UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 27, 2005
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VIPER NETWORKS, INC.
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(Exact Name of Registrant as Specified in Charter)
Utah
(State of Incorporation)
0032939
(Commission File No.)
87-0410279
(IRS Employer Identification No.)
10373 Roselle Street, Suite 170, San Diego, CA 92121
(Address of Principal Executive Office)
Registrant's telephone number including area code: (858) 452-8737
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425).
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12).
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)).
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the exchange
Act (17 CFR 240.13e-4(c)).
Items 1.01, 1.02, 2.01, 3.02, 7.01, and 8.01
On August 21, 2003, Viper Networks, Inc., a Utah corporation (the
"Company") entered into an Asset Purchase Agreement (the "Agreement") with
Young's Environmental Solutions, LLC, a Nevada limited liability company (the
"Seller"). The Seller is an entity owned and managed by Stephen D. Young, a
former officer and director of the Company ("Young").
Under the terms of the Agreement, the Company purchased a one-half interest
in land located in San Jacinto, California (the "Real Property"). At the time of
the Agreement, the Company intended to develop the Real Property and include
facilities for the Company.
The purchase of the Real Property was undertaken through the Company's
issuance of an aggregate of 4,000,000 shares of the Company's Common Stock to
two transferees who had, by prior agreement, transferred the land to the Seller.
The Agreement grants each of the two transferees piggy-back registration rights
to include up to an aggregate of 1,000,000 shares each in a Form SB-2
registration statement that may be filed by the Company. The Agreement further
provides that the two transferees shall be allowed to sell, subject to Rule 144
of the Securities Act of 1933, up to 250,000 shares each during each calendar
quarter commencing one year after the date at which the shares are issued in
payment of the purchase price of the Real Property.
Subsequently, on January 27, 2005, the Company and the Seller entered into
a settlement agreement (the "Settlement Agreement"). The Settlement Agreement,
by its terms, was effective August 21, 2003 and provides for the following:
(1) The Company and the Seller agreed that Young was to return an
aggregate of 4,400,000 shares of the Company's Common Stock previously
issued to Young with all said shares to be returned to the Company for
cancellation; and
(2) The Company and Young agreed that the Company was released from all
obligations to Young (and all affiliates of Young) in connection with
the following common stock purchase options and all rights thereto,
all rights to receive shares of the Company's Common Stock, and all
rights to receive all other consulting fees, as previously granted to
Young or as claimed as granted to Young, namely:
(a) the common stock purchase option giving Young the right to
purchase 500,000 shares of the Company's Common Stock
(granted on July 17, 2003);
(b) the common stock purchase option giving Young the right to
purchase 250,000 shares of the Company's Common Stock
(granted on December 16, 2003); and
(c) all obligations that the Company has or may have to Young
for any other consulting fees, whether earned or unearned in
any capacity.
(4) The Company and the Seller also agreed that Young would assume sole
and exclusive responsibility:
(a) for the payment of all debts and encumbrances in connection
with the purchase, ownership, possession, maintenance, and
operation of all activity on the Real Property;
(b) for all costs incurred in connection with the transfer of
record title to the Real Property to ensure that the Company
is not listed as holding any interest in the Real Property;
and
(c) to provide the Company, to the extent that the insurance
carrier will so provide, with an insurance binder showing
that the Company is an additional insured on all insurance
policies on the Real Property and for the Company to
continue as an additional insured on all such policies for a
period of three years thereafter.
(5) For its part and not withstanding the other terms of the Settlement
Agreement, the Company agreed to reimburse Young by issuing an
unsecured subordinated promissory note equal to the net proceeds
received by the Company arising out of the financing of the Real
Property.
(6) The Company also agreed to grant Young a common stock purchase warrant
for the purchase of up to 2,750,000 shares of the Company's Common
Stock (the "New Option") at an exercise price of thirty cents per
share (the "Exercise Price"). The New Option is exercisable as
follows: (a) 1,000,000 shares may be purchased on or after October 12,
2005; (b) 1,000,000 shares may be purchased on or after October 12,
2006; and 750,000 shares may be purchased on or after October 12,
2007. The New Option and all rights to purchase the Company's shares
expires on October 12, 2009. The New Option also contains provisions
to adjust the Exercise Price and the number of shares purchasable
thereunder in the event in the nature of a stock split or
recapitalization.
(7) The Company and the Seller (including Young and a corporate affiliate
of Young) also agreed to mutually and forever released each other from
and against any and all liabilities, claims, demands, causes of
action, rights (contingent, accrued, or otherwise) which either has or
may have against the other party (including, but not limited to, any
officers, directors, or other affiliates) except that the Seller was
not released from any liability that may be asserted by the two
transferees;
(8) The Company agreed to pay Young the sum of $12,000 for past services
as an outside director and Young agreed to resign as a director and
officer of the Company effective October 12, 2004.
The Company entered into the Settlement Agreement to resolve uncertainties
related to the purchase of the Real Property and believes that the Settlement
Agreement will better serve the Company's long-term interests.
Item 1.01, 7.01, and 8.01
Dial Discount USA Inc., one of the first web-based long distance companies in
the marketplac that began marketing long distance products and services in1999,
will feature Viper Networks on the Web site of its wholly-owned subsidiary,
BroadbandTeleco.com. The site will be selling Viper Networks home and business
products, which start as low as $49.99 and $129.99 for business users. Dial
Discount USA Inc. is a non-facilities based telephone company offering local and
long distance service in one-package to customers world-wide.
EXHIBITS
Exhibit 10(C) Settlement Agreement signed January 27, 2005
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIPER NETWORKS, INC.
Dated: February 1, 2005 By:/s/ Paul E. Atkiss
-----------------------------------
Paul E. Atkiss
Chief Financial Officer
Exhibit 10(C)
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is effective as of August 21, 2003, by
and between among Viper Networks, Inc., a Utah corporation with principal
offices at 7660 Fay Avenue, Suite H3339, La Jolla, California 92037 (the
"Releasee") on the one hand, and Young's Environmental Solutions, LLC a Nevada
limited liability company with principal address at 840 McAllister Avenue, Big
Bear City, California 92314 (the "LLC Releasor"), Young's Environmental
Solutions, Inc. a Nevada corporation with principal address at 840 McAllister
Avenue, Big Bear City, California 92314 (the "Corporate Releasor"), Stephen D.
Young, a married individual whose principal residence is 840 McAllister Avenue,
Big Bear City, California 92314 (the "Individual Releasor"). The LLC Releasor,
the Corporate Releasor, and the Individual Releasor are hereinafter jointly
referred to as the "Releasors."
WHEREAS:
A. The Releasee and the LLC Releasor are parties to that certain Asset
Purchase Agreement dated August 21, 2003 (the "Understanding") where the
Releasee, through the negotiations and discussions conducted by the
Individual Releasor, issued Four Million (4,000,000) shares of its common
stock ($0.001 par value) (the "Transaction Shares") to a Glenn C. Barnett
and George A. Brown (both, collectively, as the "Investors").
B. The Understanding contemplated that the Releasee was to acquire a one-half
interest in certain real property located in San Jacinto, Riverside County,
California and as more particularly described in the legal description set
for as Exhibit A attached hereto (the "Real Property").
C. The Releasee and the Releasors, subject to the terms and conditions of this
Agreement, seek to fully, completely, and irrevocably terminate the
Understanding and terminate all rights and obligations that the Releasee
and the Releasors may have to all persons identified or described in the
Understanding.
D. The Releasee and the Releasors, subject to the terms and conditions of this
Agreement, seek to fully and finally settle and terminate all liabilities
and obligations that the Releasee has or may have to all of the Releasors
and to fully and finally settle and terminate all liabilities and
obligations that the Releasors may have to the Releasee.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1.00. Release of Claims by the Releasees and Releasors.
1.01. Release By Releasee. In consideration of: (a) the mutual releases
herein; (b) the indemnifications provided by the Releasors to the Releasee as
set forth herein; (c) the Individual Releasor's delivery of one (1) or more
common certificates representing an aggregate of four million (4,000,000) shares
of the common stock of Releasee ($0.001 par value) (the "Cancelled Shares") and
one (1) or more common certificates representing an aggregate of four hundred
thousand (400,000) shares of the common stock of Releasee ($0.001 par value)
representing the dividend issued on that stock pursuant to the 11-for-10 stock
split effective October 17, 2004 (the "Cancelled Dividend Shares") as set forth
in Section 1.05(a) of this Agreement;(d) the delivery by the Individual Releasor
of the Letter of Resignation attached as Exhibit B to this Agreement; and (e)
the full and faithful performance of the obligations by the Releasors as set
forth in Section 1.05 of this Agreement and upon execution of this Agreement by
the Releasors and the Releasee, then the Releasee on its own behalf and on
behalf of each of all of its current and former officers, directors, agents,
parent corporations, sister corporations, affiliates, attorneys, heirs,
successors in interest, and assigns (the "Releasing Parties"), hereby fully and
forever releases, acquits and discharges each and every one of the Releasors and
each of their current and former officers, directors, stockholders, members,
managers, agents, parent corporations, sister corporations, limited liability
companies, affiliates, heirs, assigns, trustees, trustors, beneficiaries,
attorneys, together with all affiliates, business associates, all entities
currently or previously associated or affiliated with any one or more of the
Releasors and each of them, of and from any and all liabilities, claims,
demands, actions, causes of action and rights (contingent accrued, or otherwise)
(collectively, as "Claims") which the Releasee (and any officer, director,
employee or agent of the Releasee) may now have against any or all parties
released. Notwithstanding the provisions of Sections 1.01 and 1.04 of this
Agreement or any other term or provision of this Agreement, the Releasing
Parties are not hereby releasing the Releasors from and against any Claims that
may be asserted by the Investors, Circle B Development Company, or any person or
persons claiming under or through one or more of them in connection with the
issuance of the Transaction Shares pursuant to the Understanding. The Individual
Releasor shall retain all liability to all said persons in the event any claims
or demands are asserted in connection with the offering, sale, or issuance of
the Transaction Shares pursuant to the Understanding.
1.02. Release by Releasors. In consideration of: (a) the mutual releases
herein; (b) the indemnifications provided by the Releasee to the Releasors set
forth herein; (c) the full and faithful performance of the obligations of the
Releasee as set forth in Section 1.05 of this Agreement and upon execution of
this Agreement by the Releasors and the Releasee; and (d) together with other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, then the Releasors, individually and collectively and on their own
behalf and on behalf of each of their current and former officers, directors,
stockholders, members, managers, agents, parent corporations, sister
corporations, limited liability companies, affiliates, attorneys, heirs,
successors in interest, and assigns, hereby fully and forever releases, acquits
and discharges the Releasee and each of their current and former officers,
directors, agents, parent corporations, sister corporations, affiliates, heirs,
assigns, trustees, trustors, beneficiaries, attorneys, together with all
affiliates, business associates, all entities currently or previously associated
or affiliated with the Releasee and each of them (all such persons are included
in the definition "Releasees" for the purpose of this Section 1.02), of and from
any and all Claims which the Releasors (including any one or more of them) may
now have against any or all Releasees.
1.03 Release by Individual Releasor. In consideration of: (a) the mutual
releases herein; (b) the indemnifications provided by the Releasee to the
Individual Releasor set forth herein; (c) the payment of the sum of Twelve
Thousand Dollars ($12,000.00) (the "Consulting Fee") to the Individual Releasor
by the Releasee; and (d) together with other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, then the Individual
Releasor, individually and on behalf of his agents, parent corporation, sister
corporation, limited liability companies, affiliates, attorneys, heirs,
successors in interest, and assigns, hereby fully and forever releases, acquits
and discharges the Releasee from:
(a) All rights and interests that the Individual Releasor has or may have to:
(i) the Cancelled Shares and Cancelled Dividend Shares (as described in
Section 1.05(a) of this Agreement).
(b) All obligations that the Releasees have or may have to the Individual
Releasor arising out of that certain Option to Purchase Five Hundred
Thousand (500,000) shares of the common stock of the Releasee dated July
17, 2003;
(c) All obligations that the Releasees have or may have to the Individual
Releasor arising out of that certain Option to Purchase Two Hundred Fifty
Thousand (250,000) shares of the common stock of the Releasee dated
December 16, 2003;
(d) All obligation that the Releasees have or may have to the Individual
Releasor arising out of that certain 2000 Equity Incentive Plan (including,
but not limited to, Non-Statutory Stock Options, Incentive Stock Options,
Limited Rights, and Stock Awards);
(e) All obligations that the Releasees have or may have to the Individual
Releasor or any other persons for the issuance of any capital stock that
has not been earned (the "Pending Shares") arising out of and pursuant to
the terms of, that certain Securities Purchase Agreement, dated July 16,
2003 among the Releasee, certain representatives of the Releasee, Coliance
Communications, Inc., a California corporation ("Coliance"), and certain
holders of the capital stock of Coliance (the "Coliance Purchase
Agreement"), except that it is expressly agreed that the Pending Shares
described on Exhibit E Agreement which have not been delivered to the
Individual Releasor to date pending the occurrence of the applicable
qualifying event and/or time frame relating to delivery thereof, have been
issued and remain pending, as set forth in Exhibit E, and are not being
released or waived by the Individual Releasor.
(f) All obligations that Releasee has or may have to the Individual Releasor
for any consulting fees or similar, whether earned or unearned in any
capacity, except as provided in the first paragraph of Section 1.03, above.
The Releasees and the Individual Releasor hereby acknowledge and agree that
the release of obligations described in this Section 1.03 of this Agreement is
in addition to the provisions of this Agreement releasing the Releasee of all
obligations to the Individual Releasor otherwise provided hereunder.
1.04. Mutual Waiver; Section 1542. In executing and delivering this
Agreement and releasing each of the other respective parties herein, each party
hereby waives any and all rights which may exist under Section 1542 of the Civil
Code of the State of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR,
INCLUDING BUT NOT LIMITED TO ANY AND ALL OTHER ACTIONS WHICH MAY CONSTITUTE A
BREACH OF A FIDUCIARY DUTY WHICH IS CURRENTLY UNKNOWN AND/OR UNDISCLOSED TO
RELEASEE AT THE TIME OF EXECUTION OF THIS AGREEMENT.
1.05. Actions To Be Taken Upon Execution. All of the parties hereto agree
that upon execution of this Agreement, or at the times expressly provided for
below in this Section 1.05:
(a) The Individual Releasor shall, at no cost or expense to Releasee, return
and deliver the Cancelled Shares and Cancelled Dividend Shares to the
Releasee, which shall be comprised of the Shares of Releasee Common Stock
represented in the Stock Certificates listed on Exhibit G attached hereto.
(b) The Individual Releasor shall, at no cost or expense to Release, return and
deliver all of the Pending Shares listed and shown on Exhibit E attached
hereto to Paul G. Goss, Esq., 1775 Sherman Street, Suite 2550, Denver,
Colorado 80203 as escrow agent, (the "Escrow Agent") concurrently with the
execution of this Agreement, to be held in escrow until the occurrence of
each qualifying event and/or time frame as set forth in Exhibit E, as more
particularly set forth in the form of Escrow Agreement attached hereto as
Exhibit H.
(c) The Individual Releasor shall deliver the Letter of Resignation (Exhibit B)
attached hereto.
(d) The Individual Releasor shall cause his spouse to execute and deliver a
copy of the Consent of Spouse-Young (Exhibit C) attached hereto to Releasee
(at no cost or expense to Releasee).
(e) The Individual Releasor shall, at no cost or expense to Releasee, cause
each and every person who holds or may claim a deed of trust, lien,
mortgage, claim, or encumbrance ("Encumbrance") on the Real Property to
fully and forever release, acquit and discharge Releasee from all
obligations that Releasee has or may have to any said person on account of
any Encumbrance and furnish Releasee with a copy of all documents
supporting said release and discharge, to the extent that the Releasee has
or may have any obligations to such person(s) on the account of any
Encumbrance on the Real Property.
(f) Individual Releasor, the LLC Releasor and/or the Corporate Releasor shall
assume sole and exclusive responsibility for the payment of all
Encumbrances and all other debts, obligations, commitments incurred in
connection with the purchase, ownership, possession, maintenance, and
operation of all activity of the Real Property as of the date of the
Understanding.
(g) The Individual Releasor, the LLC Releasor and/or the Corporate Releasor,
shall, at no cost or expense to Releasee, cause to be filed such documents
as may be necessary or required by law, if any, and at the sole expense of
the Individual Releasee, to ensure that Releasee is not named or listed as
holding any interest in the Real Property.
(h) The Individual Releasor shall, within fifteen (15) days of the execution of
this Agreement and at no cost or expense to Releasee, deliver to Releasee
an insurance binder showing that the Releasee is an additional named
insured on all insurance policies on the Real Property, to the extent the
insurance carriers will issue such binder, and the Individual Releasor
agrees to maintain the Releasee as an additional named insured for a period
of three (3) years thereafter. In absence of a binder naming Releasee as
additional named insured, the Individual Releasor will provide a
certificate of insurance during the three year period.
(i) The Individual Releasor shall, within fifteen (15) days of the execution of
this Agreement and at no cost or expense to Releasee deliver to Releasee
all assets and products that are the personal property of Releasee, if the
Individual Releasor has any such Releasee personal property in his
possession.
(j) The Releasee shall, upon execution of this Agreement, pay the Board
Consulting Fee described in the first paragraph of Section 1.03 of this
Agreement.
(k) The Releasee shall, subject to Section 1.05(a) of this Agreement, upon
execution of this Agreement deliver to the Individual Releasor the
following stock certificates representing the following shares of Releasee
common stock (the "Undelivered Shares"): (i) Stock Certificate No. 3372 for
2,000,000 Undelivered Shares, (ii) Stock Certificate No. 3518 for 1,000,000
Undelivered Shares, (iii) Stock Certificate No. 4092 for 1,100,000
Undelivered Shares, (iv) Stock Certificate No. 4132 for 200,000 Undelivered
Shares, and (v) Stock Certificate No. 4135 for 100,000 Undelivered Shares.
{The 4,400,000 Undelivered Shares (representing the Cancelled Shares and
the Cancelled Dividend Shares), as set forth in detail in Exhibit G, are to
be delivered to the Individual Releasor such that they are deemed
delivered, and then concurrently be delivered and turned over by the
Individual Releasor to Releasee as the Cancelled Shares and Cancelled
Dividend Shares pursuant to Section 1.05(a) of this Agreement.
(l) The Releasee shall, take the actions set forth in Sections 1.06 and 1.07.
All of the parties to this Agreement acknowledge and agree that each of the
Releasors are individually and jointly responsible for the performance of the
obligations set forth in this Section 1.05 of this Agreement. All of the parties
to this Agreement acknowledge and agree that the performances required by
Sections 1.05(a), 1.05(b), 1.05(c), 1.05(d), 1.05(e), 1.05(f), 1.05(g), 1.05(j),
and 1.05(k) shall be fully and faithfully performed concurrently with the
execution of this Agreement is executed.
1.06 Issuance of Promissory Note to Individual Releasor. Notwithstanding
any other provision of this Agreement and in consideration of the obligations of
each party to this Agreement, together with other and valuable consideration,
the receipt and sufficiency is acknowledged:
(a) Issuance of Note. Releasee shall, upon the execution of this Agreement,
issue to Individual Releasor the Unsecured Subordinated Promissory Note
shown as Exhibit D attached hereto and incorporated by reference herein
(the "Note") as payment in full of all amounts, except for the Consulting
Fee, due the Individual Releasor by Releasee; and
(b) Additional Effective Date. The Releasee and the Releasors agree that
Sections 1.00, 1.01, 1.02, 1.03, 1.04, 1.08, 2.00, 2.01, 2.02, 2.03, 4.00,
5.00, 6.00, and 7.00 (and all subsections thereunder) shall also apply with
equal force and effect as of the date of the Note as if this Agreement were
also effective on such date.
1.07 Grant of Common Stock Purchase Warrant to Releasor. Notwithstanding
any other provision of this Agreement and in consideration of the full and
faithful performance by the Releasors of their obligations under this Agreement,
Releasee shall, upon the execution of this Agreement, grant to Individual
Releasor a Common Stock Purchase Warrant (the "Warrant") for the purchase of up
to Two Million Seven Hundred Fifty Thousand (2,750,000) shares of the Releasee's
Common Stock ($0.001 par value) (the "Warrant Shares") as more fully described
in Exhibit F attached to this Agreement.
1.08 Resignation of Individual Releasor. The Releasee and the Releasors
hereby acknowledge that the Individual Releasor resigned as a director of the
Releasee effective October 12, 2004, and has utilized his own offices and
facilities in rendering all services to Releasee. Individual Releasor further
agrees to assume all responsibility for the payment of all employment and other
taxes that may be incurred by him whether by exercise of the Warrant or
otherwise.
2.00 Termination of Understanding. The Releasee and the Releasors
acknowledge and agree that all rights and obligations that the Releasee and the
Releasors or any one or more of them may have to all other persons identified or
described in the Understanding are hereby terminated.
2.01 Representations of the Releasors. The Releasors and each of them
hereby warrant and represent that, as of the date of execution of this
Agreement:
(a) no one or more of the Releasors have taken any action which would cause or
reasonably result in the transfer or assignment of the Understanding in
whole or in part, to any other person or persons;
(b) no one or more of the Releasors have taken any action which would cause or
reasonably result in the transfer, assignment, or assumption of any rights
and obligations described in the Understanding, in whole or in part, to any
person or persons; and
(c) each person who is a party or who controls a party in the Understanding is
able to fully and irrevocably terminate the Understanding.
(d) the Releasors have informed the Investors of the terms of the Understanding
and the restrictions imposed on the public resale of the Transferred Shares
recited in the Understanding.
(e) the Individual Releasor has the power and authority to execute and deliver
this Agreement and to perform his obligations and covenants contemplated
hereby;
(f) that neither the execution of this Agreement nor performance hereunder will
(i) violate, conflict with or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under the terms, conditions or provisions
of any contract, agreement or other instrument or obligation to which the
Individual Releasor is a party, or by which he may be bound, or (ii)
violate any order, judgment, writ, injunction or decree applicable to him.
(g) the LLC Releasor is a limited liability company, and the Corporate Releasor
is a corporation each duly organized validly existing and in good standing
under the laws of their respective states of formation;
(h) the LLC Releasor has full limited liability power and authority, and the
Corporate Releasee has full corporate power and authority, to execute and
deliver this Agreement and to perform their respective covenants and
obligations contemplated hereby;
(i) the execution, delivery and performance of this Agreement has been duly
authorized by the LLC Releasor's member(s) and/or manager(s) and the
Corporate Releasor's Board of Directors respectively, and no other limited
liability company or corporate approvals are necessary;
(j) that neither the execution of this Agreement nor performance hereunder will
(i) violate, conflict with or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under the terms, conditions or provisions
of the LLC Releasor's Articles of Organization, and/or Operating Agreement,
if any, and the Corporate Releasor's Articles of Incorporation or By-Laws,
or any contract, agreement or other instrument or obligation to which
either of the LLC Releasor or Corporate Releasor are a party, or by which
either of them may be bound, or (ii) violate any order, judgment, writ,
injunction or decree applicable to either of them.
2.02 Representations of the Releasee. The Releasee hereby warrants and
represents that, as of the date of execution of this Agreement:
(a) it has not taken any action which would cause or reasonably result in the
transfer or assignment of the Understanding in whole or in part, to any
other person or persons;
(b) it has not taken any action which would cause or reasonably result in the
transfer, assignment, or assumption of any rights and obligations described
in the Understanding, in whole or in part, to any person or persons; and
(c) Releasee has the full power to fully and irrevocably terminate the
Understanding and any said termination shall not create or result in the
breach of any other agreements, understandings, commitments, or obligations
that the Releasee has or may have to any other person or persons.
(d) it is a corporation duly organized validly existing and in good standing
under the laws of the state of its incorporation;
(e) it has full corporate power and authority to execute and deliver this
Agreement and to perform the obligations and covenants contemplated hereby;
(f) the execution, delivery and performance of this Agreement has been duly
authorized by its Board of Directors and no other corporate approvals are
necessary;
(g) that neither the execution of this Agreement nor performance hereunder will
(i) violate, conflict with or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under the terms, conditions or provisions
of its Articles of Incorporation or By-Laws or any contract, agreement or
other instrument or obligation to which it is a party, or by which it may
be bound, or (ii) violate any order, judgment, writ, injunction or decree
applicable to it.
(h) Neither the Releasee Business Plan (as that term is defined in Section
2.03(d) nor the Releasee Financial Statements (as that herein is defined in
Section 2.03(d)) contains any untrue statement of a material fact, or omits
to state a material fact necessary in order to make the disclosure in such
Releasee Business Plan or Releasee Financial Statements not misleading.
2.03 Representation of Individual Releasor. The Individual Releasor hereby
warrants and represents that:
(a) Individual Releasor is an Accredited Investor as that term is defined
under Rule 501(a)(1) of Regulation D of the Securities Act of 1933;
(b) Individual Releasor agrees that he is acquiring the Warrant for
investment purposes only and not with a view to effecting a
distribution, transfer, or sale of the Warrant;
(c) Individual Releasor agrees that the Warrant and any Warrant Shares
acquired upon exercise of the Warrant are restricted securities and
that the Warrant and the Warrant Shares are and will bear a restricted
securities legend as required by the Securities Act of 1933;
(d) Individual Releasor agrees that prior to entering into this Agreement,
Individual Releasor: (1) received from Releasee a copy of Releasee's
current business plan bearing all attachments, schedules, and exhibits
thereto (the "Releasee Business Plan"); (2) received a copy of
Releasee's unaudited financial statements and financial reports for
the prior two fiscal years (the "Releasee Financial Statements"); (3)
had sufficient opportunity to ask questions of Releasee and its
officers and directors regarding the affairs and operations of
Releasee and to receive answers to each of all said questions; and (4)
received a copy of any additional documents and information regarding
the current plans and strategies that Releasee may pursue in the
future.
(e) Individual Releasor agrees that the Warrant and the Warrant Shares are
speculative investments and there can be no assurance that the Warrant
and the Warrant Shares are or will possess any value in the future. In
the event that Individual Releasor exercises the Warrant, Individual
Releasor may need to hold the Warrant Shares for an indefinite period
of time. The Warrant and the Warrant Shares represent a form of equity
that is and will remain subordinate to the claims of the Releasee's
current and future creditors pursuant to the corporate law of state
under which Releasee is incorporated. The exercise price of the
Warrant was determined on an arbitrary basis without any reference to
the Releasee's financial condition or industry comparison. The
Releasee is an early-stage company without any history of generating
profits and there can be no assurance that the Releasee will be
profitable or, if it becomes profitable that any profitability will be
sustained. In the event that the Warrant is exercised for the purchase
of the Warrant Shares, there can be no assurance that the Warrant
Shares will possess a market value equal to or above the exercise
price of the Warrant. The Releasee's common stock is traded on a
limited and sporadic basis and the trading market for the Releasee's
common stock may not allow Releasor to effectively sell or transfer
any significant amount of the Warrant Shares without a material
reduction in the price of the Warrant Shares. There is no trading
market for the Warrants and there is no likelihood that any trading
market will ever develop. Individual Releasor agrees that prior to any
exercise of the Warrant, Individual Releasor shall deliver and execute
such additional documents as Releasee or Releasee's counsel may
reasonably require.
(f) The Cancelled Shares and Cancelled Dividend Shares are and will be as
delivered to the Releasee under this Agreement (pursuant to Section
1.05(a) of this Agreement), free of all other claims, interests,
charges, both legal and equitable, of any other person (including any
that may be asserted under community property laws).
(g) The Pending Shares are and will be as delivered the Escrow Agent
(pursuant to Section 1.05(b) of this Agreement), free of all other
claims, interests, charges, both legal and equitable, of any other
person (including any that may be asserted under community property
laws).
3.00 Termination of Prior Agreements. The parties hereby terminate the
Understanding and expressly intend that the releases provided for herein shall
release each and every party thereto from all obligations and liabilities
thereunder. Each of the parties to the Understanding further agree that they
have not assigned the Understanding or any rights accruing to them thereunder to
any third party and agree to hold each and every other party to the
Understanding harmless from and against any claims or interests that may be
asserted by any person or entity that may later assert that any rights as an
assignee or transferee thereby.
4.00 Interpretation of Release. Notwithstanding anything herein set forth to the
contrary, no provision of this Agreement: (i) shall constitute or be construed
as a release or discharge of any obligation, claims or causes of action
hereafter arising out of the breach of any of the terms or provisions of this
Agreement; nor (ii) shall it constitute an admission of liability by any party
to any other party.
5.00 Indemnifications by Releasors. The Releasors shall, upon receipt of an
executed copy of this Agreement and the Releasee's full and faithful performance
of all of its obligations, including, but not limited to, those recited in
Sections 1.05(j), 1.05(k), 1.06, 1.07, 7.03 and 7.19 of this Agreement,
indemnify and defend the Releasee (and each person released and discharged, and
their respective heirs, assigns, trustees, trustors, beneficiaries, attorneys,
fiduciaries, employees, and consultants, and each of them) (all collectively, as
the "First Indemnities"), and shall hold the First Indemnitees harmless from and
against any and all loss, expense and/or liability arising directly or
indirectly out of the enforcement or attempted enforcement by anyone (including,
but not limited to, all current and former officers, directors, shareholders,
parent corporations, sister corporations, limited liability companies, agents,
fiduciaries, and all current and previous affiliates of the First Indemnitees,
and each of them) for any of the same Claims released and discharged by each of
the Releasors. The Releasors further indemnify and agree to hold the First
Indemnitees harmless and defend the First Indemnitees, from and against any
Claims by any person in connection with or related to the issuance of the
Releasee's common stock for the purchase of the Real Property. In addition, the
Releasors hereby further indemnify the First Indemnitees from and against any
and all loss, expense and/or liability arising directly or indirectly out of any
Claims by any other person asserting any interest in the Cancelled Shares,
Cancelled Dividend Shares, Pending Shares, and the Transaction Shares.
6.00 Indemnification by the Releasee. The Releasee shall, upon receipt of an
executed copy of ] this Agreement and the Releasors' full and faithful
performance of all the obligations, including, but not limited to, those recited
in Sections 1.05 and 7.19 of this Agreement, indemnify and defend the Releasors
and their respective heirs, assigns, trustees, trustors, beneficiaries,
attorneys, fiduciaries, employees, and consultants, and each of them) (all
collectively, as the "Second Indemnities"), and shall hold the Second
Indemnitees harmless from and against any and all loss, expense and/or liability
arising directly or indirectly out of the enforcement or attempted enforcement
by anyone (including, but not limited to, all current and former officers,
directors, shareholders, parent corporations, sister corporations, limited
liability companies, agents, fiduciaries, and all current and previous
affiliates of the Second Indemnitees, and each of them) for any of the same
Claims released and discharged by the Releasee.
7.00 Miscellaneous.
7.01 Further Assurances. Each of the parties shall hereafter execute all
documents and do all acts reasonably necessary to effect the provisions of this
Agreement, including, but not limited to, any filings or deliveries that one or
more of the Releasors may be required to make in connection with respect to the
performance of the obligations set forth in Sections 1.05(a), 1.05(b), 1.05(c),
1.05(d), 1.05(e), 1.05(f), 1.05(g), 1.05(h), 1.05(i), 1.05(j), 1.05(k), 1.06 and
1.07 of this Agreement.
7.02 Cooperation Clause. Each party agrees to cooperate fully and to
take all additional actions that may be necessary or appropriate
to give full force and effect to the terms and intent of this
Agreement, including but not limited to, the execution of any
further documents necessary to fully and finally resolve this
matter, and full cooperation in any and all current, pending or
future lawsuits and/or legal proceedings arising out of events
which occurred during the entire time in which the Individual
Releasor was involved in any sort of business relationship with
the Releasee.
7.03 Rule 144.
(a) With a view to making available to the Individual Releasor the
benefits of Rule 144 promulgated under the Securities Act of 1933, as
amended (the "1933 Act") and any other rule or regulation of the
Securities and Exchange Commission (the "SEC") that may at any time
permit the Individual Releasor to sell shares of common stock of the
Releasee to the public without registration, the Releasee agrees to:
(i) make and keep available public information, as those terms are
defined in Rule 144, at all times after the date hereof;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the 1934 Act") if
the Releasee is subject to Section 13 or 15(d) of the 1934 Act,
or if the Releasee is not subject to Section 13 or 15(d) of the
1934 Act the Releasee shall maintain publicly available
information concerning the Releasee specified in Rule 15c2-11
paragraphs (a)(5)(i) through (xiv) and (xvi) promulgated under
the 1934 Act; and
(iii)furnish to the Individual Releasor so long as the Individual
Releasor owns any shares of common stock of the Releasee upon
request (A) a written statement by the Releasee that it has
complied with the reporting or public information requirements of
Rule 144, the 1933 Act and the 1934 Act, and (B) such other
information as may be reasonably required in availing the
Individual Releasor as holder of shares of common stock of the
Releasee of any rule or regulation of the SEC which permits the
selling of any such shares of common stock of the Releasee
without registration.
(b) (i) The provisions of Section 7.03(a)(i) through (iii) shall be
suspended for the period provided for in Section 7.03(b)(ii) hereof if
at any time, the Releasee is engaged in confidential negotiations or
other confidential business activities, and the Board of Directors of
the Company determines in good faith that such disclosure would be
materially detrimental to the Company and its stockholders or would
have a material adverse effect on any such confidential negotiations
or other confidential business activities (the "Non-Disclosure
Determination").
(ii) The suspension of the provisions of Section 7.03(a)(i) through
(iii) shall continue until the earlier of (A) the date on which
the negotiations or other activities are disclosed or terminated,
or (B) sixty (60) days following the date of the Non-Disclosure
Determination.
(c) In no event are the provisions of Section 7.03(b) meant to waive or
limit any rights the Releasors may generally have as holders of
unregistered securities of the Releasee arising from the Releasee's
failure to fulfill the provisions of Rule 144(c) promulgated under the
1933 Act.
7.04 Independent Counsel. Each of the parties to this Agreement
acknowledges and agrees that it has had an opportunity to be represented by
independent counsel of its own choice throughout all negotiations which preceded
execution of this Agreement and the transaction referred to in this Agreement,
and each has executed this Agreement with the consent and upon the advice of
said independent counsel. Each party represents that he or it fully understands
the provision of this Agreement, has consulted with counsel concerning its
terms, and executes this Agreement of his or its own free choice without
reference to any representations, promises or expectations not set forth herein.
7.05 Successors. The provisions of this Agreement shall be deemed to
obligate, extend to, and inure to the benefit of the successors, assigns,
transferees, grantees, and indemnitees of each of the parties to this Agreement.
7.06 Attorneys' Fees. In the event of a dispute between the parties
concerning the enforcement or interpretation of this Agreement, the prevailing
party in such dispute, whether by legal proceedings or otherwise, shall be
reimbursed immediately for the reasonably incurred attorneys' fees and other
costs and expenses by the other parties to the dispute.
7.07 Interpretation. Whenever the context so requires: the singular number
shall include the plural; the plural shall include the singular; and the
masculine gender shall include the feminine and neuter genders.
7.08 Captions. The caption by which the sections and subsections of this
Agreement are identified are for convenience only, and shall have no effect
whatsoever upon its interpretation.
7.09 Exhibits. Exhibits A, B, C, D, E, F, G, and H are an integral part of
this Agreement and each is incorporated by reference herein.
7.10 Integration and Amendments. This Agreement, and those stipulations and
other exhibits attached hereto, and which are hereby expressly incorporated
herein by reference, after full execution, acknowledgment and delivery,
memorializes and constitutes the entire agreement and understanding between the
parties and supersedes and replaces all prior negotiations and agreements of the
parties, whether written or unwritten. Each of the parties to this Agreement
acknowledges that no other party, nor any agent or attorney of any other party
has made any promises, representations or warranty whatsoever, express or
implied, which is not expressly contained in this Agreement; and each party
further acknowledges that he or it has not executed this Agreement in reliance
upon any belief as to any fact not expressly recited here-in-above. No amendment
or waiver of any provision, term, or condition of this Agreement shall be
effective unless the same is in writing and executed by the party against whom
enforcement is sought.
7.11 Severance. If any provision of this Agreement is held to be illegal or
invalid by a court of competent jurisdiction, such provision shall be deemed to
be severed and deleted; and neither such provision, nor its severance and
deletion, shall affect the validity of the remaining provisions unless such
severance or deletion materially alters the bargain intended by the parties
which is reflected in this Agreement and the stipulations and exhibits attached
hereto.
7.12 Disclaimer of Liability. The parties to this Agreement hereby
expressly recognize and agree that the terms and conditions of this Agreement
constitute an accord and satisfaction of contested matters and neither the offer
nor the acceptance of the terms and conditions hereof represent an admission of
liability or responsibility on the part of any party, each party expressly
disclaiming any such liability.
7.13 Counterparts. This Agreement may be executed in any number of
counterparts.
7.14 Survival of Warranties. All representations and warranties made in
this Agreement shall survive any closing and any execution of this Agreement for
a period of five (5) years after any applicable period provided under any
statutes of limitation, repose, or otherwise.
7.15 Equitable Remedies. In the event that any party to this Agreement
fails to fully and faithfully perform their obligations under this Agreement,
the non-breaching party to this Agreement shall be entitled to a decree of
specific performance. This remedy shall not be exclusive and shall be in
addition to any other remedy available to the parties. In addition, in the event
that the Releasors or any of them fail to perform their obligations under this
Agreement, the Releasee shall have a right of set-off against the Note, the
Warrant, the Warrant Shares, and all of them as the Releasee may so determine.
7.16 Power to Bind. Each party to this Agreement represents that it has
read and understands the contents of this Agreement and is empowered and duly
authorized to execute it in his individual and representative capacities.
7.17 Interpretation of Agreement. This Agreement shall be interpreted in
accordance with the law of the State of California as if this Agreement was
fully performed and executed within the State of California.
7.18 Arbitration. Any dispute or claim arising to or in any way related to
this Agreement shall be settled by arbitration in San Diego, California but any
dispute or controversy arising out of or interpreting this Agreement shall be
settled in accordance with the laws of the State of California as if this
Agreement were executed and all actions were performed hereunder within the
State of California. All arbitration shall be conducted in accordance with the
rules and regulations of the American Arbitration Association ("AAA"). AAA shall
designate an arbitrator from an approved list of arbitrators following both
parties' review and deletion of those arbitrators on the approved list having a
conflict of interest with either party. Each party shall pay its own expenses
associated with such arbitration (except as set forth in Section 7.04 Above). A
demand for arbitration shall be made within a reasonable time after the claim,
dispute or other matter has arisen and in no event shall such demand be made
after the date when institution of legal or equitable proceedings based on such
claim, dispute or other matter in questions would be barred by the applicable
statutes of limitations. The decision of the arbitrators shall be rendered
within 60 days of submission of any claim or dispute, shall be in writing and
mailed to all the parties ;included in the arbitration. The decision of the
arbitrator shall be binding upon the parties and judgment in accordance with
that decision may be entered in any court having jurisdiction thereof.
7.19 Confidentiality & Non-Disparagement. Each party to this Agreement
acknowledges and agrees that this Agreement, the subject matter of this
Agreement, all actions taken or required by any party to this Agreement in
connection with this Agreement, and all actions contemplated or related to
the performance of the express or implied obligations that each party has
under this Agreement (all, collectively, as the "Confidential Matters") are
and will remain confidential and that any disclosure of the Confidential
Matters will likely result in irreparable injury to one or more other
parties to this Agreement. Notwithstanding the foregoing, any party to this
Agreement shall have the right to disclose any one or more of the
Confidential Matters to the extent reasonably necessary to protect its
rights under this Agreement or as may be required under the Securities Act
of 1933, the Securities Exchange Act of 1934, and any similar laws of any
state or other jurisdiction. Each of the Releasors further agrees not to
issue or cause to be issued any press release, other public statement, or
any other description or statement to any third party which may cause or
result in the creation or distribution of any disparaging disclosure
regarding Releasee, Releasee's business, or any officer, director,
employee, or agent of the Releasee at any time for a period of three (3)
years from the date of this Agreement.
7.20 Additional Indemnification by Releasee of Individual Releasor. In
addition to any and all other indemnification obligations of the Releasee to the
Releasor under this Agreement, the Releasee shall indemnify and defend the
Individual Releasor and shall hold the Individual Releasor harmless, to the
maximum extent permitted by the laws, and decisions of the Courts, of the State
of Utah and by any additional federal or state laws or Court decisions, for any
action, suit or proceeding in which the Individual Releasor was or is a party or
is threatened to be made a party in his capacity as, or as a result of the
Individual Releasor formerly being, a director and/or officer of the Releasee,
including without limitation, any claim of, or action or proceeding pending or
instituted by, Greenland Corporation. This Section 7.20 expressly excludes
indemnification of the Individual Releasor for any conduct on the part of the
Individual Releasor, whether known or unknown, which would constitute a breach
of fiduciary duties and/or intentionally tortious conduct. This Section 7.20 is
expressly excluded from any release by the Releasee under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement:
FOR RELEASEE:
/s/ Paul E. Atkiss 1/27/05
BY: _______________________________________ DATED: _________________
Paul E. Atkiss, Chief Financial Officer
/s/ James Balestraci 1/27/05
BY: _______________________________________ DATED: _________________
James Balestraci, Director
FOR THE LLC RELEASOR:
/s/ Stephen D. Young 1/27/05
BY: _______________________________________ DATED: _________________
Stephen D. Young
FOR THE INDIVIDUAL RELEASOR:
/s/ Stephen D. Young 1/27/05
___________________________________________ DATED: _________________
Stephen D. Young, Individually
FOR THE CORPORATE RELEASOR:
/s/ Stephen D. Young 1/27/05
BY:________________________________________ DATED: _________________
Stephen D. Young
[SIGNATURE PAGE: SETTLEMENT AGREEMENT]
EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
LOCATED IN
SAN JACINTO, RIVERSIDE COUNTY, CALIFORNIA
(Attached)
EXHIBIT B
LETTER OF RESIGNATION
(Attached)
EXHIBIT C
CONSENT OF SPOUSE-YOUNG
Karen Young
I, ____________________________, am the spouse of Stephen D. Young.
In that connection, I have read and understand the terms and
provisions of that certain Settlement Agreement, effective August 21, 2003
(the "Agreement").
I understand that I may have certain community property rights to
certain shares of the common stock of Viper Networks, Inc., a Utah
corporation, owned and held by Stephen D. Young as described in the
Agreement and that, by the terms of the Agreement, I and my spouse are
relinquishing all rights to said shares and certain other rights as set
forth in the Agreement.
I hereby irrevocably approve of and give my consent to all the terms
and provisions of the Agreement and the transactions contemplated by the
Agreement.
I further acknowledge that I am giving my consent to the Agreement
freely and that I acknowledge that I have had a sufficient opportunity to
consult with and receive the advice of legal counsel of my own choosing.
1/27/05
Dated: ____________________________
/s/ Karen Young
Signed: ____________________________
Karen Young
Print Name: ____________________________
EXHIBIT D
THE SECURITIES REPRESENTED BY THIS UNSECURED SUBORDINATED PROMISSORY NOTE HAVE
NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION. AS A
RESULT, THE SECURITIES REPRESENT RESTRICTED SECURITIES AS THT TERM IS DEFINED IN
THE SECURITIES ACT OF 1933.
UNSECURED SUBORDINATED PROMISSORY NOTE
San Diego, California
October 12, 2004
Page 1 of 4
FOR VALUE RECEIVED, the undersigned, Viper Networks, Inc., a Utah
corporation (hereinafter called "Maker"), promises to pay to the order of
Stephen D. Young with principal address at 840 McAllister Avenue, Big Bear City,
California 92314, (together with all subsequent holders of this Note,
hereinafter called "Payee"), or at such other place as Payee may from time to
time designate in writing, the principal sum of One Hundred Thousand One Hundred
Forty-Eight and No/00 Dollars ($100,148.00) together with interest thereon
calculated on a daily basis (based, at Payee's option, on 360-day or 365/366-day
years) from the date hereof on the principal balance from time to time
outstanding (the "Principal Amount") as hereinafter provided, principal,
interest and all other sums payable hereunder to be paid in lawful money of the
United States of America as follows:
A. Interest Rate. Interest shall accrue at all times hereunder at the rate
of ten percent (10%) per annum (non-compounded) commencing upon the execution of
this Note, and shall be payable monthly on the first calendar day of each month
thereafter until all principal, interest, and all amounts due hereunder are paid
in full. Maker shall have the right, but not the obligation, to prepay all or
any portion of this Note without incurring any penalty, fee, or prepayment
premium.
B. Due At Maturity Date. If not earlier due and payable, the unpaid
principal balance, any accrued and unpaid interest and all other amounts payable
hereunder shall be due and payable in full on November 1, 2005 (the "Maturity
Date").
C. Subordination. The indebtedness evidenced by this Note and the payment
of the principal thereof and interest thereon shall be subordinate, junior and
subject in right of payment to Senior Indebtedness of the Maker hereinafter
incurred. "Subordinate", as used herein, shall be deemed to mean that, in the
event of any default in the payment of Senior Indebtedness (after giving effect
to "cure" provisions, if any), or of liquidation, insolvency, bankruptcy,
reorganization, or similar proceedings relating to the Maker, all sums payable
on Senior Indebtedness shall first be paid in full, with interest, if any,
before any payment is made upon the indebtedness evidenced by this Note, "Senior
Indebtedness" shall mean the principal and other obligations arising out of, and
interest on, all secured or unsecured indebtedness of the Maker to all banks,
factors, other institutional lenders and other lenders (other than officer or
directors of the Releasee) who provided or provide debt financing to the Maker,
prior to, on, or after the date of this Agreement provided that the terms of any
written agreement, executed after the date hereof, with any such Lenders require
that this Note be Subordinate as aforesaid to the Maker's Senior Indebtedness to
such Lender(s).
Maker agrees to an effective rate of interest that is the rate stated above
plus any additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid by or on behalf of Maker, or any benefit
received or to be received by Payee, in connection with this Note.
If any payment required under this Note is not paid within five (5)
calendar days after the date such payment is due, then, at the option of Payee,
Maker shall pay a "late charge" equal to Ten Percent (10%) of the amount of that
payment of compensate Payee for administrative expenses and other costs of
delinquent payments in connection with the collection of any sums due Payee
under this Note. This late charge may be assessed upon written notice, shall be
due and payable and shall be in addition to all other rights and remedies
available to Payee.
All payments on this Note shall be applied in such manner as Payee elects,
and may be applied first to the payment of any costs, attorney's fees,
penalties, late charges, fees or other charges incurred in connection with the
indebtedness evidenced hereby, next to the payment of accrued interest and then
to the reduction of the principal balance.
Time is of the essence of this Note. At the option of Payee, the entire
unpaid principal balance, all accrued and unpaid interest and all other amounts
payable hereunder shall become due and payable upon the failure to pay any sum
due and owing hereunder as provided herein or upon the occurrence of any Event
of Default, provided that Payee provides Maker with ten (10) days written notice
of any default to allow Maker the ability to cure any default. In the event that
maker effects a cure of any default, this Note and the rights and obligations of
the parties hereto shall remain without reference to any prior default.
[intentionally left blank]
Events of Default
The occurrence of any of the following events or conditions shall
constitute and is hereby defined to be an "Event of Default":
(a) Any failure to pay any principal or interest or any other amount due
in connection with this Note when the same shall become due and
payable.
(b) Any failure or neglect to perform or observe any of the terms,
provisions, or covenants of any of this Note, or the Maker's
obligations, covenants or agreements set forth in (i) that certain
Settlement Agreement of even date among the Maker, Young's
Environmental Solutions, LLC, Young's Environmental Solutions, Inc.
and Payee, except those set forth in Section 7.03 of such Settlement
Agreement, and that certain warrant of even date issued by Maker to
Payee to purchase an aggregate of 2,750,000 shares of Maker's common
stock, and such failure or neglect either cannot be remedied or, if it
can be remedied, it continues unremedied for a period of ten (10) days
after notice thereof to Maker and an additional ten (10) days
thereafter and Maker has not cured any said default.
After maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable hereunder
shall bear interest from the date of maturity until paid at the rate that is two
percent (2%) above the rate that would otherwise be payable under the terms
hereof. In addition to the payment of the "late charge" described above, Maker
shall pay all costs and expenses, including reasonable attorneys' fees and court
costs, incurred in the collection or enforcement of all or any part of this
Note. In the event of any court proceedings, court costs and attorneys' fees
shall be set by the court and not by jury and shall be included in any judgment
obtained by Payee. No provision of this Note is intended to or shall require or
permit Payee, directly or indirectly, to take, collect or receive in money,
goods or in any other form, any interest (including amount deemed by law to be
interest) in excess of the maximum rate of interest permitted by applicable law.
If any amount due from or paid by Maker shall be determined by a court of
competent jurisdiction to be interest in excess of such maximum rate, Maker
shall not be obligated to pay such excess and, if paid, such excess shall be
applied against the unpaid principal balance of this Note, or if and to the
extent that this Note has been paid in full, such excess shall be remitted to
Maker. This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of Payee and its successors and assigns. All notices
required or permitted in connection with this Note shall be given at the place
and address as separately provided by each party to this Note. This Note shall
be governed by and construed according to the laws of the State of Utah.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
MAKER:
VIPER NETWORKS, INC.
/s/ Paul E. Atkiss
By:_______________________________________
Paul E. Atkiss, Chief Financial Officer
/s/ James Balestraci
By:_______________________________________
James Balestraci, Director
EXHIBIT E
SHARE CERTIFICATES & NUMBER OF SHARES ISSUED
TO INDIVIDUAL RELEASOR TO BE DELIVERED
TO PAUL G. GOSS, ESQ.1 AND HELD IN ESCROW
Stock Cert.# Registered Holder No. of Shares Qualifying Event/Timeframe
#3299 Stephen Young 500,000 April 16, 2005
#4138 Stephen Young 50,000 April 16, 2005
#3301 Stephen Young 1,000,000 10,000 reg USB phones sold & on network
#4133 Stephen Young 100,000 10,000 reg USB phones sold & on network
#3302 Stephen Young 1,000,000 3 mos. At $1/share OR 2nd anniversary (July 16, 2005)
#4134 Stephen Young 100,000 3 mos. At $1/share OR 2nd anniversary (July 16, 2005)
Initials of Authorized Representative of Releasee: ______________________
Initials of Individual Releasor: ______________________
8
EXHIBIT F
WARRANT
For the Purchase of Common Stock, Par Value $0.001 per Share, of
VIPER NETWORKS, INC.
(Incorporated Under the Laws of the State of Utah)
No. 1 Warrant to Purchase Common Stock
THIS IS TO CERTIFY, that, for value received, Stephen D. Young (the
"Warrantholder"), is entitled, subject to the terms and conditions of that
certain Settlement Agreement of August 21, 2003 between Stephen D. Young
(including certain affiliated entities of Stephen D. Young) and Viper Networks,
Inc., a Utah corporation and those terms and conditions hereinafter set forth
and at any time prior to 5:00 P.M. P.D.T. October 12, 2009, San Diego,
California Time, to purchase up to Two Million Seven Hundred Fifty Thousand
(2,750,000) shares (the "Shares") of Common Stock (par value $0.001 per share)
(the "Common Stock"), of VIPER NETWORKS, INC., a Utah corporation (the
"Corporation"), from the Corporation subject to the Warrantholder's full and
faithful performance of its obligations as recited in that certain Settlement
Agreement, effective August 21, 2003 (the "Settlement Agreement") entered into
between the Corporation and, the Warrantholder and other parties, and upon
payment to the Corporation of Thirty Cents ($0.30) per share (the "Purchase
Price") if and to the extent this Warrant is exercised, in whole or in part,
during the period this Warrant remains in force, subject in all cases to
adjustment as provided in Article II hereof, and to receive a certificate or
certificates representing the Shares so purchased, upon presentation and
surrender to the Corporation of this Warrant, with the form of subscription
attached hereto duly executed, and accompanied by payment of the Purchase Price
of each Share purchased.
ARTICLE I -- TERMS OF THE WARRANT
Section 1.01 Subject to the provisions of Sections 1.05 and 3.01 hereof,
this Warrant may be exercised at any time and from time to time after 9:00 A.M.,
San Diego, California time as follows: (a) One Million (1,000,000) Shares of the
Common Stock may be purchased at any time on or after October 12, 2005; (b) an
additional One Million (1,000,000) Shares of the Common Stock may be purchased
on or after October 12, 2006; and (c) an additional Seven Hundred Fifty Thousand
(750,000) Shares of the Common Stock may be purchased on or after October 12,
2007 (the "Vesting Provisions"). All rights to purchase the Shares and to
exercise this Warrant shall expire at 5:00 P.M., P.D.T., October 12, 2009 (the
"Expiration Time") after which it shall become void, and all rights hereunder
shall thereupon cease.
Section 1.02 (1) The holder of this Warrant (the "Holder") may exercise
this Warrant, in whole or in part, upon surrender of this Warrant with the form
of subscription attached hereto duly executed, to the Corporation at its
corporate office in San Diego, California together with the full Purchase Price
for each Share to be purchased in lawful money of the United States, or by
certified check, bank draft or postal or express money order payable in United
States dollars to the order of the Corporation, and upon compliance with and
subject to the conditions set forth herein.
(2) Upon receipt of this Warrant with the form of subscription duly
executed and accompanied by payment of the aggregate Purchase Price for the
Shares for which this Warrant is then being exercised, the Corporation shall
cause to be issued certificates for the total number of whole Shares for which
this Warrant is being exercised in such denominations as are required for
delivery to the Holder, and the Corporation shall thereupon deliver such
certificates to the Holder or its nominee.
(3) In case the Holder shall exercise this Warrant with respect to less
than all of the Shares that may be purchased under this Warrant, the Corporation
shall execute a new Warrant for the balance of the Shares that may be purchased
upon exercise of this Warrant and deliver such new Warrant to the Holder.
(4) The Corporation covenants and agrees that it will pay when due and
payable any and all taxes which may be payable in respect of the issue of this
Warrant, or the issue of any Shares upon the exercise of this Warrant. The
Corporation shall not, however, be required to pay A) any state, federal,
franchise or income tax; or B) any tax which may be payable in respect of any
transfer involved in the issuance or delivery of this Warrant or of the Shares
in a name other than that of the Holder at the time of surrender, and until the
payment of such tax the Corporation shall not be required to issue such Shares.
Section 1.03 This Warrant may be split-up, combined or exchanged for
another Warrant or Warrants of like tenor to purchase a like aggregate number of
Shares. If the Holder desires to split-up, combine or exchange this Warrant, he
shall make such request in writing delivered to the Corporation at its corporate
office and shall surrender this Warrant and any other Warrants to be so
split-up, combined or exchange, the Corporation shall execute and deliver to the
person entitled thereto a Warrant or Warrants, as the case may be, as so
requested. The Corporation shall not be required to effect any split-up,
combination or exchange which will result in the issuance of a Warrant entitling
the Holder to purchase upon exercise a fraction of a Share. The Corporation may
require the Holder to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any split-up, combination or
exchange of Warrants.
Section 1.04 Prior to due presentment for registration of transfer of this
Warrant, the Corporation may deem and treat the Holder as the absolute owner of
this Warrant (notwithstanding any notation of ownership or other writing hereon)
for the purpose of any exercise hereof and for all other purposes, and the
Corporation shall not be affected by any notice to the contrary.
Section 1.05 This Warrant may not be sold, hypothecated, exercised,
assigned or transferred, to any individuals, including, but not limited to, any
entity owned, controlled, or affiliated with the Warrantholder except that the
Warrantholder may, upon notice and receipt of written approval of the
Corporation, assign or transfer this Warrant to: (a) a trust for which the
Warrantholder is the settlor or one or more of the beneficiaries; or (b) a legal
dependent or heir of the Warrantholder (pursuant to the laws of descent and
distribution), provided that prior to any said assignment or transfer of this
Warrant, the assignee or transferee of this Warrant executes such documents as
the Corporation's counsel may reasonably require to ensure that the terms the
Settlement Agreement and this Warrant are approved and accepted by any proposed
assignee or transferee. Further, any said proposed assignment or transfer shall
be permissible only pursuant to the provisions of the Securities Act of 1933 and
applicable state securities law. Notwithstanding any assignment or transfer by
the Warrantholder, any assigneee or transferee shall not acquire any rights to
exercise this Warrant or purchase the Shares of the Common Stock described
herein if the Warrantholder (or any person named as a Releasor in the Settlement
Agreement) has committed any breach of the obligations assumed by the Releasors
in the Settlement Agreement.
Section 1.06 Any assignment permitted hereunder shall be made by surrender
of this Warrant to the Corporation at its principal office with the form of
assignment attached hereto duly executed and funds sufficient to pay any
transfer tax. In such event, the Corporation shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in such instrument of
assignment and this Warrant shall promptly be canceled. This Warrant may be
divided or combined with other Warrants which carry the same rights upon
presentation thereof at the corporate office of the Corporation together with a
written notice signed by the Holder, specifying the names and denominations in
which such new Warrants are to be issued.
Section 1.07 Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to consent or to receive notice
as a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Corporation. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following shall occur:
(a) the Corporation shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained
earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Corporation; or
(b) the Corporation shall offer to the holders of its Common Stock any
additional shares of capital stock of the Corporation or securities
convertible into or exchangeable for shares of capital stock of the
Corporation, or any option, right or warrant to subscribe therefor; or
(c) there shall be proposed any capital reorganization or reclassification
of the Common Stock, or a sale of all or substantially all of the
assets of the Corporation, or a consolidation or merger of the
Corporation with another entity; or
(d) there shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; then, in any one or more
of said cases, the Corporation shall cause to be mailed to the Holder,
at the earliest practicable time (and, in any event, not less than
thirty (30) days before any record date or other date set for
definitive action), written notice of the date on which the books of
the Corporation shall close or a record shall be taken to determine
the stockholders entitled to such dividend, distribution, convertible
or exchangeable securities or subscription rights, or entitled to vote
on such reorganization, reclassification, sale, consolidation, merger,
dissolution, liquidation or winding up, as the case may be. Such
notice shall also set forth such facts as shall indicate the effect of
such action (to the extent such effect may be known at the date of
such notice) on the Purchase Price and the kind and amount of the
Common Stock and other securities and property deliverable upon
exercise of this Warrant. Such notice shall also specify the date as
of which the holders of the Common Stock of record shall participate
in said distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the
case may be (on which date, in the event of voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the right
to exercise this Warrant shall terminate).
Without limiting the obligation of the Corporation to provide notice to the
holder of actions hereunder, it is agreed that failure of the Corporation to
give notice shall not invalidate such action of the Corporation.
Section 1.08 If this Warrant is lost, stolen, mutilated or destroyed, the
Corporation shall, on such reasonable terms as to indemnity or otherwise as it
may impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant, which shall thereupon become void. Any such
new Warrant shall not constitute an additional contractual obligation of the
Corporation, whether or not the Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone; any such new Warrant shall operate
solely to replace the Warrant so lost, stolen, destroyed or mutilated and the
Corporation shall have the right to require that the Warrantholder and any other
persons to indemnify the Corporation from and against any costs or losses that
the Corporation may incur as a result of or arising out of the loss,
destruction, or mutilation of the Warrant.
Section 1.09 (1) The Corporation covenants and agrees that at all times it
shall reserve and keep available for the exercise of this Warrant such number of
authorized Shares as are sufficient to permit the exercise in full of this
Warrant.
(2) The Corporation covenants that all Shares, when issued upon the
exercise of this Warrant, will be validly issued, fully paid,
and non-assessable.
ARTICLE II -- ADJUSTMENT OF PURCHASE PRICE
AND NUMBER OF SHARES PURCHASABLE UPON EXERCISE
Section 2.01 In case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force, effect a recapitalization of
such character that the Shares purchasable hereunder shall be changed into or
become exchangeable for a larger or smaller number of shares, then, after the
date of record for effecting such recapitalization, the number of Shares of
Common Stock which the Holder hereof shall be entitled to purchase hereunder
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason such
recapitalization, and of the Purchase Price, per share, whether or not in effect
immediately prior to the time of such recapitalization, of such recapitalized
Common Stock shall in the case of an increase in the number of such Shares be
proportionately reduced, and in the case of a decrease in the number of such
Shares shall be proportionately increased. For the purposes of this Section
2.01, a stock dividend, stock split-up or reverse split shall be considered as a
recapitalization and as an exchange for a larger or smaller number of shares, as
the case may be.
Section 2.02 In case of any consolidation of the Corporation with, or
merger of the Corporation into another corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Corporation other
than in connection with a plan of complete liquidation of the Corporation, then,
as a condition of such consolidation, merger or sale or conveyance, adequate
provision shall be made whereby the Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of Shares of Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock or securities as may be issued in connection with such
consolidation, merger or sale or conveyance, with respect to or in exchange for
the number of outstanding shares of Common Stock equal to the number of shares
of Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby had such consolidation, merger or sale
or conveyance, not taken place, and in any such case appropriate provision shall
be made with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof shall be applicable as nearly as may be in
relation to any shares of stock or securities thereafter deliverable upon the
exercise hereof.
Section 2.03 (a) In case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force, issue (otherwise than by stock
dividend or split-up or reverse split) or sell shares of its Common Stock
(hereinafter referred to as "Additional Shares"), there shall be no adjustment
in the number of Shares purchasable upon exercise of this Warrant or the
Purchase Price, or both of them, on account of the issuance of the Additional
Shares or otherwise.
(b) In case the Corporation shall, while this Warrant remains unexercised,
in whole or in part, and in force, issue or grant any rights to subscribe for or
to purchase, or any option, for the purchase of, (i) Common Stock or (ii) any
indebtedness or shares of stock convertible into or exchangeable for Common
Stock being hereinafter referred to as "Convertible Securities"), or issue or
sell Convertible Securities, there shall be no adjustment in the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price, or both
of them, on account of the issuance of any said rights, option, or Convertible
Securities or any combination of them.
Section 2.04 Subject to the provisions of Sections 1.01 and 2.05 of this
Warrant, in case the Corporation shall, while this Warrant remains unexercised,
in whole or in part, and in force, declare to make any distribution of its
assets to holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise, then, after the date of record for determining
stockholders entitled to such distribution, but prior to the date of
distribution, the Holder shall be entitled upon exercise of this Warrant
(subject to the Vesting Provisions of Section 1.01 of this Warrant) and purchase
of any or all of the Shares of Common Stock subject hereto, to receive the
amount of such assets (or, at the option of the Corporation, a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Corporation in good
faith) which would have been payable to the Holder had he been the holder of
such Shares of Common Stock on the record date for the determination of
stockholders entitled to such distribution.
Section 2.05 Except as otherwise provided in Section 2.02 above, in the
case of any sale or conveyance of all or substantially all of the assets of the
Corporation in connection with a plan of complete liquidation of the
Corporation, in the case of the dissolution, liquidation or winding-up of the
Corporation, all rights under this Warrant shall terminate on a date fixed by
the Corporation, such date so fixed to be not earlier than the date of the
commencement of the proceedings for such dissolution, liquidation or winding-up
and not later than thirty (30) days after such commencement date. Notice of such
termination of purchase rights (the "Purchase Rights Termination Notice") shall
be given to the Holder at least thirty (30) days prior to such termination date.
The Holder shall after the Purchase Rights Termination has been given, but prior
to the termination dated be entitled to exercise this Warrant, without regard to
the Vesting Provisions of Section 1.01, and purchase any or all of the shares
and common stock subject hereto.
Section 2.06 Any adjustment pursuant to the provisions of this Article II
shall be made on the basis of the number of Shares of Common Stock which the
Holder would have been entitled to acquire by exercise of this Warrant
immediately prior to the event giving rise to such adjustment and, as to the
Purchase Price per share in effect immediately prior to the event that giving
rise to such adjustment. Whenever any such adjustment is required to be made,
the Corporation shall forthwith determine the new number of Shares of Common
Stock which the Holder hereof shall be entitled to purchase hereunder and/or
such new Purchase Price per share and shall prepare, retain on file and transmit
to the Holder within thirty (30) days after such preparation a statement
describing in reasonable detail the method used in calculating such adjustment.
Section 2.07 Anything contained herein to the contrary notwithstanding, the
Corporation shall not be required to issue any fraction of a Share in connection
with the exercise of this Warrant, and in any case where the Holder would,
except for the provisions of this Section 2.07, be entitled under the terms of
this Warrant to receive a fraction of a Share upon such exercise, the Company
shall upon the exercise and receipt of the Purchase Price, issue the largest
number of whole Shares purchasable upon exercise of this Warrant. The
Corporation shall not be required to make any cash or other adjustment in
respect of such fraction of a Share to which the Holder would otherwise be
entitled. The Holder, by the acceptance of this Warrant, expressly waives his
right to receive a certificate for any fraction of a Share upon exercise hereof.
Section 2.08 The form of Warrant need not be changed because of any change
pursuant to this Article II in the Purchase Price or in the number of Shares of
Common Stock purchasable upon the exercise of a Warrant, and Common Stock
Purchase Warrants issued after such change may state the same Purchase Price and
the same number of shares of Common Stock as are stated in the Warrants
initially issued pursuant to the Settlement Agreement.
ARTICLE III --
REGISTRATION UNDER THE SECURITIES ACT OF 1933
Section 3.01 This Warrant and the Shares of Common Stock issuable upon
exercise of this Warrant have not been registered under the Securities Act of
1933, as amended ("the Act") and no rights to register this Warrant under the
Act, the Shares underlying the Warrant, or both of them, has been granted the
Warrantholder. The Warrantholder acknowledges and agrees that the Warrant and
the shares underlying the Warrant shall not be sold, transferred, or
hypothecated absent an opinion, acceptable to the Corporation's counsel, that
any said sale, transfer, or hypothecation is exempt from the registration
requirements of the Act. Any Shares of the Corporation's Common Stock issued
upon exercise of this Warrant shall bear the following legend:
"The Shares represented by this Certificate have not been registered under the
Securities Act of 1933, as amended, and may not be transferred in the absence of
a registration statement covering said Shares or an opinion of Counsel to the
Company that such registration is not required."
ARTICLE IV -- OTHER MATTERS
Section 4.01 The Corporation will from time to time promptly pay, subject
to the provisions of paragraph (4) of Section 1.02 hereof, all taxes and charges
that may be imposed upon the Corporation in respect of the issuance or delivery
of this Warrant or the Shares purchasable upon the exercise of this Warrant.
Section 4.02 All the covenants and provisions of this Warrant by or for the
benefit of the Corporation shall bind and inure to the benefit of its successors
and assigns hereunder.
Sections 4.03 Notices or demands pursuant to this Warrant to be given or
made by the Holder to or on the Corporation shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Corporation, as follows:
Viper Networks, Inc.
10373 Roselle Street, Suite 170
San Diego, California 92121
Notices to the Holder provided for in this Warrant shall be deemed given or
made by the Corporation if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed to the Holder at his last known
address as it shall appear on the books of the Corporation.
Section 4.04 The validity, interpretation and performance of this Warrant
shall be governed by the laws of the State of Utah.
Section 4.05 Nothing in this Warrant expressed and nothing that may be
implied from any of the provisions hereof is intended, or shall be construed, to
confer upon, or give to, any person or corporation other than the Corporation
and the Holder any right, remedy or claim under promise or agreement hereof, and
all covenants, conditions, stipulations, promises and agreements contained in
this Warrant shall be for the sole and exclusive benefit of the Corporation and
its successors and of the Holder, its successors and, if permitted, its
assignees.
Section 4.06 The Article headings herein are for convenience only and are
not part of this Warrant and shall not affect the interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Corporation
under its corporate seal as of the _____ day of ____________.
VIPER NETWORKS, INC.
/s/ Paul E. Atkiss
BY ______________________________________
Paul E. Atkiss, Chief Financial Officer
Attest: _____________________________
ASSIGNMENT
FOR VALUE RECEIVED, Stephen D. Young hereby sells, assigns and transfers
unto __________________________________________________ the within Warrant and
the rights represented thereby, and does hereby irrevocably constitute and
appoint _________________________________ Attorney, to transfer said Warrant on
the books of the Corporation, with full power of substitution. The Assignee of
this Warrant has read and agrees to all terms of the Warrant as described in the
Warrant and agrees that the Company's obligations to issue any shares of the
Company's Common Stock are subject to the terms and provisions of that certain
Settlement Agreement between the Company and Stephen D. Young. The Assignee
further agrees to deliver and execute such additional agreements as the
Corporation may reasonably require so as to assure the Corporation that all of
the terms of the Settlement Agreement and those of applicable state and federal
securities laws are satisfied.
Dated: _______________________
Signed: ______________________________
Signature guaranteed:
SUBSCRIPTION FORM
VIPER NETWORKS, INC.
10373 Roselle Street, Suite 170
San Diego, California 92121
The undersigned hereby irrevocably subscribes for the purchase of shares of
your Common Stock pursuant to and in accordance with the terms and conditions of
this Warrant, and herewith makes payment, covering such shares of Common Stock
which should be delivered to the undersigned at the address stated below, and,
if said number of shares shall not be all of the shares purchasable hereunder,
that a new Warrant of like tenor for the balance of the remaining shares
purchasable hereunder be delivered to the undersigned at the address stated
below.
The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such shares of Common Stock unless either
(a) a registration statement, or post-effective amendment thereto, covering such
shares of Common Stock has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
such sale, transfer or other disposition is accompanied by a prospectus meeting
the requirements of Section 10 of the Act forming a part of such registration
statement, or post-effective amendment thereto, which is in effect under the Act
covering the shares of Common Stock to be so sold, transferred or otherwise
disposed of, or (b) counsel to VIPER NETWORKS, INC. satisfactory to the
undersigned has rendered an opinion in writing and addressed to VIPER NETWORKS,
INC. that such proposed offer, sale, transfer or other disposition of the shares
of Common Stock is exempt from the provisions of Section 5 of the Act in view of
the circumstances of such proposed offer, sale, transfer or other disposition;
(2)VIPER NETWORKS, INC. may notify the transfer agent for its Common Stock that
the certificates for the Common Stock acquired by the undersigned are not to be
transferred unless the transfer agent receives advice from VIPER NETWORKS, INC.
that one or both of the conditions referred to in (1)(a) and (1)(b) above have
been satisfied; and (3) VIPER NETWORKS, INC. may affix the legend set forth in
Section 3.01 of this Warrant to the certificates for shares of Common Stock
hereby subscribed for, if such legend is applicable.
Dated: ________________ Signed:________________________________
Signature guaranteed: _________________________________
Address: ___________________________________
EXHIBIT G
ALLOCATION OF STEPHEN YOUNG'S VIPER SHARES
(Attached)
EXHIBIT H
ESCROW AGREEMENT OF JANUARY 27, 2005
(Attached)
ESCROW AGREEMENT, dated as of January 27, 2005, by and between VIPER
NETWORKS, INC., a Utah corporation ("Viper"), STEPHEN YOUNG ("Young") and PAUL
G. GOSS, ESQ., (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, as of even date herewith Viper, Young and other parties, have
entered into that certain Settlement Agreement (the "Agreement") pursuant to
which, among other things, Viper shall deliver to the Escrow Agent 2,750,000
shares of common stock (0.001 par value per share) of Viper (which are referred
to as the "Pending Shares" in the Agreement), to be held in, and delivered from
escrow, pursuant to Section 1.05(b) and Exhibit E of the Agreement.
WHEREAS, the Escrow Agent has agreed to act as Escrow Agent pursuant to the
terms and conditions hereinafter set forth;
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the meaning ascribed to them in the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Viper shall deliver stock certificates representing the Pending Shares
which are identified and described on Schedule 1 attached hereto and made a part
hereof, in Young's name, to the Escrow Agent, who the parties agree acts as
counsel to Viper and is not an independent third party, and the Escrow Agent
hereby agrees to accept receipt of the certificates evidencing the Pending
Shares. The certificates representing the Pending Shares are sometimes
hereinafter referred to as the "Escrowed Certificates."
2. The Escrow Agent shall hold the Escrowed Certificates until they are
required to be released from escrow pursuant to Section 3 hereof.
3(a) The Escrowed Certificates for the applicable Pending Shares shall be
released from escrow and delivered by the Escrow Agent to Young (i) upon the
dates set forth on Schedule 1, or (ii) upon the occurrence of the events (the
"Event Occurrence") set forth on Schedule 1, as the case may be upon the dates
set forth in Schedule 1.
(b) Upon the dates set forth in Schedule 1, the Escrow Agent shall
immediately release and deliver the applicable Escrowed Certificates which are
to be released on such dates to Young.
(c) Viper or Young shall immediately notify the Escrow Agent of an Event
Occurrence in writing, and provide a copy of such notice in writing to the
other. If Viper notifies the Escrow Agent of an Event Occurrence, the Escrow
Agent shall release and deliver the applicable Escrowed Certificates which are
to be released upon such Event Occurrences, to Young, upon receipt of the notice
of Event Occurrence. If Young notifies the Escrow Agent of an Event Occurrence,
the Escrow Agent shall release and deliver the applicable Escrowed Certificates
to Young within seven (7) days following the Escrow Agent's receipt of the
notice of Event Occurrence, unless the Escrow Agent shall have received a
written notice of dispute from Viper.
4. If a written notice of dispute is received by the Escrow Agent pursuant
to Section 3 above, then the Escrow Agent shall not be required to release the
Escrowed Certificates until the entry of a final non-appealable order by a court
of competent jurisdiction determining all of the outstanding issues concerning
ownership of the Escrowed Certificate or until the receipt of a joint notice by
Viper and Young or their respective successors.
5. During the period in which the Escrow Certificates are held in escrow,
Young shall have all of the incidents of ownership of the Pending Shares and the
Escrowed Certificates therefor.
6. The Escrow Agent shall not be responsible for the genuineness of any
certificate or signature and may rely conclusively upon and shall be protected
when acting upon any notice, affidavit, request, consent, instruction, check or
other instrument believed by it in good faith to be genuine or to be signed or
presented by the other person, or duly authorized or properly made. The Escrow
Agent shall have no responsibility except for the performance of its express
duties hereunder and no additional duties shall be inferred herefrom or implied
hereby. No amendment or modification of this Agreement or waiver of its terms
shall affect the right and duties of the Escrow Agent upon acceptance of the
Escrowed Certificates unless the Escrow Agent's written consent therefor shall
first have been obtained. The Escrow Agent shall not be responsible or liable
for any act or omission on its part in the performance of its duties as Escrow
Agent under this Agreement, except as such act or omission constitutes bad
faith, gross negligence or fraud.
7. The Escrow Agent shall not be required to institute or defend any action
involving any matters referred to herein or which affects the Escrow Agent or
its duties or liabilities hereunder unless or until requested to do so by any
party to this Agreement and then only upon receiving full indemnity, in
character satisfactory to the Escrow Agent, against any and all claims,
liabilities, and expenses in relation thereto (including any fees). In the event
of any dispute among the parties hereto with respect to the Escrow Agent or its
duties: (i) the Escrow Agent may act or refrain from acting in respect of any
matter referred to herein in full reliance upon and by and with the advice of
counsel; or (ii) the Escrow Agent may refrain from acting until required to do
so by a final non-appealable order of a court of competent jurisdiction.
Notwithstanding the foregoing, the Escrow Agent may at any time be relieved of
its duties and obligations hereunder by depositing the Escrowed Certificates
with a court of competent jurisdiction willing to accept the same or upon thirty
(30) days written notice of resignation given to the Viper and Young. In the
event that the Escrow Agent resigns as Escrow agent hereunder, then the Viper
and the Young shall obtain a mutually satisfactory substitute, and the Escrow
Agent shall continue as escrow agent until a substitute escrow agent is engaged.
8. In the event of any change in the Pending Shares during the term of this
Agreement, by reason of any stock dividend, stock split-up, reverse split,
recapitalization, combination, reclassification, exchange of shares or the like,
all new, substituted, or additional stock, or other securities, issued by reason
of any such change shall be delivered to and held by the Escrow Agent under the
terms of this Agreement in the same manner as the Pending Shares originally
escrowed hereunder.
9. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
10. This Agreement contains the entire agreement and understanding between
the parties in respect of the subject matter hereof, and cannot be modified,
changed, discharged or terminated except by an instrument in writing, signed by
the party against whom enforcement of any modification, change, discharge or
termination is sought.
11. A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any other breach of the same or any
other condition.
12. This Agreement will be construed and governed in accordance with the
laws of the State of California, excluding choice of law rules thereof.
13. All notices or other communication required or permitted hereunder
shall be sufficiently given if delivered by hand, or sent by certified mail,
return receipt requested, postage prepaid, facsimile transmission or overnight
mail or courier, addressed as follows:
If to Viper, at:
Viper Networks, Inc.
7660 Fay Avenue, Suite H3339
La Jolla, California 92314
Attention: Paul Atkiss
Telecopier Number: (858)4525-8638
If to Young, at:
Stephen D. Young
840 McAllister Avenue
Big Bear City, California 92314
Telecopier Number: (888) 375-7270
If to the Escrow Agent:
Paul G. Goss, Esq.
1775 Sherman Street, Suite 2550
Denver, Colorado 80203
Telecopier Number: (720) 981-2955
14. In the event of any litigation or arbitration between the parties, the
prevailing party shall be entitled to its reasonable attorneys' fees and costs
associated with such action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
VIPER NETWORKS, INC.
By:
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Name:
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Title:
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/s/ Stephen D. Young
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STEPHEN D. YOUNG
/s/ Paul G. Goss
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PAUL G. GOSS, ESQ. as Escrow Agent
SCHEDULE 1
SHARE CERTIFICATES & NUMBER OF SHARES ISSUED
TO YOUNG TO BE DELIVERED
TO THE ESCROW AGENT AND HELD IN ESCROW
Stock Cert.# No. of Shares Qualifying Event/Timeframe
#3299 500,000 April 16, 2005
#4138 50,000 April 16, 2005
#3301 1,000,000 10,000 reg USB phones
sold & on network
#4133 100,000 10,000 reg USB phones
sold & on network
#3302 1,000,000 3 mos. At $1/share OR
2nd anniversary (July 16, 2005)
#4134 100,000 3 mos. At $1/share OR
2nd anniversary (July 16, 2005)