstances under which they are made, not misleading.

5. REPRESENTATIONS AND WARRANTIES OFVMC

VMC, which for purposes of this section5 shall be deemed to include all “Subsidiaries” ofVMC unless the context indicates otherwise, represents and warrants to all the other companies that, except as disclosed on any schedule:

5.1.

Existence; Good Standing;Corporate Authority. VMC is a corporation duly organized, validly existing and in good standing under the laws of theState of Texas and has the corporate power and lawful authority to own, lease, and operate its assets, properties, and business, and to carry on its business in all material respects as now conducted.

5.2.

Qualification. VMC is duly qualified as a foreign corporation to transact business in the jurisdictions set forth in Schedule5.2, which are the only jurisdictions where the nature of its business or the ownership of its assets makes such qualification necessary, except as set forth on Schedule5.2 or where the failure to so qualify would nothave a “Material Adverse Effect” onVMC.

5.3.

Authority. VMC has the requisite corporate power and authority to execute, deliver, and perform its obligations under thisAgreement, every other Transaction Document to be executed byVMC under thisAgreement and to consummatethe transactions contemplated hereby. The execution and delivery of thisAgreement byVMC and the performance byVMC of its obligations, the execution and delivery of each of the Transactions Documents, and the performance of its obligations andthe consummation of the transactions contemplated hereby have been duly authorized by the board of directors ofVMC, and all other necessary corporate action on the part ofVMC, other than the adoption and approval of thisAgreement by the stockholders ofVMC, and no other corporate proceedings on the part ofVMC are necessary to authorize thisAgreement, the Transaction Documents, andthe transactions contemplated hereby (assuming due authorization, execution, and delivery by the other party or parties). ThisAgreement has been duly and validly executed and delivered byVMC and constitutes a legal, valid, and binding obligation ofVMC, enforceable against it in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the enforcement of creditors’ ; rights generally, or by general principles of equity. Each Transaction Document has been, or, as of theEffective Time, will have been, duly and validly authorized, executed, and delivered byVMC, and constitutes or will constitute as of such date a legally valid and binding obligation ofVMC, enforceable against it in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws affecting the enforcement of creditors' rights generally or by general principles of equity.

5.4.

Capitalization. On the date of thisAgreement,VMC's authorizedCapital Stock consists of 100,000,000 shares of common stock, par value $.0001 per share, and 20,000,000

452027v1

shares of preferred stock, par value $10 per share of which 3,697,651 shares or common stock and 141,841 shares of preferred stock were issued and outstanding as of the date of this Agreement. No other class ofCapital Stock ofVMC is authorized or outstanding. All of the issued and outstanding shares(i) are owned by the persons listed on Schedule5.4 and(ii) are duly authorized and are legally and validly issued, fully paid, and nonassessable.

5.5.

VMC Convertible Securities. On the date of thisAgreement, except as set forth in Schedule5.5,(a) there are no outstanding Convertible Securities to acquire anyCapital Stock ofVMC;(b) there are no shares ofCapital Stock ofVMC reserved or set aside as treasury shares for any purpose and no stockholder ofVMC has preemptive rights; and(c) there are no voting trusts or other agreements or understandings with respect to the voting of shares of any class ofCapital Stock ofVMC, except as contemplated by thisAgreement.

5.6.

Subsidiaries. Except as set forth in Schedule5.6,VMC has no Subsidiaries and neitherVMC nor any of its Subsidiaries is a party to any partnership or joint ventureagreement or arrangement or owns any equity interest in any other corporation, partnership or other entity. Except as set forth in Schedule5.6, each subsidiary ofVMC is a corporation duly organized, validly existing, and in good standing under the laws of the state or other jurisdiction of incorporation set forth on Schedule5.6, and is duly qualified to do business as a foreign corporation, and in good standing in the jurisdictions (listed in Schedule5.6) in which it owns property of the nature, or transacts business of the type, that would make such qualification necessary, except where the failure to so qualify wouldnothave a Material Adverse Effect. Each Subsidiary ofVMC has the power and lawful authority to own, lease and operate its assets, properties and business and to carry on its business in all material respects as now conducted. VMC owns of record, free and clear of all Liens, 100% of the issued and outstandingCapital Stock of its Subsidiaries.

5.7.

Certificate of Incorporation and Bylaws. VMC has made available toVTSI true, correct, and complete copies of the certificate of incorporation and bylaws ofVMC, and all amendments as of the date of thisAgreement.

5.8.

No Conflicts. Except as disclosed in Schedule5.8, neither the execution and delivery of thisAgreement and the Transaction Documents, nor the performance byVMC of its obligations, northe consummation of the transactions contemplated hereby, will:(i) conflict withVMC’s certificate of incorporation or bylaws;(ii) violate any material statute, law, ordinance, rule, or regulation applicable toVMC or any of its Subsidiaries or any of their properties or assets; or(iii) violate, breach, be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation ofVMC or any of its Subsidiaries, or result in the creation or imposition of any Lien upon any properties, assets, or business ofVMC or any of its Subsidiaries under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, or otheragreement or commitment or any order, judgment, or decree to whichVMC or any of its Subsidiaries is a party or by whichVMC or any of its Subsidiaries or any of their respective assets or properties is bound or encumbered, or give any Person the right to requireVMC or any of its Subsidiaries to purchase or repurchase any notes, bonds or instruments of any kind except, in each case, for such violations, confl icts, defaults, or other occurrences which would not have, and would not reasonably be expected tohave, a Material Adverse Effect.

452027v1

5.9.

No Consents Required. Except(i) for the filing of the articles of merger pursuant to Texas Law,(ii) for theVMC stockholder approval (as set forth below) or(iii) with respect to matters set forth in Schedule5.8, no consent, approval, or authorization of, permit from, or declaration, filing, or registration with, any governmental or regulatory authority, or any other person is required to be made or obtained byVMC or its Subsidiaries in connection with the execution, delivery, and performance of thisAgreement, the Transaction Documents andthe consummation of the transactions contemplated hereby e xcept where the failure to obtain such consent, approval, authorization, permit, or declaration or to make such filing or registration wouldnothave a Material Adverse Effect.

5.10.

Unaudited Financial Statements. VMC has previously provided VTR side with preliminary drafts, prepared in consultation withVMC's auditors but not yet audited, of the unaudited balance sheets ofVMC as atSeptember 30, 2005 (the"VMCBalance Sheet Date"), together with the related unaudited statements of income, for the year then ended (the"VMC Unaudited Financial Statements"). TheVMC Unaudited Financial Statements were prepared in accordance with GAAP consistently applied throughout the periods indicated and fairly presentsthe financial position, results of operations, and changes in stockholders' equity ofVMC as at theVMCBalance Sheet Date and for the respective periods stated in such statements.

5.11.

No Material Adverse Change. Except as set forth in Schedule5.10,since theVMCBalance Sheet Date,VMC has conducted its business in all material respects only in the ordinary and usual course and except forVMC continuing to incur losses and depletion of its cash assets, there has been no material adverse change in the assets,liabilities, properties, business, or condition, financial or otherwise, ofVMC, and no event or condition exists or has occurred which would, so far as reasonably can be foreseen at this time,have a Material Adverse Effect, nor has there been any damage, destruction, or loss materially affecting the assets, properties, business, or conditi on ofVMC, whether or not covered by insurance.

5.12.

Tax Matters. Except as set forth in Schedule5.12, the total amounts accrued on the books and records ofVMC on both theVMCBalance Sheet Date and theEffective Date represent and will represent adequate provisions, in accordance with GAAP, for the payment of all federal, state, county, local, foreign, and other income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax, property tax, employment, and payroll related tax, and all other taxes and import duties, including any penalties or interest, whether or not measured in whole or in part by income, whether disputed or not, which are hereafter found to be, or to have been, due with respect to the conduct of the business ofVMC during all periods covered by theVMC Unaudited Financial Statements and during the period subsequent and up to and through the date of theClosing, respectively. Except as disclosed in Schedule5.12 or as wouldnothave a Material Adverse Effect,VMC has timely filed, on or before the relevant due dates (including any extensions of time to file), all income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax, employment and payroll related tax, property tax, and all other tax returns and reports whichVMC is required by law to file, all of which were properly prepared on a reasonable basis. Except as disclosed in Schedule5.12,VMC has paid or provided for all taxes shown to be due on such returns and any amendments. Except as disclosed in Schedule5.12, there are no unpaid deficiencies or other assess ments of tax, interest, or penalties owed byVMC.

5.13.

Compliance with Laws. (a) Except as is set forth in Schedule5.13,VMC is in compliance with, and has not received notice from any “Governmental Authority” alleging a violation by it of, any federal, state, county, local or foreign, statute, law, ordinance, regulation,

452027v1

or order(i) applicable to it or its business, or(ii) which otherwise is applicable to it involving the manufacture, production, storage, possession, sale, delivery, or distribution of any of its products or services;(b) VMC has not received any directives or orders from any Governmental Authority related to or affecting any of its products or facilities;(c) VMC has allPermits material to the conduct of its business as presently conducted; and(d) all materialPermits, the loss of whichcouldhave a Material Adverse Effect, are listed in Schedule5.13 and are in full force and effect, no violations are or have been recorded in respect of anyPermit which currently have orcouldhave a Material Adverse Effect, and no proceeding is pending, or, to the best knowledge ofVMC, threatened, to revoke or limit anyPermit, the loss of whichcouldhave a Material Adverse Effect.

5.14.

No Defaults Under Loan Agreements. Except as set forth in Schedule5.14,VMC is not in default under anyContractual Obligation relating to borrowed money to which it is a party or by which it orits material assets or properties is bound, nor does any condition exist which with notice or lapse of time or both would constitute such default, and each such contract or otheragreement relating to borrowed money is in full force and effect. Except as set forth in Schedule5.14, there is noagreement, contract, or instrument to whichVMC is a party and which evidences, individually or, in the case of related transactions, collectively, indebtedness ofVMC for money borrow ed.

5.15.

Litigation. Except as set forth in Schedule5.15,VMC is not a party to, nor, to its knowledge, threatened with, any litigation or judicial, administrative, or arbitration proceeding or investigation. Except as set forth in Schedule5.15, there is no dispute with any Person under contract withVMC whichhas a Material Adverse Effect onVMC, or is reasonably likelytohave a Material Adverse Effect onVMC, and there is no present or toVMC’s knowledge, threatened walkout, strike, or any other similar occurrence.

5.16.

Agreements. Schedule5.16 lists or refers to all of the following types of contracts and other agreements (whether oral or written) that are not otherwise disclosed in thisAgreement and that provide for payments by or toVMC in excess of $10,000(a) to whichVMC is a party or(b) by or to whichVMC orits assets or properties are bound or subject: (i) contracts and other agreements with any current or former officer, director, employee, consultant, or stockholder, including, without limitation, all non-competition agreements with employees;(ii) contracts and other agreements for the sale of products or services;(iii) contracts and other agreements for the purchase or acquisition of products, materials, supplies, equipment, merchandise, or services;(iv) joint venture agreements relating to its assets, properties, or business or by or to which it orits assets or properties are bound or subject;(v) warehousing, distributorship, representative, management, marketing, sales agency, or advertising agreements; and(vi) any other material contract or other agreement not made in the ordinary course of business (other than those reflected in any other schedule). All of the contracts and other agreements set forth in Schedule5.16 are (except as set forth in said schedule) in full force and effect in accordance with their respective terms, andVMC is not in default, nor does any condition exist which with notice or lapse of time or both would constitute a default byVMC, in any material respect, under any of them, nor, to the knowledge ofVMC, is any other party to any such contract or otheragreement in default in any material respect on the date of thisAgreement. On the date of thisAgreement,VMC is not a party to or bound by any contracts or other agreements (other than those identified on a Schedule to thisAgreement) which it believes either individually or in the aggregate have orcouldhave a Material Adverse Effect onVMC.

452027v1

5.17.

Real Estate. Except as set forth in Schedule5.17,VMC does not own or lease any real property. Schedule5.17 sets forth a list of: (i) all leases, subleases, or other agreements under whichVMC is lessor or lessee of any real property. Schedule5.17 includes, without limitation, the location of the property, the names of the lessor and lessee, and any affiliation or other association betweenVMC and the lessor and lessee. Such leases, subleases, and other agreements are in full force and effect and, with respect toVMC’s performance, no default, or event which, with notice or lapse of time or both, would constitute a default, in any material respect byVMC, has occurred.

The real estate owned or leased byVMC is not subject in any material respect to unlawful contamination from any substance or material presently identified as toxic or hazardous by anyEnvironmental Laws andVMC has not caused or suffered to occur a material spillage or other discharge of any “Hazardous Materials” within the meaning of any Environmental Law or otherwise conducted operations which could reasonably lead to the imposition of any Lien upon any real property owned or leased byVMC or any material fine uponVMC pursuant to any Environmental Law.

5.18.

Officers, Directors and Employees. Schedule5.18 sets forth as of this date of the name and total annual compensation of each officer and director ofVMC, and each employee and consultant ofVMC, who is compensated at a rate in excess of $60,000 per annum. Except for employment agreements described in Schedule5.18,VMC is not a party to anyContractual Obligation which could obligateVMC to pay severance or other similar compensation to an officer, director, employee, or other Person solely as a result of theMerger or other transactions contemplated.

5.19.

Intellectual property.

5.19.1.

Schedule5.19 contains a complete and accurate list and summary description, including any royalties paid or received byVMC, of all contracts relating to theIntellectual Property Assets to whichVMC is a party or by whichVMC is bound (the "VMC Intellectual Property Assets"), except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $5,000 under whichVMC is the licensee. There are no outstanding and, toVMC's knowledge, no threatened, disputes, or disagreements with respect to any suchagreement.

5.19.2.

Ownership ofIntellectual Property Assets. Except as set forth on Schedule5.19:

5.19.2.1.

VMC is the owner of all right, title, and interest in and to each of theVMC Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use without payment to a third party all of theIntellectual Property Assets; and

5.19.2.2.

all former and current employees ofVMC have executed written contracts withVMC that assign toVMC all rights to any inventions, improvements, discoveries, or information relating to the business ofVMC. No employee ofVMC has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other thanVMC.

5.19.3.

Patents

452027v1

5.19.3.1.

Schedule5.19 contains a complete and accurate list and summary description of all patents held byVMC (the"VMC Patents").

5.19.3.2.

Except as set forth in Schedule5.19, all of the issuedVMC Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use),and are not subject to any maintenance fees or taxes or actions falling due within 90 days after the date ofClosing.

5.19.3.3.

Except as set forth in Schedule5.19, noVMC Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding, and there is not toVMC's knowledge any potentially interfering patent or patent application of any third party.

5.19.3.4.

Except as set forth in Schedule5.19, noVMC Patent is infringed or, toVMC's knowledge, has been challenged or threatened in any way. Except as set forth in Schedule5.19, none of the products manufactured and sold, nor any process or know-how used, byVMC infringes or is alleged to infringe any patent or other proprietary right of any other Person.

5.19.3.5.

Except as set forth in Schedule5.19, all products made, used, or sold under theVMC Patents have been marked with the proper patent notice.

5.19.4.

Trademarks

5.19.4.1.

Schedule5.19 contains a complete and accurate list and summary description of allMarks registered with theUnited States Patent and Trademark Office (the"VMC Marks").

5.19.4.2.

Except as set forth in Schedule5.19, allVMC Marks that have been registered with theUnited States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable,and are not subject to any maintenance fees or taxes or actions falling due within 90 days after theClosing.

5.19.4.3.

Except as set forth in Schedule5.19, noVMC Mark has been or is now involved in any opposition, invalidation, or cancellation, and no such action is known byVMC to be threatened with respect to any of theMarks.

5.19.4.4.

Except as set forth in Schedule5.19,VMC does not know of any potentially interfering trademark or trademark application of any third party.

5.19.4.5.

Except as set forth in Schedule5.19, noVMC Mark is infringed or, toVMC's knowledge, has been challenged or threatened in any way. None of theVMC Marks used byVMC infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.

5.19.4.6.

Except as set forth in Schedule5.19, all products and materials containing aMark bear the proper federal registration notice where permitted by law.

5.19.5.

Copyrights

5.19.5.1.

Schedule5.19 contains a complete and accurate list and summary description of allCopyright registrations held byVMC ("VMC Copyrights").

452027v1

5.19.5.2.

Except as set forth in Schedule5.19, all theVMC Copyrights which have been registered and are currently in compliance with formal legal requirements, are valid and enforceable,and are not subject to any maintenance fees or taxes or actions falling due within 90 days after the date ofClosing.

5.19.5.3.

Except as set forth in Schedule5.19, noVMC Copyright is infringed or, toVMC's knowledge, has been challenged or threatened in any way. None of the subject matter of any of theVMC Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party.

5.19.6.

Trade Secrets

5.19.6.1.

Except as set forth in Schedule5.19, with respect to eachTrade Secret, ofVMC the documentation relating to suchTrade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual.

5.19.6.2.

Except as set forth in Schedule5.19,VMC has taken all reasonable precautions to protect the secrecy, confidentiality, and value of itsTrade Secrets. VMC has good title and an absolute (but not necessarily exclusive) right to use itsTrade Secrets. VMC'sTrade Secrets are not part of the public knowledge or literature, and have not toVMC's knowledge been used, divulged, or appropriated either for the benefit of any Person (other thanVMC) or toVMC's detriment. NoTrade Secret ofVMC is subject to any adverse claim or has been challenged or threatened in any way.

5.20.

Products. VMC has furnished theVTSI with representative information describingVMC products and services.

5.21.

Liens. VMC owns outright and has good and marketable title to all of its tangible property, including, without limitation, all of the tangible property reflected on theVMC Unaudited Financial Statements, in each case free and clear of any Lien, except as set forth on Schedule5.21 and except for:(i) immaterial tangible property,(ii) assets and properties disposed of, or subject to purchase or sales orders, in the ordinary course of business since theVMCBalance Sheet Date,(iii) Liens securing taxes, assessments, governmental charges or levies, or the claims of materialmen, carriers, landlords, and like persons, which are not yet due and payable, and(iv ) minor Liens of a character which do not substantially impair the assets or properties ofVMC or materially detract from its business..

5.22.

Liabilities. As at the date of thisAgreement,VMC did not have any materialLiabilities which have not been adequately accrued, reserved for or reflected in theVMC Unaudited Financial Statements, exceptLiabilities(i) incurred since theVMCBalance Sheet Date in the ordinary course of business,(ii) incurred in connection with thisAgreement,(iii) of the type expressly referred to elsewhere in thisAgreement or(iv) has disclosed in Schedule5.22.

5.23.

Employee Benefit Plans. Schedule5.23 sets forth a true and complete list of all written and oral pension,Employee Benefit Plans to whichVMC is a party, or under whichVMC has any obligations, present or future (other than obligations to pay current wages, salaries or sales commissions terminable on notice of 30 days or less) in respect of, or which otherwise cover or benefit, any of the current or former officers, employees or sales representatives (whether or not employees) ofVMC, or their beneficiaries.VMC has delivered or made

452027v1

available to the other parties true and complete copies of all documents, as they may have been amended to today’s date, embodying the terms of itsEmployee Benefit Plans.

Except for theEmployee Benefit Plans identified in Schedule5.23, there is no "employee pension benefit plan", "employee welfare benefit plan," or "employee benefit plan" within the meaning of sections3(1), 3(2) and 3(3) of “ERISA.” NoEmployee Benefit Plan to whichVMC or any “ERISAAffiliate” has maintained or contributed to is subject toTitle IV of ERISA, or section 412 of theCode.

VMC does not maintain and has not maintained a plan which meets the safe harbor requirements of section 414(n)(5) of theCode andVMC has not made any representations (including oral representations) with respect to the existence of such a plan to any customers, clients, employees, or any other person. VMC does not maintain and has not maintained any "voluntary employees' beneficiary association" within the meaning of section 501(c)(9) of theCode.

Except as set forth in Schedule5.23, eachEmployee Benefit Plan described in Schedule5.23 is in full force and effect in accordance with its terms and there are no material actions, suits, or claims pending (other than routine claims for benefits) or, toVMC’s knowledge, threatened, against anyEmployee Benefit Plan or any fiduciary, andVMC has performed all material obligations required to be performed by it under, and is not in default under or in violation of, anyEmployee Benefit Plan, in any material respect, andVMC is in compliance in all material respects with the requirements prescribed by all statutes, laws, ordinances, orders or governmental rules or regulations applicable to theEmployee Benefit Plans, including, without limitation, ERISA and theCode. NeitherVMC nor any other "party-in-interest," as defined in section3(14) ofERISA, has engaged in any "prohibited transaction," as defined in section406 ofERISA, which could subject anyEmployee Benefit Plan,VMC, orVMC, or any officer, director, partner, or employee ofVMC orVMC, or any fiduciary of anyEmployee Benefit Plan to a material penalty or excise tax imposed under section502(i) ofERISA and section 4975 of theCode.

5.24.

Potential Conflicts of Interest. Except as disclosed in Schedule5.24, no officer or director ofVMC:(i) owns, directly or indirectly, any interest in (excepting not more than 5% stock holdings for investment purposes in securities of publicly held and traded companies) or is an officer, director, employee, or consultant of any entity which is a competitor, lessor, lessee, customer, or supplier ofVMC;(ii) has any interest, direct or indirect, in any material property or assets ofVMC (except in his capacity as a stockholder ofVMC);(iii) owns directly or indirectly, in whole or in part, any material copyright, trademark, trade name, service mark, franchise, patent, i nvention, permit, license, secret, or confidential information of the nature requiring a license for use byVMC whichVMC is using or the use of which is necessary for the business ofVMC; or(iv) has any material cause of action or other claim whatsoever against, or owes any material amount to,VMC, except for claims in the ordinary course of business (such as for accrued vacation pay, accrued benefits underEmployee Benefit Plans, expense advances, and similar matters).

5.25.

Full Disclosure. None of the information supplied or to be supplied byVMC for inclusion in the documents to be prepared in connection with the transactions contemplated by thisAgreement including, without limitation,(i) documents to be filed with the SEC,(ii) filings pursuant to any state securities and blue sky laws, and(iii) filings made in connection with obtaining the approvals ofGovernmental Authorities, contain or will contain, at the time such

452027v1

documents are filed with any federal or state regulatory authority and/or at the time they are distributed to the stockholders ofVMC, any untrue statements of a material fact or omit to state any material fact necessary in order to make the statements not misleading.

5.26.

Information inProxy Statement. Information supplied byVMC or any of its Subsidiaries for inclusion or incorporation by reference in the Proxy Statement, at the date mailed to the parties’ stockholders and at the time of the parties’ stockholders meeting contemplated hereby, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated, or necessary in order to make the statements, in light of the circumstances under which they are made, not misleading.

6. INCORPORATION OF SCHEDULES

The parties recognize that there may be some overlapping in the disclosure required pursuant to a number of the representations and schedules set forth above. Failure of disclosure in response to one item shall not be deemed a default so long as disclosure is fairly contained in the schedules. All schedules are being delivered in preliminary form, with final schedules to follow in accordance with section7.1.1. All references to the schedules in thisAgreement shall be deemed to refer to the final schedules, except in connection with the rights of a party to terminate thisAgreement in accordance with sections8.11 or 9.11.

7. COVENANTS ANDAGREEMENTS

The parties covenant and agree as follows (references toVMC shall be deemed to include its Subsidiaries unless the context otherwise requires):

7.1.

Covenants of Each Company.

7.1.1.

Delivery of Final Schedules. Each Company shall deliver to the other, not later thanJanuary 8, 2006, final versions of the schedules to thisAgreement.

7.1.2.

Conduct of Business by theVMC andVTSI. Commencing after the date of thisAgreement, and at all times prior to theEffective Time, or the date, if any, on which thisAgreement is earlier terminated pursuant to article11, and except as may be required pursuant to thisAgreement, or as disclosed or contemplated in the “Disclosure Schedule” (including the agreements and contemplated agreements referred to, andthe consummation of the transactions contemplated by such agreements) or as may be consented to in writing by all the other companies, each party:

7.1.2.1.

shall conduct its operations according to its ordinary and usual course of business.

7.1.2.2.

shall use its best efforts to preserve intact its business organization and good will in all material respects, keep available the services of its partners, officers, and employees as a group and maintain satisfactory relations with lessees, suppliers, distributors, customers, banks, and others having business relationships with it;

7.1.2.3.

shall confer on a regular and frequent basis with one or more representatives of the other to report operational matters of a material nature and the general status of ongoing operations, subject to compliance with applicable law;

452027v1

7.1.2.4.

shall notify the other of any emergency or other change in the normal course of their respective businesses or in the operation of its properties and of any governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated) if such emergency, change, complaint, investigation, or hearing or its effect would be material to the business, operations, or financial condition of eitherVTSI orVMC, as the case may be, taken as a whole;

7.1.3.

Litigation. TheVMC andVTSI shall promptly notify each other of any lawsuit, claims, proceedings, or investigations which after the date of thisAgreement are threatened or commenced against it or against any officer, director, employee,affiliate, or consultant, with respect to the transactions contemplated by thisAgreement or which reasonably could be expectedtohave a Material Adverse Effect.

7.1.4.

Corporate Examination and Investigations. Each party has afforded and shall continue to afford to the other party, through its their employees and representatives, the opportunity to make such reasonable investigation of the property and plant of such party as are reasonable and appropriate for transactions of the nature contemplated hereby. In order that the parties may have full opportunity to make such business, accounting, regulatory, and legal review, examination, or investigation, each party shall furnish the representatives of the other during such period with all such information as such representatives may reasonably request and cause its officers, employees, consultants, accountants, and attorneys to cooperate fully with such representatives in connection with such review and examination, and to make full disclosure of all material facts aff ecting such party's financial condition, regulatory affairs, and business operations.

7.1.5.

Meeting of Stockholders. Each ofVTSI andVMC will take all action necessary in accordance with applicable law and its organizational documents to convene a meeting of its stockholders as promptly as practicable to consider and vote upon the adoption of thisAgreement andthe transactions contemplated hereby, as required by applicable law. The boards of directors ofVTSI andVMC will recommend that their respective stockholders vote in favor of such adoption, andVTSI andVMC will all take all lawful action to solicit such approval, including, without limitation, timely mailing the Proxy Statement; provided, however, that nothing conta ined in this section7.1.5 shall prohibit eitherVTSI from taking and disclosing to its stockholders a position with respect to any tender offer from a third party as contemplated by Rule 14e-2(a) promulgated under the “Exchange Act” or from making any disclosure to, or having any communication with, their respective stockholders if, in the good faith judgment of the board of directors ofVTSI, after consultation with outside counsel, failure so to disclose or communicate would be inconsistent with its fiduciary duties under applicable law. The meetings of the stockholders ofVTSI andVMC shall be held as soon as practicable and in any event (to the extent permissible under applicable law) within 30 days after the date upon which the Proxy Statement shall have been cleared for release to the stockholders ofVTSI by the SEC; provided, however, that notwithstanding anything to the contrary contained in thisAgreement,VTSI may adjourn or postpone its meetings of stockholder to the extent necessary, in the opinion of its counsel, to supplement or amend the Proxy Statement in advance of a vote on thisAgreement and theMerger. VTSI andVMC shall coordinate and cooperate with respect to the timing of such meetings and shall endeavor to hold such meetings on the same day.

7.1.6.

Cooperation in Preparing Applications. Each of the parties shallassist and cooperate fully with the other in the prompt preparation and filing of any applications,

452027v1

approvals, consents, or similar documents necessary or advisable in connection with the transactions contemplated by thisAgreement or under any qualifications under state securities laws, which counsel forVMC and counsel forVTSI shall agree are required for the proper and effective consummation of the transactions provided for in thisAgreement.

7.1.7.

Confidentiality. VTSI andVMC each will, and will cause its officers, directors, employees, auditors, attorneys, financial advisors, and other consultants to, hold in confidence all information furnished to it by the other in connection with the transactions contemplated by thisAgreement and will not release or disclose such information to any other person, except to its officers, directors, employees, auditors, attorneys, financial advisors, and other consultants who require such information in connection with the transactions contemplated by thisAgreement and who have been informed by it of the confidential nature of such information and directed by it to treat such information confidentially, unless, in any such case,(i) disclosure is com pelled by judicial or administrative process or(ii) in the opinion of its counsel, taking into account the requirements of law, disclosure should be made. It is understood that each ofVTSI andVMC shall be deemed to have satisfied its obligations to hold such information confidential if it exercises the same care as it takes to preserve confidentiality for its own similar information. If thisAgreement is terminated in accordance with section 11, such confidence shall be maintained, and each ofVTSI andVMC will promptly return to the other or destroy all documents (including all copies) received by it containing such information. The foregoing provisions of this section 7.1.7 shall not apply to any information held or obtained by eitherVTSI orVMC that is(i) obtained from public or published information,(ii) received from a third party not known to it to be under an obligation to the other to keep such information confidential,(iii) which is or becomes known to the public (other than through a breach of thisAgreement), or(iv) which was independently developed by it.

7.1.8.

Agreement to Defend. In the event any claim, action, suit, investigation, or other proceeding by any Governmental Authority or other Person is commenced which questions the validity or legality of the proposedMerger, or any of the other transactions contemplated hereby or seeks damages in connection with theMerger, the parties shall cooperate and use their best efforts to defend against such claim, action, suit, investigation, or other proceeding and, if an injunction or other order of the type referred to in section7.1.10 is issued in any such action, suit, or other proceeding, shall use their best efforts to have such injunction or other order lifted.

7.1.9.

No Disclosure.Unless and until thisAgreement shall have been terminated by eitherVTSI orVMC pursuant to section 11, neitherVTSI norVMC, nor their respective officers or directors will, except for such disclosure asVTSI shall make in good faith pursuant to theExchange Act or as may be required by court order, disclose to any Person any proprietary, financial, or other information concerning the other parties, or their operations or business, or other transactions contemplated under thisAgreement, not generally available to the public.

7.1.10.

Further Assurances. Subject to the terms and conditions in thisAgreement,VTSI andVMC shall use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by thisAgreement, and shall cooperate with each other(a) to obtain all necessary waivers, consents, and approvals from other parties to material loan agreements, leases, and other contracts (provided that neither

452027v1

VTSI norVMC shall agree to any substantial modification to any suchagreement, lease, or contract, or to any payment of funds in order to obtain such waiver, consent, or approval without the prior written consent of the other),(b) to defend any lawsuits or other legal proceedings challenging thisAgreement orthe consummation of the transactions contemplated hereby,(c) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated thereby,(d) to effect all necessary registrations and filings, and(e) to fulfill all conditions to thisAgreement. &nbs p;

7.1.11.

Tax Treatment. VTSI andVMC shall: (i) report theMerger on their respective tax returns and tax filings as a reorganization described in section 368(a) of theCode;(ii) keep their records and file in connection with their tax returns all such information as may be required by section1.368-3 of theTreasury Regulations (and corresponding state rules and regulations) with respect to theMerger;(iii) refrain from taking any position in connection with their tax returns, or taking any other action, that would be inconsistent with the qualification of theMerger as a reorganization under section 368(a) of theCode; and(iv) comply in all respects with the requirements of section368(a) of theCode and Treasury Regulations, rulings, and administrative positions of the IRS applicable to theMerger.

7.1.12.

No Solicitation. Each ofVTSI andVMC agrees that except as may be required by court order, from and after the date of thisAgreement to occur of theClosing or the termination of thisAgreement, none of its directors, officers, shareholders, agents, investment bankers, or other representatives, shall, directly or indirectly,(a) solicit, initiate or encourage submission of proposals or offers from any person relating to, or negotiate with any person or enter into anyagreement, contract, or understanding with respect to, any acquisition or purchase of all or a material part of the stock or assets of, or a merger, consolidation or business combination withVTSI orVMC, oragreement to sell shares ofCapital Stock ofVTSI orVMC, other than as contemplated by thisAgreement (an"Acquisition Proposal") or(b) participate in any discussions or negotiations regarding or furnish to any other person any information with respect to or otherwise cooperate in any way, assist, facilitate, or encourage anyAcquisition Proposal by any other person. IfVTSI orVMC shall receive anyAcquisition Proposal or any inquiry regarding any such proposal from a third party, such party agrees to promptly notify the other parties of suchAcquisition Proposal or inquiry, and that, without the prior written consent of the other parties, it will not discuss directly or indirectly, any suchAcquisition Proposal or inquiry (other than with the other parties).

7.1.13.

Proxy Statement. VTSI, with the cooperation ofVMC will promptly prepare and file with the SEC as soon as practicable aproxy statement and necessary forms of proxy in connection with the vote ofVTSI’s stockholders with respect to theMerger (the“Proxy Statement”). No amendment or supplement to the Proxy Statement will be made byVTSI without the approval ofVMC, such approval not to be unreasonably withheld or delayed. Each ofVTSI andVMC shall use reasonable efforts to cause the P roxy Statement to be mailed toVTSI's stockholders as soon as practicable after the date of thisAgreement.

7.1.14.

Further Action. Each ofVTSI andVMC will, subject to the other terms and conditions set forth in thisAgreement and to the fulfillment at or before theEffective Time of each of the conditions of performance set forth in thisAgreement, perform such further acts and execute such documents as may be reasonably required to effect theMerger. Each ofVTSI andVMC will permit the other and its authorized representatives full access to all of its and its Subsidiaries premises, properties, personnel, books, records, contracts, and documents,

452027v1

and each party will use commercially reasonable efforts to cause its representatives to furnish to the other parties and their authorized representatives such additional financial and operating data and other information concerning its businesses and properties (and those of its Subsidiaries) as the others or their duly authorized representatives may from time to time reasonably request.

7.1.15.

Expenses. If theMerger is not consummated, all costs and expenses incurred in connection with thisAgreement andthe transactions contemplated hereby will be paid by the party incurring such expenses except as expressly provided in thisAgreement, except that the agreed post-due diligence expenses incurred in connection with the preparation, printing, and mailing of the Proxy Statement will be paid 50% byVTSI and 50% byVMC. The provisions of this section7.1.15will survive the termination of thisAgreement.

7.1.16.

Notice of Change in Representations and Warranties. VTSI andVMC will each give prompt notice to the others of(i) any change in its condition or any event causing a breach of any of its representations and warranties,(ii) the occurrence or non-occurrence of any event which would, or which would be reasonably likely to, cause any conditions to their obligations to effect theMerger and other transactions contemplated hereby not to be satisfied in any material respect, and(iii) their failure to satisfy in any material respect any covenant or condition to be complied with by them pursuant to thisAgreement.

7.1.17.

Consents. VTSI andVMC will use all reasonable efforts to obtain each of the consents required to carry on the transactions contemplated by thisAgreement.

7.2.

Additional Covenants ofVTSI.

7.2.1.

Operations ofVTSI. Except as set forth in Schedule7.2.1, from the VTSIBalance Sheet Date through theClosing,VTSI will not (except as contemplated by, or disclosed in, thisAgreement):

7.2.1.1.

amend its articles of incorporation or bylaws or merge with or into or consolidate with any other Person, subdivide or in any way reclassify any shares of itsCapital Stock, or change or agree to change in any manner the rights of its outstandingCapital Stock or, in any material manner, the character of its business;

7.2.1.2.

issue or sell or purchase any Convertible Securities ofVTSI, or enter into any contracts or commitments to issue or sell or purchase any shares of itsCapital Stock;

7.2.1.3.

enter into or amend any material employmentagreement, enter into anyagreement with any labor union or association representing any material employee or enter into or amend any material “Employee Benefit Plan;”

7.2.1.4.

incur any indebtedness for borrowed money;

7.2.1.5.

declare or pay any dividends or declare or make any distributions of any kind in respect of shares of itsCapital Stock;

7.2.1.6.

waive any right of material value of its business other than in the ordinary course of its business;

7.2.1.7.

make any significant change in its accounting methods or practices from those reflected in the VTSI Financial Statements;

452027v1

7.2.1.8.

make any wage or salary increase or bonus, or increase in any other direct or indirect compensation, for or to any ofVTSI’s officers, directors, or employees in excess of 5% in the aggregate or any accrual for or commitment oragreement to make or pay the same;

7.2.1.9.

make any loan or advance to any ofVTSI’s officers, directors, or employees in excess of $2,500 individually or $10,000 in the aggregate, other than travel and petty cash advances made in the ordinary course of business;

7.2.1.10.

make any payment or commitment to pay any severance or termination pay to any of its officers, directors, or “Significant Employees;”

7.2.1.11.

enter into any lease (as lessor or lessee) or sell, abandon, or make any other disposition of any ofits material assets or properties, or grant or suffer any Lien on any ofits material assets or properties;

7.2.1.12.

enter into or amend any written contract or otheragreement pursuant to which it agrees to indemnify any party or to refrain from competing with any party;

7.2.1.13.

except for inventory, supplies, or equipment acquired in the ordinary course of business, make any acquisition of all or any part of the assets, properties,capital stock, or business of any other entity which is material toVTSI;

7.2.1.14.

enter into any transaction other than in the ordinary course of business; or

7.2.1.15.

sell, transfer, assign or otherwise dispose of any assets, property or portion of its business which is material toVTSI.

7.2.2.

Filing of Exchange Act Reports. VTSI will file all reports required to be filed by it pursuant to theExchange Act and the promulgated regulations and, if at any time theVTSI is not required to file such reports, it will, upon the request of any holder of theVTSI to be issued pursuant to thisAgreement, make publicly available other information so long as necessary to permit sales of its securities pursuant to Rule 144. No such reports filed byVTSI after the date of thisAgreement will contain any untrue statement of a material fact or omit to state any material fact required to be stated or necessary in order to make the statements not misleading (in each case as of the date filed). Rule 144. Upo n the request of any such holder,VTSI shall deliver to such holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

7.2.3.

Tax Returns. VTSI will file when due all tax returns which are required to be filed by it on or before the date of theClosing. Such returns shall be properly prepared on a reasonable basis and in a manner consistent with prior returns.

7.2.4.

D&O Insurance. Insurance. As of theEffective Time,VTSI will have a binding commitment from an insurance company reasonably acceptable toVMC for officers and directors liability insurance providing coverage of an aggregate of at least $4,000,000 for the persons who will be officers and directors ofVTSI after theEffective Time.

7.3.

Additional Covenants byVMC.

7.3.1.

Operations ofVMC. Except as set forth in Schedule7.3.1, from theBalance Sheet Date through theClosing,VMC will not (except as contemplated by, or disclosed

452027v1

in, thisAgreement or, in the case of section7.3.1, to the extent necessary to insure that its corporate documents conform to the representations made in thisAgreement):

7.3.1.1.

amend its certificate of incorporation or bylaws or merge with or into or consolidate with any other Person, subdivide or in any way reclassify any shares of itsCapital Stock, or change or agree to change in any manner the rights of its outstandingCapital Stock or, in any material manner, the character of its business; issue or sell or purchase any Convertible Securities ofVMC or enter into any contracts or commitments to issue or sell or purchase, any shares of itsCapital Stock;

7.3.1.2.

7.3.1.3.

incur any indebtedness for borrowed money;

7.3.1.4.

declare or pay any dividends or declare or make any distributions of any kind in respect of shares of itsCapital Stock;

7.3.1.5.

waive any right of material value of its business other than in the ordinary course of its business;

7.3.1.6.

make any significant change in its accounting methods or practices from those reflected in theVMC Unaudited Financial Statements;

7.3.1.7.

make any wage or salary increase or bonus, or increase in any other direct or indirect compensation, for or to any ofVMC’s officers, directors, or employees in excess of 5% in the aggregate or any accrual for or commitment oragreement to make or pay the same;

7.3.1.8.

make any loan or advance to any ofVMC's officers, or directors, or employees in excess of $2,500 individually or $10,000 in the aggregate, other than travel and petty cash advances made in the ordinary course of business;

7.3.1.9.

make any payment or commitment to pay any severance or termination pay to any of its officers, or directors, or employees;

7.3.1.10.

enter into any lease (as lessor or lessee) or sell, abandon or make any other disposition of any ofits material assets or properties, or grant or suffer any Lien on any ofits material assets or properties;

7.3.1.11.

enter into or amend any written contract or otheragreement pursuant to which it agrees to indemnify any party or to refrain from competing with any party;

7.3.1.12.

except for inventory, supplies or equipment acquired in the ordinary course of business, make any acquisition of all or any part of the assets, properties,capital stock or business of any other entity, which is material toVMC;

7.3.1.13.

enter into any transaction other than in the ordinary course of business; or

7.3.1.14.

sell, transfer, assign, or otherwise dispose of any assets, property or portion of its business, which is material toVMC.

452027v1

7.3.2.

Tax Returns. TheVMC will file when due all tax returns which are required to be filed by it on or before the date of theClosing. Such returns shall be properly prepared on a reasonable basis and in a manner consistent with prior returns.

7.3.3.

Audited Financial Statements. ByMarch 15, 2006,VMC will provideVTSI with a true, correct, and complete copy of the balance sheets of theVMC as atDecember 31, 2005, together with the related statements of income, cash flows, and changes in stockholders' equity, and notes, for the years then ended, audited by independent public accountants, whose opinion will be included (the“VMC Audited Financial Statements”). Such financial statements will have been prepared in accordance with GAAP consistently applied throughout the periods indicated, and will fairly presentthe financial position, results of operations, cash flows and, changes in stockholders' equity ofVMC as atDecember 31, 2005 and for the respective periods stated thereafter.

7.3.4.

Filing Tax Returns. The MC will file when due all tax returns which are required to be filed by it on or before the date of theClosing. Such returns shall be properly prepared on a reasonable basis and in a manner consistent with prior returns.

8. CONDITIONS PRECEDENT TO THE OBLIGATION OFVMC TO CLOSE

The obligation ofVMC to consummate theMerger is subject to the satisfaction, on or prior to theClosing, of the following conditions, any one or more of which may be waived by theVMC in writing:

8.1.

Representations and Covenants. The representations and warranties ofVTSI contained in thisAgreement shall be true and complete in all material respects, except for changes in the ordinary course of business and as contemplated by thisAgreement, on and as of theClosing with the same force and effect as though made on and as of such date. VTSI shall have performed and complied in all material respects with all covenants and agreements required by thisAgreement to be performed or complied with byVTSI on or prior to such date. VTSI shall have delivered toVMC a certificate, executed by its principal executive officer and principal financial officer, and dated such date to the foregoing effect.

8.2.

Litigation. No action, suit, or proceeding shall have been instituted or threatened by any Governmental Authority, except for such matters set forth in the schedules, and no order or award shall have been entered (and not removed or stayed) by any court or Governmental Authority, in either case to restrain or prevent the carrying out of theMerger, or to seek damages in connection with any of the transactions provided in thisAgreement, or which has or may have, in the reasonable opinion of VMC, a Material Adverse Effect onVTSI,VMC, or the merged entity.

8.3.

Approval of Counsel toVMC. All actions and proceedings and all documents or other papers required to be delivered byVTSI under thisAgreement, or in connection withthe consummation of the transactions contemplated hereby, and all other related matters shall have been reasonably approved in all material respects byVMC’s attorneys as to their form.

8.4.

Approval by VMC Stockholders. ThisAgreement, theMerger, and an amended certificate of incorporation in such form as has been supplied byVMC toVTSI, shall have been approved byVMC’s stockholders.

452027v1

8.5.

Absence of Certain Changes. VTSI shall not, inVMC’s reasonable judgment, have shown losses or deterioration in its cash position as described in section 4.10 in excess of that which might reasonably be expected in view of its history of operations to date.

8.6.

Board of Directors. VTSI shall have taken all necessary actions and obtained stockholders approval to insure that its board of directors after theClosing consists of the directors specified in section1.4.

8.7.

Approval byVTSI Stockholders. VTSI stockholders’ approval shall have been obtained to approve thisAgreement and theMerger in accordance with section5.03 of the Texas Law.

8.8.

Opinion of Counsel. VMC shall have received, on behalf of itself andVMC shareholders, the opinion ofPryor Cashman Sherman & Flynn LLP, counsel toVTSI, dated theClosing, in form and substance to be agreed upon not later than ten days from the date of thisAgreement.

8.9.

Appraisal Rights. The holders of less than 5% ofVMC’s Shares shall have exercised their appraisal rights as provided under any applicable law. For purposes of this section, holders who are officers, directors, or controlling stockholders ofVMC will be deemed not to have exercised their appraisal rights, whether or not they in fact do exercise such rights.

8.10.

Tax Matters. VMC shall be reasonably satisfied that theMerger will qualify as a reorganization under section 368(a) of theCode.

8.11.

Content of Final Schedules. The final schedules to be delivered byVTSI in accordance with section7.1.1 shall not, inVMC’s reasonable judgment, demonstrate a material adverse change inthe financial position, results of operations, or business ofVTSI as compared to the schedules attached to thisAgreement at the time of execution. This condition shall be deemed satisfied unlessVMC shall have notifiedVTSI in writing not later than the seventh calendar day after receipt of the last of such schedules that it has elected to terminate thisAgreement for failure to satisfy this condition.

8.12.

Third Party Consents. All consents and approvals from parties to any material contracts oragreement withVTSI which may be required in connection with the performance byVTSI of its obligations under thisAgreement shall have been obtained.

8.13.

GovernmentalPermits and Approvals. Any and allpermits, licenses, and approvals from any Governmental Authority required for the lawful consummation of theMerger and the issuance of the VTSI Merger Shares shall have been obtained.

8.14.

Securities Opinion.VTSI shall have received the opinion ofPryor Cashman Sherman & Flynn LLP, its counsel, to the effect that the issuance of the VTSI Merger Shares does not require registration under theSecurities Act of 1933.

9. CONDITIONS PRECEDENT TO THE OBLIGATION OFVTSI TO CLOSE

The obligation ofVTSI to consummate theMerger is subject to the satisfaction, on or prior to theClosing, of the following conditions, any one or more of which may be waived in writing byVTSI:

452027v1

9.1.

Representations and Covenants. The representations and warranties ofVMC contained in thisAgreement shall be true and complete in all material respects, except for changes in the ordinary course of business and as contemplated by thisAgreement, on and as of theClosing with the same force and effect as though made on and as of such date. VMC shall have performed and complied with all covenants and agreements required by thisAgreement to be performed or complied with by it on or prior to such date. VMC shall have delivered toVTSI a certificate, executed by its principal executive officer and principal financial officer, and dated such date to the foregoing effect.

9.2.

Litigation. No action, suit or proceeding shall have been instituted or threatened by any Governmental Authority, except for such matters set forth in the schedules, and no order or award shall have been entered (and not removed or stayed), by any court or Governmental Authority, in either case to restrain or prevent the carrying out of theMerger or to seek damages in connection with any of the transactions provided for herein or which has or may have, in the reasonable opinion of VTSI, a Material Adverse Effect onVMC.

9.3.

Approval of Counsel toVTSI. All actions and proceedings and all documents or other papers required to be delivered byVMC under thisAgreement, or in connection withthe consummation of the transactions contemplated hereby, and all other related matters shall have been reasonably approved in all material respects byVTSI's attorneys as to their form.

9.4.

Approval byVTSI Stockholders. VTSI stockholders’ approval shall have been obtained to approve thisAgreement and theMerger in accordance with section5.03 of Texas Law.

9.5.

GovernmentalPermits and Approvals. Any and allpermits, licenses, and approvals from any Governmental Authority required for the lawful consummation of theMerger shall have been obtained.

9.6.

Third Party Consents. All consents and approvals from parties to any material contract oragreement withVMC which may be required in connection with the performance byVMC of its obligations under thisAgreement shall have been obtained.

9.7.

Audited Financial Statements. VMC’s Audited Financial Statements shall not show thatthe financial position and results of operations ofVMC reported are, inVTSI's reasonable judgment, materially less favorable thanthe financial position and results of operations reported inVMC’sVMC Unaudited Financial Statements.

9.8.

Absence of Certain Changes. VMC shall not, inVTSI's reasonable judgment, have shown losses or deterioration in its cash position as described in section 5.10 in excess of that which might reasonably be expected in view of their history of operations to date.

9.9.

Appraisal Rights. The holders of less than 5% ofVMC Shares shall have exercised their appraisal rights. For purposes of this section, holders who are officers, directors, or controlling stockholders ofVMC will be deemed not to have exercised their appraisal rights, whether or not they in fact do exercise such rights.

9.10.

Content of Final Schedules. The final schedules to be delivered byVMC in accordance with section7.1.1 shall not, inVTSI's reasonable judgment, demonstrate a state of facts indicating a material adverse change inthe financial position, results of operations, or business ofVMC as compared to the schedules attached to thisAgreement at the time of execution. This condition shall be deemed satisfied unlessVTSI shall have notifiedVMC in

452027v1

writing not later than the seventh calendar day after receipt of the last of such schedules that it has elected to terminate thisAgreement for failure to satisfy this condition.

9.11.

Questionnaires and other Securities Law Matters.VTSI shall have received from each holder ofVMC shares a completed questionnaire in the form of Schedule9.12 confirming that he or she is acquiring the VTSI Merger Shares to be issued for investment, and not with a view to distribution, containing such additional information as may reasonably be required to determine his or her status as an accredited investor, and acknowledging that the VTSI Merger Shares to be issued pursuant to thisAgreement will bear an appropriate legend referring to the restrictions on sale imposed by theSecurities Act of 1933 and the securities laws of the various states. Each holder ofVMC shares who is not an accredited investor shall have appointed a qualified offeree representative to advise and assist him or her in evaluating the VTSI Merger Shares, andVTSI shall have received from each such offeree representative an appropriate questionnaire containing such information as may reasonably be requested to evaluate the qualifications of the offeree representative.

10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

The representations and warranties set forth in thisAgreement shall survive theClosing of theMerger for a period of 12 months.

11. TERMINATION OF AGREEMENT

11.1.

Prior toClosing. ThisAgreement may be terminated as follows:

11.1.1.

at any time prior to theClosing by mutualagreement ofVMC andVTSI.

11.1.2.

at any time prior to theEffective Time byVMC if any representation or warranty ofVTSI contained in thisAgreement (and the final schedules) is or becomes untrue or breached in any material respect or ifVTSI fails to comply in any material respect with any covenant, and any such misrepresentation, noncompliance, or breach is not cured, waived, or eliminated within ten days following written notice.

11.1.3.

at any time prior to theEffective Time byVTSI, if any representation or warranty of any ofVMC contained in thisAgreement (and the final schedules) is or becomes untrue or breached in any material respect, or if any ofVMC fails to comply in any material respect with any covenant contained and any such misrepresentations, noncompliance, or breach is not cured, waived, or eliminated within ten days following written notice.

11.1.4.

byVMC if the conditions stated in section8 have not been satisfied or waived in writing by any ofVMC prior toApril 1, 2006.

11.1.5.

byVTSI if the conditions stated in section9 have not been satisfied or waived in writing byVTSI prior toApril 1, 2006.

11.1.6.

byVTSI or any ofVMC if theMerger is not consummated on or beforeJune 30, 2006.

452027v1

11.2.

Effect of Termination. In the event thisAgreement is terminated pursuant to section11.1.1, or pursuant to sections11.1.4 or 11.1.5, each party shall be fully released and discharged from any and all obligations under thisAgreement. In the event thisAgreement is terminated pursuant to subparagraph11.1.2 or 11.1.3, then the nonbreaching party shall be entitled to pursue, exercise, and enforce any and all remedies, rights, powers, and privileges available at law or in equity; provided that

11.2.1.

the nonbreaching party shall take all reasonable efforts to mitigate its damages upon its discovery of such breach, and

11.2.2.

monetary damages shall not be available unless, in the case of a breach of a representation or warranty, the misstatement in the representation or warranty was deliberately made or, in the case of failure to comply with any covenant, such failure was deliberate

Notwithstanding the foregoing, the provisions of section11 shall survive such termination.

12. INDEMNIFICATION

12.1.

From and after theEffective Time,VTSI shall indemnify, defend, and hold harmless the present and former directors, officers, and employees ofVTSI andVMC and their respective Subsidiaries (each, an“Indemnified Party”) against all costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, orliabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative, or investigative, arising out of actions or omissions as directors or officers ofVTSI orVMC and their respective Subsidiaries occurring at or prior to theEffective Time, including, without limitation, the transactions contemplated by thisAgreement, to the fullest extent that such persons are indemnified under the laws ofTexas and the organizational documents, as in effect on the date of thisAgreement, ofVTSI andVMC and its Subsidiaries, or any existing indemnificationagreement with eitherVTSI orVMC (and during such periodVTSI shall also advance expenses as incurred to the fullest extent permitted under applicable law, provided that the Person to whom expenses are advanced provides a written affirmation of his or her good faith that the standard of conduct necessary for indemnification has been met, and an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification with no bond or security to be required); provided that any d etermination required to be made with respect to whether an officer’s or director’s conduct complies with the standards set forth under applicable law and any such organizational documents shall be made by independent counsel selected byVTSI and reasonably acceptable to such officer or director; and provided, further, that in the absence of applicable judicial precedent to the contrary, such counsel, in making such determination, shall presume such officer’s or director’s conduct complied with such standard andVTSI shall have the burden to demonstrate that such officer’s or director’s conduct failed to comply with such standard.

12.2.

For a period of not less than six years after theEffective Time,VTSI will maintain officers’ and directors’ liability insurance in an amount of no less than $4,000,000 covering theIndemnified Parties who are currently covered, in their capacities as current or former officers and directors ofVTSI and covering similarly situatedIndemnified Parties of

452027v1

VMC, by existing officers’ and directors’ liability insurance policy on terms substantially no less advantageous to theIndemnified Parties than such insurance.

12.3.

Indemnified Party wishing to claim indemnification under section12.1 upon learning of any claim, action, suit, proceeding or investigation described above, shall promptly notifyVTSI; provided that the failure so to notify shall not affect the obligations ofVTSI under section12.1 unless and to the extent such failure materially increasesVTSI’s liability under such section 12.1.

12.4.

IfVTSI or any of its successors or assigns shall consolidate with or merge with any other entity and shall not be the continuing or surviving entity of such consolidation or merger or shall transfer all or substantially all of its assets to any Person, then and in each case, proper provision shall be made so that the successors and assigns ofVTSI or any of its Subsidiaries shall assume the obligations set forth in this section12.

12.5.

VTSI shall pay all reasonable costs, including attorneys’ fees, that may be incurred by anyIndemnified Party in enforcing the indemnity and other obligations provided for in this section12. The rights of eachIndemnified Party shall be in addition to any other rights suchIndemnified Party may have under applicable law.

12.6.

VTSI will keep in effect provisions inVMC andVTSI subsidiaries’ organizational documents providing for exculpation of director and officer liability and its indemnification of theIndemnified Parties to the fullest extent permitted under theTexas Business Corporation Act, as applicable, which provisions will not be amended except as required by applicable law or except to make changes permitted by law that would enlarge theIndemnified Parties’ right of indemnification.

12.7.

In any proceeding for which indemnification is sought under this section12,VTSI will be entitled to participate in such proceeding and, to the extent that it wishes (unlessVTSI is also a party to such proceeding and theIndemnified Party determines in good faith that joint representation would be inappropriate), to assume the defense of such proceeding with counsel satisfactory toVTSI and, after notice fromVTSI to theIndemnified Party of its election to assume the defense of such proceeding,VTSI will not, as long as it diligently conducts such defense, be liable to theIndemnified Party under this section for any fees of other counsel or any other expenses with r espect to the defense of such proceeding subsequently incurred by theindemnified party in connection with the defense of such proceeding, other than reasonable costs of investigation.

12.8.

The provisions of this section12 will survive the consummation of theMerger and expressly are intended to benefit eachIndemnified Party.

13. DEFINITIONS

13.1.

Defined Terms. As used in thisAgreement, the following terms have the following meanings:

13.1.1.

“Acquisition Proposal:” has the meaning set forth in section7.1.12.

452027v1

13.1.2.

“Affiliate:” shall mean, with respect to any Person, any other Person that directly, or through one or more intermediaries, controls or is controlled by or is under common control with such Person.

13.1.3.

“Agreement:” thisagreement of merger, as amended, supplemented, or otherwise modified from time to time.

13.1.4.

“Capital Stock:” any and all shares, interests, participations or other equivalents (however designated) ofcapital stock of a corporation, and any and all equivalent ownership interests in a partnership or other Person (other than a corporation).

13.1.5.

“Closing:” has the meaning set forth in section3.

13.1.6.

“Code:” has the meaning set forth in Recital B.

13.1.7.

“Contractual Obligation:” as to any Person, any provision of anyagreement, instrument, or other undertaking to which such Person is a party or by which it or any of its property is bound.

13.1.8.

“Convertible Securities:” options, warrants, subscriptions, or other commitments or rights of any nature to purchase, or securities convertible into or exchangeable for,Capital Stock.

13.1.9.

“Disclosure Schedule:” means the schedules dated as of the date of thisAgreement and delivered by or on behalf of each party to the other party in connection with thisAgreement, and which set forth exceptions to the representations and warranties contained in thisAgreement and certain other information called for by other provisions of thisAgreement.

13.1.10.

“Effective Date:” the date upon which theEffective Time occurs.

13.1.11.

“Effective Time:” has the meaning set forth in section1.2.

13.1.12.

“Environmental Laws:” any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any Governmental Authority regulating, relating to or imposing liability or standards of conduct concerning environmental protection matters, including without limitation, Hazardous Materials, as currently in effect.

13.1.13.

“ERISA:” theEmployee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and rulings issued thereunder.

13.1.14.

"ERISA Affiliate:" of any Person shall mean any trade or business (whether or not incorporated) which is under common control with that Person, within the meaning of sections 414(b) and 414(c) of theCode or the regulations.

13.1.15.

“Exchange Act:” theSecurities Exchange Act of 1934, as amended from time to time, and the regulations and rulings.

13.1.16.

“GAAP:” generally accepted accounting principles in theUnited States of America, in effect from time to time.

13.1.17.

“Governmental Authority:” any nation or government, any state or other political subdivision, and any federal, state, county, local, or foreign entity or body

452027v1

exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.

13.1.18.

“Hazardous Materials:” any(i) "Hazardous Substance," "pollutant," or "contaminant" (as defined in Sections101(14),(33) of theComprehensive Environmental Response Compensation Liability Act ("CERCLA") or the regulations designated pursuant to Section 102 ofCERCLA and found at 40 C.F.R. §302), including any element, compound, mixture, solution, or substance that is designated pursuant to Section 102 ofCERCLA;(ii) substance that is designated pursuant to Section311(b)(2)(A) of theFederal Water Pollution Control Act, as amended (33 U.S.C. §§1251, 1321(b)(2)(A)) ("FWPCA");(iii) hazardous waste having the characteristics identified under or listed pursuant to Section3001 of theResource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901, 6921) ("RCRA");(iv) substance containing petroleum, as that term is defined in Section 9001(8) ofRCRA;(v) toxic pollutant that is listed under Section 307(a) ofFWPCA;(vi) hazardous air pollutant that is listed under Section112 of theClean Air Act, as amended (42 U.S.C. §§ 7401, 7412);(vii)&n bsp;asbestos, asbestos-containing material, or urea formaldehyde or material that contains it; and(viii) waste oil and other petroleum products.

13.1.19.

"Intellectual Property Assets:” of a Person means all that person's

13.1.19.1.

corporate, partnership or other business names, all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively,"Marks");

13.1.19.2.

patents, patent applications, and inventions and discoveries that may be patentable (collectively,"Patents");

13.1.19.3.

copyrights in both published works and unpublished works (collectively,"Copyrights");

13.1.19.4.

rights in mask works; and

13.1.19.5.

know-how,Trade Secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively,"Trade Secrets"), owned, used, or licensed as licensee or licensor.

13.1.20.

“Lien:” any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security interest, oragreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retentionagreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under theUniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing).

13.1.21.

“Material Adverse Effect:” a material adverse effect on(a) the business, operations, property, condition (financial or otherwise), or prospects of the specified party and its Subsidiaries taken as a whole,(b) the ability of the party to perform its obligations under thisAgreement, or(c) the validity or enforceability of thisAgreement or the rights or remedies of the other party or parties hereunder or thereunder.

13.1.22.

“Merger:”has the meaning set forth in Recital A.

452027v1

13.1.23.

“Person:” an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture,Governmental Authority, or other entity of whatever nature.

13.1.24.

“Proxy Statement:"has the meaning set forth in section7.1.13.

13.1.25.

"Rule 144:" Rule 144 promulgated by the SEC pursuant to theSecurities Act, as such Rule may be amended from time to time, or any similar rule or regulation adopted by the SEC having substantially the same effect as such Rule.

13.1.26.

“SEC:” theSecurities and Exchange Commission.

13.1.27.

“Securities Act:” theSecurities Act of 1933, as amended, and the rules and regulations.

13.1.28.

“Shares:” shares ofCommon Stock, par value $0.005 per share, ofVTSI.

13.1.29.

“Significant Employee:” as to any Person, "significant employees" of such Person as that term is defined inRegulation S-K of theSecurities Act.

13.1.30.

“Subsidiary:” as to any Person, a corporation, partnership, or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. A Subsidiary, as to any Person, shall include a partnership, which has such Person or a Subsidiary of such Person as a general partner of such partnership.

13.1.31.

“Surviving Corporation:” has the meaning set forth in section1.1.

13.1.32.

“Texas Law:” theTexas Business Corporation Act of the State of Texas, as amended from time to time.

13.1.33.

"Transaction Document:"has the meaning set forth in sections4.3.

13.1.34.

“VMC Audited Financial Statements:”has the meaning set forth in section7.3.3.

13.1.35.

"VMC Copyrights"has the meaning set forth in section5.19.5.1.

13.1.36.

"VMC Intellectual Property Assets"has the meaning set forth in section5.19.1.

13.1.37.

"VMC Marks"as the meaning set forth in section5.19.4.1.

13.1.38.

"VMC Patents"has the meaning set forth in section5.19.3.1.

13.1.39.

“VMC Unaudited Financial Statement:” has the meaning set forth in section5.10.

13.1.40.

"VTSIBalance Sheet Date"as the meaning set forth in section4.11.

452027v1

13.1.41.

"VTSI Copyrights"has the meaning set forth in section4.19.5.1.

13.1.42.

"VTSI Intellectual Property Assets"has the meaning set forth in Section4.19.1.

13.1.43.

"VTSI Marks"has the meaning set forth in section4.19.4.1.

13.1.44.

“VTSI Merger Shares:” has the meaning set forth in section2.3.

13.1.45.

"VTSI Patents"has the meaning set forth in Section4.19.3.1

13.2.

Other Definitional Provisions; Interpretation.

13.2.1.

Unless otherwise specified, all terms defined in thisAgreement shall have the defined meanings when used in any certificate or otheragreement, instrument or document made or delivered pursuant to thisAgreement.

13.2.2.

The headings in thisAgreement are included for convenience of reference only and shall not in any way affect the meaning or interpretation of thisAgreement.

13.2.3.

The meanings given to terms defined in thisAgreement shall be equally applicable to both the singular and plural forms of such terms.

14. MISCELLANEOUS

14.1.

Broker. Each of the parties represents and warrants to the other that no broker, finder, or other financial consultant, has acted on its behalf in connection with the negotiation and execution of thisAgreement. Each such party agrees to indemnify and save the other harmless from any claim or demand for commission or other compensation by any broker, finder, financial consultant, or similar agent not so disclosed claiming to have been employed by or on behalf of such party, and to bear the cost of legal expenses incurred in defending against any such claim.

14.2.

Schedules. The schedules to thisAgreement are a part of thisAgreement. If no schedule is attached, it is conclusively presumed that such schedule would have contained the words “None” or “Not Applicable,” or other similar words to the effect that the schedule would have contained no subject matter.

14.3.

Publicity. No publicity release or announcement concerning thisAgreement orthe transactions contemplated hereby shall be issued without advance approval of the form and substance byVTSI, subject toVTSI's right to make any such publicity release or announcement reasonably required to comply with its obligations as a public company including, without limitation, under theExchange Act, theSecurities Act, or the rules and regulations of the National Association of Securities Dealers, Inc.

14.4.

Notices. Any notice or other communication required or which may be given under thisAgreement shall be in writing and shall be delivered personally, telegraphed or telecopied, or sent by FedEx, or certified or registered mail, postage prepaid, and shall be deemed given when so delivered personally, telegraphed, or telecopied, or if sent by FedEx, one business day after the date of sending, or if sent by certified or registered mail, three business days after the date of mailing, as follows (or to such other address as any party may from time to time specify in writing pursuant to the notice provisions of thisAgreement):

If toVMC, to:

452027v1

Virtra Merger Corporation

2500City West Blvd., Suite 700

Houston,Texas 77042

Attention: T. Craig Takacs

If toVTSI, to:

VirTra Systems, Inc.

440North Center

Arlington,TX 76011

Attention: L. Kelly Jones, chief executive officer

With a copy to:

Pryor Cashman Sherman & Flynn, LLP

410Park Avenue

New York,New York 10022

Attention: Dave Thomas

14.5.

EntireAgreement. ThisAgreement (including all schedules and exhibits) contains the entireagreement among the parties with respect to theMerger, and all transactions related to thisAgreement, and supersedes all prior agreements or understandings, whether written or oral.

14.6.

Waivers and Amendments. ThisAgreement may be amended, modified, superseded, cancelled, renewed, or extended, and the terms and conditions may be waived, only by a written instrument signed by the parties or, in the case of a waiver, signed by the party waiving compliance. No delay on the part of any party in exercising any right, power, or privilege shall operate as a waiver, nor shall any waiver on the part of any party of any right, power or privilege, nor any single or partial exercise of any right, power or privilege, preclude any other or further exercise or the exercise of any other right, power, or privilege. The rights and remedies provided in thisAgreement are cumulative, and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity.

14.7.

Governing Law. ThisAgreement shall be governed by and construed in accordance with the laws of the State of Texas, and the obligations of the parties under thisAgreement are deemed performable in Tarrant County,Texas.

14.8.

No Assignment. ThisAgreement is not assignable except by operation of law.

14.9.

Variations in Pronouns. All pronouns refer to the masculine, feminine, or neither singular or plural, as the identity of the person or persons may require.

14.10.

Counterparts. ThisAgreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

14.11.

Severability. If any one or more of the provisions of thisAgreement is held invalid, illegal, or unenforceable, the remaining provisions of thisAgreement shall be unimpaired, and the invalid, illegal, or unenforceable provision shall be replaced by a mutually acceptable valid, legal, and enforceable provision, which comes closest to the intent of the parties.

452027v1

14.12.

Binding Effect. ThisAgreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal representatives and permitted assigns.

14.13.

Legal Fees. In any legal action, arbitration (if any), or other proceeding brought to enforce thisAgreement, or in any other way arising out of or in relation to thisAgreement, the court or arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party, which amount shall be included in any judgment recovered.

ThisAgreement has been duly executed and delivered by the duly authorized officers of the parties on theEffective Date.

VIRTRA SYSTEMS, INC.

by:___________________________________

L. Kelly Jones, chief executive officer

VIRTRA MERGER CORPORATION

by:_________________________

T. Craig Takacs, Executive Officer

452027v1

VirTra (VTSI) 8-KEntry into a Material Definitive Agreement