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SECURITIES MERGER AGREEMENT

Security Agreement

SECURITIES MERGER AGREEMENT | Document Parties: VIPER NETWORKS INC | Mid-Atlantic International, Inc You are currently viewing:
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VIPER NETWORKS INC | Mid-Atlantic International, Inc

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Title: SECURITIES MERGER AGREEMENT
Governing Law: Michigan     Date: 4/18/2005

SECURITIES MERGER AGREEMENT, Parties: viper networks inc , mid-atlantic international  inc
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SECURITIES MERGER AGREEMENT

 

 

 

 

 

THIS SECURITIES MERGER AGREEMENT ("Agreement") is entered into as of October 15, 2003 by and among Viper Networks, Inc., a Utah corporation ("Viper" or the "Company"), those certain representatives of the Company listed on Exhibit A attached hereto (the "Viper Representatives"), Mid-Atlantic International, Inc., a Michigan corporation ("Mid-Atlantic"), and the sole common stockholder of Mid-Atlantic, Farid Shouekani ("Shouekani") listed on Exhibit B attached hereto.

 

 

 

 

 

R E C I T A L S

A.     The Company has authorized capital stock consisting of 100,000,000 shares of common stock ("Common Stock"), no par value, of which 54,000,000 shares are issued and outstanding; 100,000 shares of Class A preferred stock ("Class A Preferred Stock"), with a par value of $1.00 per share, of which no shares are issued and outstanding; and 10,000,000 shares of Class B preferred stock ("Class B Preferred Stock"), with a par value of $1.00 per share, of which 450,000 shares are issued and outstanding.

B.     Mid-Atlantic has authorized capital stock consisting of 60,000 shares of common stock, no par value, of which 1,000 shares are issued and outstanding ("Mid-Atlantic Shares") and held by the Shouekani.

C.     Shouekani wishes to exchange his 100% non-dilutive ownership of his Mid-Atlantic Shares on the Closing Date (as defined below), for $1,150,000, as follows: $50,000 cash within 21 days of closing as a sign up bonus; and $1,100,000 in Viper's common stock by issuance of two separate common stock certificates, as follows: (1) 3,300,000 shares of the Company's Common Stock and (2) 4,235,000 shares of the Company's Common Stock (the "Company Common Shares"), both of which will exchanged with Shouekani. The 4,235,000 shares of the Company's Common Stock with be subject to certain redemption rights, as outlined paragraph 1.2 (b) i.

A G R E E M E N T

 

It is agreed as follows:

 

1.

Securities Purchase And Reorganization

 

 

1.1

Agreement to Merge and Exchange Securities . Subject to the terms and upon the conditions set forth herein, Shouekani agrees to assign, transfer and deliver to the Company, and the Company agrees to receive from Shouekani, at the Closing (as defined below), the Mid-Atlantic Shares owned by Shouekani as set forth on Exhibit A attached hereto, in exchange for the transfer, at the Closing, by the Company to Shouekani a pro rata share of the Company Common Shares, as determined according to Section 1.1(a) below.

 

 

 

(a)

Determination of Pro Rata Share of Company Common Shares. The number of Common Company Shares which Shouekani is entitled to receive hereunder will be exchanged pro rata, based on the 1,000 Mid-Atlantic Shares owned by Shouekani at the Closing. Not withstanding the forgoing pro rata shall mean The exchange ratio of 1 share of Mid Atlantic owned by Shouekani for 7535 of Viper.

 

 

1.2

Instruments of Transfer .

 

 

 

(a)

Mid-Atlantic Shares . Shouekani shall deliver to the Company original certificates evidencing the Mid-Atlantic Shares along with executed stock powers, in form and substance satisfactory to the Company, for purposes of assigning and transferring all of his right, title and interest in and to the Mid-Atlantic Shares. From time to time after the Closing Date, and without further consideration, Shouekani will execute and deliver such other instruments of transfer and take such other actions as the Company may reasonably request in order to facilitate the transfer to the Company of the securities intended to be transferred hereunder.

 

 

 

(b)

The Company Common Shares . The Company shall deliver to Shouekani on the Closing Date two original certificates evidencing the issuance of 3,300,000 and 4,235,000 of the Company Common Shares or in the alternative an authorized Treasury Order to the Company's Transfer Agent for the same, in form and substance satisfactory to Shouekani, in order to effectively vest Shouekani all right, title and interest in and to the Company Common Shares. The issuance of the 4,235,000 Company Common Shares will be subject to certain redemption rights, as identified in paragraph 1.2 (b) i of this Agreement below. From time to time after the Closing Date, and without further consideration, the Company will execute and deliver such other instruments and take such other actions as Shouekani may reasonably request in order to facilitate the issuance of the Company Common Shares.

 

 

 

 

(i)

Redemption Rights . The 4,235,000 Company Common Shares will be issued, but released pursuant and subject to certain redemption rights held by Shouekani, with terms and conditions, as follows:

 

a.

Shouekani will have an option to redeem any or all in part or whole of the above-referenced 4,235,000 Company Common Shares to Viper, thereby requiring Viper to redeem these Company Common Shares from Shouekani at a price of $.17 per Company Common Share, prior to close of business on January 15, 2003. To guarantee the purchase of the above-referenced 4,235,000 Company Common Shares by Viper from Shouekani, the assets listed on Exhibit G of this Agreement will be held as collateral by Shouekani and remain as same. Should Shouekani not elect to sell any or all of the above-referenced 4,235,000 Company Common Shares to Viper, pursuant to this redemption option, the assets listed on Exhibit G will be released as collateral by Shouekani to Viper and the collateral so secured shall be released. Should Viper not fulfill its obligation to redeem said Company Common shares, Shouekani will be entitled to the collateral listed on Exhibit G and simultaneously turnover said Company Common Shares back to Viper to be cancelled and returned to treasury.

 

b.

Viper shall have the redemption obligation to reacquire all of the unredeemed amount of all the 4,235,000 shares in Viper so originally issued to Shouekani at a price of $0.17 per Company Common Share, prior to close of business day on January 15, 2004, or in the option of Shouekani to hold the company in default of this entire agreement.

 

c.

The assets of Mid-Atlantic to be held as collateral shall be listed and made subject to a Purchase Money Security Agreement and UCC-1 Financing Statement filing in both the State of Michigan and State of California and in each political subdivision or county where said assets are maintained.

 

 

1.3

Closing . The closing ("Closing") of the exchange of the Mid-Atlantic Shares and the Company Common Shares shall take place at the offices of the Company at 12:00 p.m., local time, on October 15, 2003, or at such other time and place as may be agreed to by all of the parties hereto ("Closing Date").

 

 

1.4

Tax Free Reorganization . The parties intend that the transaction under this Agreement qualify as a tax free reorganization under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986, as amended.

 

 

1.5

Merger Date. The merger shall be finalized on January 15, 2004 or earlier upon all of company's (Viper) covenants being fulfilled, at which time, Shouekani shall file form 550M with the Michigan Corporate & Securities (C&S) division evidencing the merger.     

 

2.

Deliveries At Closing.

 

 

2.1

Company's Deliveries at Closing . At or prior to the Closing, the Company shall deliver or cause to be delivered to Shouekani all of the following:

 

 

 

(a)

Certificates or Treasury Order in form acceptable to Shouekani representing the Company Common Shares, registered in the names of the Shouekani; and a check payable to Shouekani in the amount of Fifty Thousand ($50,000.00) Dollars drawn upon Viper's general account signed by its president or other duly authorized officer on post dated twenty one (21) days from the date of this execution hereof.

 

 

 

(b)

An Officer's Certificate signed by the Company's president in the form attached hereto as Exhibit C;

 

 

 

(c)

Certified resolutions of the Board of Directors of the Company in the form attached hereto as Exhibit D (i) authorizing the consummation of the transactions contemplated by this Agreement; and (ii) electing the persons designated as officers and directors of the Company and Mid-Atlantic effective as of the Closing Date.

 

 

 

(d)

A certificate of good standing of the Company from the State of Utah as of the most recent practicable date.

 

 

 

(e)

Such other documents and instruments as shall be reasonably necessary to effect the transactions contemplated hereby, including the aforementioned Purchase Money Security Agreement and UCC-1 Registrations.

 

 

2.2

Shouekani's Deliveries at Closing . At or prior to the Closing, the Merging Stockholders shall deliver or cause to be delivered to the Company all of the following:

 

 

 

(a)

Original certificates representing the Mid-Atlantic Shares, along with duly executed stock powers, in form and substance satisfactory to the Company.

 

 

 

(b)

Such other documents and instruments as shall be reasonably necessary to effect the transactions contemplated hereby.

 

 

2.3

Mid-Atlantic's Deliveries at Closing . At or prior to the Closing, Mid-Atlantic shall deliver or cause to be delivered to the Company all of the following:

 

 

 

(a)

An Officer's Certificate signed by Mid-Atlantic's president in the form attached hereto as Exhibit E.

 

 

 

(b)

Certified resolutions of the Board of Directors of Mid-Atlantic in the form attached hereto as Exhibit F authorizing the consummation of the transactions contemplated by this Agreement.

 

 

 

(c)

A certificate of good standing of Mid-Atlantic from the State of Michigan as of the most recent practicable date.

 

 

 

(d)

Such other documents and instruments as shall be reasonably necessary to effect the transactions contemplated hereby.

 

3.

Representations and Warranties of Shouekani . Shouekani severally represents, warrants and covenants to and with the Company with respect to himself, as follows:

 

 

3.1

Power and Authority . Shouekani has all requisite individual power and authority to enter into and to carry out all of the terms of this Agreement and all other documents executed and delivered in connection herewith (collectively, the "Documents"). All individual action on the part of Shouekani necessary for the authorization, execution, delivery and performance of the Documents by Shouekani has been taken and no further authorization on the part of Shouekani is required to consummate the transactions provided for in the Documents. When executed and delivered by Shouekani, the Documents shall constitute the valid and legally binding obligation of Shouekani enforceable in accordance with their respective terms, except as limited by applicable bankruptcy, insolvency reorganization and moratorium laws and other laws affecting enforcement of creditor's rights generally and by general principles of equity.

 

 

3.2

Ownership of and Title to Securities . Shouekani represents that he is the sole owner of the Mid-Atlantic Shares held by him and that there are no warrants, options, subscriptions, calls, or other similar rights of any kind for the issuance or purchase of any of the Mid-Atlantic Shares or other securities of Mid-Atlantic held by Shouekani. Shouekani represents that he will transfer to the Company good and marketable title to the Mid-Atlantic Shares which he owns, free and clear of all pledges, security interests, mortgages, liens, claims, charges, restrictions or encumbrances.

 

 

3.3

Investment and Related Representations . Shouekani is aware that neither the Company Common Shares nor the offer or sale thereof to Shouekani has been registered under the Securities Act of 1933, as amended ("Act"), or under any state securities law. Shouekani understands that the Company Common Shares will be characterized as "restricted" securities under federal securities laws inasmuch as they are being acquired in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act only in certain limited circumstances. Shouekani agrees that he will not sell all or any portion of the Company Shares except pursuant to registration under the Act or pursuant to an available exemption from registration under the Act. The Selling Stockholder understands and acknowledges that all certificates representing the Company Shares shall bear the following legend or a legend of similar import and that the Company shall refuse to transfer the Company Shares except in accordance with such restrictions:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER CERTAIN STATE SECURITIES LAWS. NO SALE OR TRANSFER OF THESE SHARES MAY BE MADE IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) AN OPINION OF COUNSEL THAT REGISTRATION UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER."

Not withstanding the forgoing, on or before Jan 15, 2004, company shall cause Shouekani's 3,300,000 common shares in company to be registered and available for sale as permitted under the "ACT". Those shares shall also participate in any reverse or forward splits authorized by the board of directors of Company that occur between the date of execution here of and the date of the said shares being registered so as to cause no dilution of this shares value.

 

4.

Representations And Warranties Of Mid-Atlantic. Mid-Atlantic represents, warrants and covenants to and with the Company as follows:

 

 

4.1

Organization and Good Standing . Mid-Atlantic is a corporation duly organized, validly existing, and in good standing under the laws of the State of Michigan and has full corporate power and authority to enter into and perform its obligations under this Agreement.

 

 

4.2

Capitalization . The authorized capital stock of Mid-Atlantic consists of 60,000 shares of common stock, no par value, of which 1,000 shares are issued and outstanding. All outstanding shares of Mid-Atlantic's common stock were issued in compliance with applicable state of Michigan laws, have been duly authorized and validly issued, and are fully paid, nonassessable, and free of any preemptive rights. There are no warrants, options, subscriptions, calls, other similar rights to purchase any of Mid-Atlantic's capital stock, and there are no voting, pooling or voting trust agreements, arrangements or contracts by and among Mid-Atlantic, its shareholders, or any of them.

 

 

4.3

Validity of Transactions . This Agreement, and each document executed and delivered by Mid-Atlantic in connection with the transactions contemplated by this Agreement, and the performance of the transactions contemplated therein have been duly authorized by the directors of Mid-Atlantic, have been duly executed and delivered by Mid-Atlantic and is each the valid and legally binding obligation of Mid-Atlantic, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency reorganization and moratorium laws and other laws affecting enforcement of creditor's rights generally and by general principles of equity.

 

 

4.4

No Conflict . The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not and will not conflict with, or result in a breach of any term or provision of, or constitute a default under or result in a violation of (i) the Certificate of Incorporation or Bylaws of Mid-Atlantic, as amended, (ii) any agreement, contract, lease, license or instrument to which Mid-Atlantic is a party or by which Mid-Atlantic or any of its properties or assets are bound, or (iii) any judgment, decree, order, or writ by which Mid-Atlantic is bound or to which it or any of its properties or assets are subject.

 

 

4.5

Approvals and Consents. There are no permits, consents, mandates or approvals of public authorities, either federal, state or local, or of any third party necessary for Mid-Atlantic's consummation of the transactions contemplated hereby.

 

 

4.6

Accuracy of Information . None of the representations or warranties or information provided and to be provided by the Mid-Atlantic in this Agreement, or any schedules or exhibits hereto, contains or will contain any untrue statement of a material fact or omits or will omit to state any material facts necessary in order to make the statements and facts contained herein or therein not false or misleading. Copies of all documents heretofore or hereafter delivered or made available to Mid-Atlantic pursuant hereto were or will be complete and accurate records of such documents.

 

5.

Representations, Warranties and Covenants of the Company . The Company represents, warrants and covenants to and with Mid-Atlantic and Shouekani the items listed on the "Company Disclosure Schedule". As used herein, the term "Company Disclosure Schedule" shall refer to the Company Disclosure Schedule attached hereto.

 

 

5.1

Organization and Good Standing . The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Utah and has full corporate power and authority to enter into and perform its obligations under this Agreement.

 

 

5.2

Capitalization . The Company has authorized capital stock consisting of 100,000,000 shares of common stock ("Common Stock"), no par value, of which 54,000,000 shares are issued and outstanding; 100,000 shares of Class A preferred stock ("Class A Preferred Stock"), with a par value of $1.00 per share, of which no shares are issued and outstanding; and 10,000,000 shares of Class B preferred stock ("Class B Preferred Stock"), with a par value of $1.00 per share, of which 450,000 shares are issued and outstanding.

 

 

5.3

Validity of Transactions . Except as set forth on the Company Disclosure Schedule: (i) this Agreement, and each document executed and delivered by the Company in connection with the transactions contemplated by this Agreement, and the performance of the transactions contemplated therein have been duly authorized by the directors of the Company, have been duly executed and delivered by the Company and is each the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency reorganization and moratorium laws and other laws affecting enforcement of creditor's rights generally and by general principles of equity; (ii) the Company Shares issuable hereunder, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable; and (iii) the Company Common Shares will be free of any liens or encumbrances, except for any restrictions imposed by federal or state securities laws.

 

 

5.4

No Conflict . Except as set forth on the Company Disclosure Schedule, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not and will not conflict with, or result in a breach of any term or provision of, or constitute a default under or result in a violation of (i) the Articles of Incorporation or Bylaws of the Company, as amended, (ii) any agreement, contract, lease, license or instrument to which the Company is a party or by which the Company or any of its properties or assets are bound, or (iii) any judgment, decree, order, or writ by which the Company is bound or to which it or any of its properties or assets are subject.

 

 

5.5

Approvals and Consents . Except as set forth on the Company Disclosure Schedule, there are no permits, consents, mandates or approvals of public authorities, either federal, state or local, or of any third party necessary for the Company's consummation of the transactions contemplated hereby.

 

 

5.6

Litigation . Except as set forth in the Company Disclosure Schedule, there are no suits or proceedings (including without limitation, proceedings by or before any arbitrator, government commission, board, bureau or other administrative agency) pending or, to the knowledge of the Company, threatened against or affecting the Company, the officers or directors of the Company or any of their respective affiliates or which questions or threatens the validity of this Agreement or any action to be taken in connection therewith, and neither the Company nor any of its assets is subject to or in default with respect to any order, writ, injunction or decree of any federal, state, local or other governmental department. The Company has not commenced and does not currently intend to commence any legal proceedings against any other person or entity.

 

 

5.7

Taxes . All federal income tax returns and state and local income tax returns for the Company have been filed as required by law. All taxes as shown on such returns or on any assessment received subsequent to the filing of such returns have been paid, and there are no pending assessments or adjustments or any income tax payable for which reserves, which are reasonably believed by the Company to be adequate for the payment of any additional taxes that may come due, have not been established. All other taxes imposed by any government authority on the Company have been paid and any reports or returns due in connection therewith have been filed. No outstanding claim for assessment or collection of taxes has been asserted against the Company and there are no pending, or to the knowledge of the Company, threatened tax audits, examinations or claims.

 

 

5.8

No Defaults . No material default (or event which, with the passage of time or the giving of notice, or both, would become a material default) exists or is alleged to exist with respect to the performance of any obligation either of the Company under the terms of any indenture, license, mortgage, deed of trust, lease, note, guaranty, joint venture agreement, operating agreement, partnership agreement, or other contract or instrument to which the Company is a party or any of its assets are subject, or by which it is otherwise bound, and, to the best knowledge of the Company, no such default or event exists or is alleged to exist with respect to the performance of any obligation of any party thereto.

 

 

5.9

Corporate Documents . The Company has furnished to Mid-Atlantic and the Merging Stockholders true and complete copies of the Articles of Incorporation and Bylaws of the Company certified by its secretary and copies of the resolutions adopted by the Company's Board of Directors authorizing and approv


 
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