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SECURITIES MERGER
AGREEMENT
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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.
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R E C I T A L
S
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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.
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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.
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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.
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A G R E E M E N
T
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It is agreed as follows:
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1.
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Securities Purchase And Reorganization
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1.1
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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.
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(a)
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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.
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1.2
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Instruments of Transfer .
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(a)
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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.
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(b)
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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.
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(i)
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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:
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a.
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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.
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b.
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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.
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c.
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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.
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1.3
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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").
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1.4
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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.
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1.5
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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.
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2.
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Deliveries At Closing.
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2.1
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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:
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(a)
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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.
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(b)
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An Officer's Certificate signed by the Company's president in
the form attached hereto as Exhibit C;
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(c)
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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.
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(d)
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A certificate of good standing of the Company from the State of
Utah as of the most recent practicable date.
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(e)
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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.
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2.2
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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:
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(a)
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Original certificates representing the Mid-Atlantic Shares,
along with duly executed stock powers, in form and substance
satisfactory to the Company.
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(b)
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Such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
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2.3
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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:
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(a)
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An Officer's Certificate signed by Mid-Atlantic's president in
the form attached hereto as Exhibit E.
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(b)
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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.
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(c)
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A certificate of good standing of Mid-Atlantic from the State of
Michigan as of the most recent practicable date.
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(d)
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Such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
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3.
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Representations and Warranties of Shouekani . Shouekani
severally represents, warrants and covenants to and with the
Company with respect to himself, as follows:
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3.1
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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.
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3.2
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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.
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3.3
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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:
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"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."
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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.
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4.
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Representations And Warranties Of Mid-Atlantic.
Mid-Atlantic represents, warrants and covenants to and with the
Company as follows:
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4.1
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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.
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4.2
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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.
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4.3
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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.
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4.4
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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.
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4.5
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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.
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4.6
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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.
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5.
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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.
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5.1
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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.
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5.2
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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.
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5.3
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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.
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5.4
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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.
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5.5
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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.
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5.6
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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.
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5.7
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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.
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5.8
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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.
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5.9
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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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