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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
REVENGE MARINE, INC.
(Exact name of registrant as specified in its charter)
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NEVADA 36-3051776
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2051 NW 11Th Street, Miami Fl 33004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 643-0334
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
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(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
CERTAIN FORWARD-LOOKING INFORMATION
The information contained in this Registration Statement includes
forward-looking statements. Since this information is based on current
expectations which involve risks and uncertainties, actual results could differ
materially from those expressed in the forward-looking statements. Various
important factors known to Revenge Marine, Inc. that could cause such material
differences are identified in the section entitled Business Factors contained in
Item 1 of this Registration Statement.
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ATTENTION: CURRENT REORGANIZATION IN PROGRESS
THE INFORMATION CONTAINED IN THIS REGISTRATION STATEMENT IS CURRENT AS OF
WEDNESDAY, OCTOBER 28, 1998. REVENGE MARINE, INC., A NEVADA CORPORATION
("REVENGE" OR THE "COMPANY") IS IN THE PROCESS OF A REORGANIZATION PLAN. THE
BOARD OF DIRECTORS OF REVENGE HAS DETERMINED THAT IT IS IN THE BEST INTEREST OF
THE COMPANY TO UNDERTAKE A REORGANIZATION FOR VARIOUS REASONS. THE PURPOSE OF
THIS REORGANIZATION IS TO SEPARATE OUT THE MARINE ASSETS AND MARINE BUSINESS OF
REVENGE, WHICH CONSTITUTE PRESENTLY THE ENTIRE BUSINESS, ASSETS AND ACTIVITY OF
REVENGE. TOWARD THIS END, THE MANAGEMENT HAS CAUSED TO BE FORMED A NEW DELAWARE
CORPORATION, REVENGE MARINE, INC. ("REVENGE DELAWARE"). IT IS THE INTENTION OF
MANAGEMENT THAT REVENGE DELAWARE PURCHASE THE MARINE ASSETS AND BUSINESS OF
REVENGE. MANAGEMENT ANTICIPATES THAT EACH SHAREHOLDER OF REVENGE WILL RECEIVE AN
INTEREST IN REVENGE DELAWARE AS PART OF THE SALE OF THE MARINE ASSETS TO REVENGE
DELAWARE. WHILE THE BOARD OF DIRECTORS OF REVENGE HAS APPROVED THE PRINCIPLE OF
THIS REORGANIZATION, THE BOARD OF DIRECTORS OF REVENGE HAS NOT DETERMINED
PRECISELY UNDER WHAT MECHANISM THE ASSETS WILL BE SOLD TO REVENGE DELAWARE OR
WHAT FORM OF PARTICIPATION THE SHAREHOLDERS OF REVENGE WILL HAVE IN REVENGE
DELAWARE. THE COMPANY IS CURRENTLY IN THE PROCESS OF OBTAINING A THIRD-PARTY
EVALUATION OF THE VALUE OF THE REVENGE ASSETS.
THE BOARD OF DIRECTORS OF REVENGE AND REVENGE DELAWARE ARE PRESENTLY
IDENTICAL. THE OFFICERS OF REVENGE AND REVENGE DELAWARE ARE NEARLY IDENTICAL.
REVENGE DELAWARE PURCHASED AN EXPIRED OPTION TO ACQUIRE THE ASSETS OF BLACKFIN
YACHT CORPORATION (THE "BLACKFIN ASSETS"), FROM REVENGE FOR A PURCHASE PRICE
EQUAL TO WHAT REVENGE PAID FOR THE OPTION, $100,000. REVENGE HAS NOT YET BEEN
PAID FOR THE PURCHASE PRICE OF THE OPTION. REVENGE DELAWARE CLOSED ON THE
PURCHASE OF THE BLACKFIN ASSETS ON FRIDAY, OCTOBER 23, 1998. REVENGE DELAWARE
ALSO ENTERED INTO A LOAN AGREEMENT WITH FINOVA FINANCIAL CORPORATION ("FINOVA")
FOR A $2.1 MILLION LOAN WHICH CLOSED ON FRIDAY, OCTOBER 23, 1998. SOME OF THE
PROCEEDS OF THIS LOAN WERE USED TO PURCHASE THE BLACKFIN ASSETS. REVENGE
EXECUTED THE LOAN AGREEMENT WITH FINOVA AS A CO-BORROWER, ALONG WITH REVENGE
DELAWARE AND MEMBERS OF MANAGEMENT AND CERTAIN STOCKHOLDERS OF REVENGE WHO ALSO
GUARANTEED THE FINOVA LOAN. IT IS CONTEMPLATED THAT FINOVA WILL RELEASE REVENGE
UPON THE COMPLETION OF THE REORGANIZATION AND ASSET SALE TO REVENGE DELAWARE,
BUT THERE IS NO ASSURANCE THAT THIS WILL OCCUR. REVENGE IS ALSO IN THE PROCESS
OF SEEKING ASSIGNMENTS AND/OR RELEASES FROM MIAMI RIVER PARTNERS, CONSOLIDATED
YACHT CORPORATION AND THE HOLDERS OF ITS CONVERTIBLE DEBENTURES UPON THE
COMPLETION OF THE REORGANIZATION. THERE IS NO ASSURANCE THAT ANY SUCH RELEASES
WILL BE OBTAINED.
CONCURRENTLY WITH THE REORGANIZATION AND ASSET SALE, REVENGE INTENDS TO
PURSUE AND IS PURSUING OTHER ACQUISITION OPPORTUNITIES THAT ARE PERIPHERALLY
RELATED, OR UNRELATED, TO THE MARINE INDUSTRY. WHILE THIS REGISTRATION STATEMENT
ACCURATELY DEPICTS REVENGE AS IT HAS EXISTED AND EXISTS PRESENTLY, NO ASSURANCE
CAN BE GIVEN THAT ANY OF THE REORGANIZATION PLANS OF REVENGE WILL ACTUALLY BE
REALIZED. IN THE IMMEDIATE FUTURE, REVENGE MAY TOTALLY DIVEST ITSELF OF ITS
MARINE ASSETS OR IT MAY CEASE ITS DIVESTITURE AT ANY STAGE IN
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THE REORGANIZATION PROCESS. WHILE EVERY EFFORT WILL BE MADE TO OBTAIN FAIR
SHAREHOLDER VALUE FOR THE MARINE ASSETS SHOULD THEY BE SOLD TO REVENGE DELAWARE
BY REVENGE, THERE CAN BE NO ASSURANCE THAT THE CONSIDERATION FOR THE SALE OF
SUCH ASSETS WILL BE ADEQUATE. IN ADDITION, AS REVENGE HAS NOT DETERMINED THE
MECHANISM BY WHICH ITS SHAREHOLDERS MIGHT RECEIVE SOME OWNERSHIP INTEREST IN
REVENGE DELAWARE, THERE IS NO ASSURANCE THAT SUCH A MECHANISM CAN OR WILL BE
FOUND. WHEN REVENGE MARINE, INC., A NEVADA CORPORATION, AND ITS BUSINESSES ARE
HEREIN DESCRIBED, THEY ARE DESCRIBED AS THEY PRESENTLY EXIST, WITHOUT AN
IMPLEMENTED PLAN OF REORGANIZATION. SUCH AN IMPLEMENTED PLAN WOULD HAVE A
MATERIAL EFFECT ON THE BUSINESS AND OPERATIONS OF REVENGE.
IN THIS REGISTRATION STATEMENT GENERALLY, WHEN THE TERMS REVENGE, THE
COMPANY OR MANAGEMENT ARE USED, IT MUST BE UNDERSTOOD THAT THESE TERMS MAY REFER
TO REVENGE MARINE, INC., A NEVADA CORPORATION OR TO REVENGE MARINE, INC., A
DELAWARE CORPORATION, BECAUSE THE REORGANIZATION HAS NOT YET BEEN COMPLETED.
EVERY ATTEMPT HAS BEEN MADE TO CONSISTENTLY IDENTIFY AND SEPARATE OPERATIONS OF
REVENGE AND REVENGE DELAWARE, TO THE EXTENT SUCH SEPARATION IS CURRENTLY
MEANINGFUL.
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ITEM 1. BUSINESS
OVERVIEW
Revenge Marine, Inc., a Nevada Corporation ("Revenge" or the "Company")
is a leading manufacturer and servicer of advanced technology yachts and motor
boats. Revenge is positioned to offer its customers a wide variety of marine
products, from a 16 foot flats motor boat to a 110 foot custom built megayacht.
Revenge meets its customers' needs for high-performance, competitively priced,
advanced technology boats and yachts by employing the latest industry materials
and manufacturing techniques, as well as pioneering the use of advanced
composite materials and innovative hull designs. Revenge also offers significant
service and refurbishing capabilities. The breadth of Revenge's custom and
production line and servicing capability allows Revenge to service the needs of
a very wide segment of marine industry customers.
In October of 1998, Revenge contemplated entering into an arrangement
with Revenge Marine, Inc., a Delaware Corporation ("Revenge Delaware"), whereby
Revenge would sell all of its assets, operations and subsidiaries to Revenge
Delaware in exchange for a form and amount of consideration as yet undetermined.
Revenge Delaware is a Delaware corporation formed in October, 1998 and set-up
for the purpose of allowing Revenge to separate out its marine operations and to
cause those operations to develop separately. At the closing of the sale of the
assets of Revenge to Revenge Delaware, should such an event occur, Revenge would
have no assets or business operations other than the consideration received from
the sale of those assets. Revenge contemplates entering into merger or
acquisition transactions currently under negotiation in fields only tangentially
related, if at all, to marine operations. There is no assurance that the asset
sale will be consummated or that Revenge will be successful in any subsequent
attempts to engage in merger or acquisition activity.
COMPANY HISTORY
Revenge was originally incorporated as a Nevada Corporation in
December, 1979 as Contracap, Inc. The Company then changed its name several
times. In November, 1994, the Company changed its name to Global Energy
Organization Corporation. In January, 1998, Global Energy Organization
Corporation entered into a stock exchange agreement with Revenge Marine, Inc.,
(formerly Revenge Yachts, Inc.), an Oklahoma corporation subsequent to which
Global Energy Organization Corporation changed its name to Revenge Marine, Inc.
Prior to January, 1998, neither Revenge Yachts, Inc. nor Global Energy
Organization Corporation had any significant assets. Prior to January, 1998,
Revenge had not engaged in significant activity involving the Yachting or Marine
Industries. In January, 1998, Revenge restated its purpose as providing
consulting services and investment opportunities in the Yachting and Marine
industries.
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Revenge began a strategy of identification, acquisition and
consolidation of marine industries. In May of 1998 Revenge entered into a stock
exchange agreement with Consolidated Marine, Inc., a Florida Corporation
("Consolidated"), whereby Revenge acquired all of the outstanding stock of
Consolidated in exchange for 636,934 shares of common stock in Revenge.
Consolidated is a custom and production yacht builder, as well as a re-fitter
and repairer of large watercraft. Revenge acquired Consolidated as the first
acquisition in a series of acquisitions of marine manufacturers with the purpose
of creating a leading marine manufacturing, repair and marketing organization
that could serve diverse customer demands and offer a wide-range of products and
services efficiently.
Revenge intends to pursue an acquisition strategy that seeks to combine
companies with cutting-edge manufacturing technology, ultra-light construction
techniques and the latest composite materials into an entity that offers a full
range of 16 to 110 foot boats and yachts at competitive prices. Consistent with
that strategy, in May of 1998, Revenge entered into a stock exchange agreement
with Egret Boat Company, a Florida Corporation ("Egret"), whereby Revenge
acquired all the outstanding stock of Egret in exchange for 955,414 shares of
common stock in Revenge. Egret is a production manufacturer of advanced
composite motorized flats boats of less than 35 feet in length. In August, 1998,
180,692 additional shares were issued to Egret and Consolidated to complete the
combined transactions and the full payment of the consideration specified in the
stock exchange agreements.
In September, 1998, Revenge entered into an agreement to purchase
Consolidated Yacht Corporation, which contained within it certain assets that
were not included in the Consolidated Marine, Inc. acquisition, but which added
refurbishing, repair and production capability to what had been acquired in the
Consolidated Marine, Inc. acquisition.
In October of 1998, Revenge had an option to purchase the assets of
Blackfin Yacht Corporation ( the "Blackfin Assets") from Detroit Diesel
Corporation. The option expired. Subsequent to the expiration of the option,
Revenge sold the option to Revenge Delaware for its purchase price, $100,000.
Detroit Diesel honored the expired option and on Friday, October 23, 1998,
Revenge Delaware purchased the Blackfin Assets for a purchase price of
$1,005,445 in cash and 545,455 warrants to acquire Revenge common stock
exercisable at an exercise price of $6.44 per share. In addition, Revenge
Delaware granted Blackfin Yacht Corporation a 2% fee of the per unit sale price
for each vessel produced from the Blackfin Assets. Revenge Delaware also granted
certain demand and piggyback registration rights to Blackfin Yacht Corporation
for the warrants issued in the asset purchase. The Blackfin Assets provide a
line of mid-size fiberglass yachts, from 27 to 48 feet. In addition, there was
an established dealer network for Blackfin products, which are visually unique
and have a high level of brand identification. The completion of the three
acquisitions outlined above gives Revenge or Revenge Delaware the capability to
produce a wide range of high technology motor yachts and motor boats, ranging
from 110 foot custom yachts to 16 foot flats boats.
Consistent with its philosophy of acquiring and streamlining
synergistic marine enterprises, Revenge entered into a long-term lease with an
option to purchase on an 8.67 acre marine facility in Miami, Florida in July of
1998. Revenge or Revenge Delaware has consolidated its acquisitions and many of
its operations in the Miami facility and therefore is positioned to take
advantage of economies of scale, improved production efficiencies and
elimination of redundancies. In addition to the Miami facility, Revenge
maintains a facility in Dania, Florida. Revenge or Revenge Delaware continues to
identify and explore other marine acquisitions that are consistent with its
objectives.
ACQUISITIONS AND STRATEGY
Management believes that several important objectives will be
accomplished by the acquisitions. The acquisitions of Consolidated Marine, Inc.
and Egret Boat Company and other targeted acquisitions will contribute
market-proven design technology, leading edge composite manufacturing materials
and processes, and high strength, lightweight construction that offer cost
savings and pricing flexibility to our full range of 16' to 110'
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boats and yachts. Our centralized operations will consolidate sales, facilities,
manufacturing, development, and general and administrative expenses in an
attempt to create significant savings and increase profits and cash flow. Sales
of a full line of boat sizes and related products to the individual megayacht,
sportfishing, and military markets may help to balance business cycles. Through
economies of scale and steadier, more predictable sales, our costs of raw
materials, engines, accessories, and advertising might be reduced through volume
purchases, partnering with vendors, and steadier ordering.
Of course, significant challenges exist with respect to the
acquisitions. Revenge has not yet fully integrated each acquisition into a
systematically operating, unified whole with separate profit centers. There are
a number of different personalities, skilled laborers accustomed to differing
management styles and logistical problems still to be worked out. While Revenge
hopes to form a clear and appealing brand name presence in the marketplace,
success at doing so is far from certain. In closing the various acquisitions and
leasing the Miami facility, Revenge has taxed its resources, both financial and
human. Revenge does not presently have enough operating capital to accomplish
its near-term operational goals. While management believes that there exists
opportunities for raising additional capital in equity and debt, this is not
certain. If Revenge cannot grow revenue sufficient to meet its operating
expenses or if it cannot raise sufficient additional financing, then the Company
may fail. Revenge has operated at a loss and there is no assurance that it will
ever operate at a profit. Nevertheless, management believes the acquisitions and
their integration into the Miami facility provide a possibility for significant
operational success.
PRODUCTS AND SERVICES
Revenge intends for its customers to be able to choose from a variety
of distinctive yacht and boat styles, from custom megayachts to small sport
fishing boats, each manufactured to exacting standards and incorporating some of
the latest marine technology. In addition, through the service capabilities of
the Consolidated acquisitions, Revenge offers a wide range or repair and
refitting options. Revenge has molds for yachts which offer customers a unique
design, distinctive from other manufacturers. In addition, Revenge focuses its
efforts on composite technologies which would allow for the use of smaller
engines, innovative hull designs and increased durability over certain
fiberglass materials.
BOATS
The Company has the capability of building custom megayachts through
the production capabilities acquired in the Consolidated acquisitions. These
custom megayachts range between 74 to 110 feet and provide significantly higher
margins than the Company realizes on the sales of its smaller boats.
Although no mid-sized yacht is currently in production, the Company
anticipates having a mid-sized yacht in place shortly, as soon as the molds from
the Blackfin acquisition can be evaluated and integrated into the production
line. Revenge is currently producing the Egret line of boats, which are
generally small, flats boats ranging from 16 to 29 feet. Egrets are
high-technology, high end, production boats, capable of customization through a
number of add-on options the customer can select.
THE CONSOLIDATED PRODUCT LINE
Consolidated Marine, Inc. is a key component in our future success, as
the manufacturer of megayachts, boats produced from the Revenge molds, and any
other products from future acquisitions. Consolidated Marine, Inc., located in
Dania, Florida, just south of Ft. Lauderdale, was formed in 1998 and is a custom
and production yacht builder, as well as a re-fitter and repairer of large
watercraft. Consolidated Marine, Inc. employs extensive use of carbon fiber
composites to manufacture lightweight yet extremely strong boats and major
components, and to perform refits and repairs. These materials and the expertise
and technology that capitalizes on them will
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be used to produce the Company's boats and yachts.
Consolidated recently entered into an agreement to manufacture an 85'
yacht. It also has plans to produce 74' to 110' megayachts. The Company will
rely on Consolidated to manufacture its other yachts, such as the output planned
using the Revenge molds. This strategy will ensure that Consolidated's advanced
carbon fiber technology is used for all of our products, and that we retain our
competitive edge. In addition, Egret Boat Company employs similar technology to
produce its top of the line "flats" boats - specialty fishing boats purchased by
sport enthusiasts.
Our diversification strategy, where a full range of yacht sizes will be
produced and sold to recreational, commercial, and military markets, will have a
similar affect on guarding our revenues from business cycles. Sales of multiple
size products to megayacht, sportfishing, and military markets will diversify
revenue sources from different market sectors, and enable multiple manufacturing
projects to be conducted simultaneously to provide a smoother revenue stream. In
addition, new technological advances will allow us to extend our market coverage
to other boat size market sectors, and add related products to our sales mix.
Through the Consolidated acquisition, we will produce megayachts and
market them at the following base prices. Added features will increase prices
above base levels:
Model Base Price
----- ----------
74' $3.0 million
110' $5.8 million
THE EGRET PRODUCT LINE
Egret Boat Company has evolved its specialized manufacturing processes
over time from boat and component production, refits, and repairs performed by
Consolidated Marine, Inc. into the construction of what is considered to be the
ultimate 16' and 18' flats boats. These are highly evolved recreational small
craft sufficiently high-powered (110 to 175 horsepower) to get out to fishing
grounds quickly, but sufficiently seaworthy to handle the chop of large bodies
of water. Egret has designed its boats to meet these requirements in a boat that
rides smoothly without dragging its transom in the mud in shallow waters, a
major industry accomplishment.
Egret has targeted a market niche and is considered to be amongst the
highest quality products in the industry. The use of carbon-Kevlar composites
and high quality processes and components, positions the company as a custom
producer. About 133 18' units have been produced since Egret's 1992 inception,
and a 16' product is also currently being produced. A more conventional laminate
process will be offered to reduce costs, and produce greater market penetration
and higher per boat profits. A 29' center console sportfishing boat prototype
has been constructed and production manufacturing will commence on it in the
near future.
REPAIR AND REFURBISHING SERVICES
Revenge anticipates that a significant portion of its operating income
will be derived from its repair and refurbishing facilities. Although
Consolidated generated most of its revenues, before its acquisition by Revenge,
through repair and refurbishing, it did so in a facility with considerably less
resources than the Miami facility. Revenge now has a number of covered working
areas which can allow for in the water painting and repair of a number of large
vessels at one time. Although there is no historical basis for what kinds of
revenues might be generated through refurbishing and repair in the Miami
facility, because these services offer relatively high margins, management
believes that they could add significantly to Revenge revenues.
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OPERATIONS
The Company's sales and service structure combines the benefits of a
flexible, custom repair, refurbishing and service facility with a wide variety
of motor boats and motor yachts. The Company intends to exploit the efficiencies
of centralized back office functions and personnel and management, while
supporting a diverse product line and flexible service and repair structure.
The Company has two leased facilities presently, the Miami production
facility and the Dania facility. With respect to sales activities, certain sales
and marketing activities are done directly by Revenge, primarily its Egret line.
Most larger yachts will be sold and marketed concurrently by Revenge and third
party brokers. The Internal marketing and service operations are typically
responsible for developing and managing customer relationships, including
initial sales-generating activities, proposal drafting and the pricing of
product and service offerings, as well as on-going account management.
SALES AND MARKETING
The Company targets its marketing efforts primarily at individual
consumers and purchasers of production and custom yachts. In addition, Revenge
supports third-party dealers and brokers in their efforts to market Revenge
products. These marketing efforts take the form of advertisements in trade and
specialty publications, boat show events and promotions, speaking engagements,
networking activities and building relationships between Revenge management and
likely purchasers of Revenge products. The Company intends to leverage its
service, marina dockyard, and Miami facility tenants into potential marketing
vehicles for its products.
Since relocating to the Miami facility, Revenge has pursued a strategy
of building synergies amongst its various operations, so that marketing and
sales efforts in one area would complement other areas. Revenge is pursuing a
strategy of becoming the boat builder and re-fitter of choice for a wide variety
of potential marine customers. Management believes that significant numbers of
present and future service, refurbishing, and dockage customers will be
persuaded to make subsequent boat purchases from Revenge. Revenge is not
dependent on any particular customer for its revenue base or growth. In fiscal
1999, none of the Company's customers is projected to account for more than 10%
of the Company's total revenues from boat sales.
COMPETITION
The marine product and services industry is intensely competitive.
Revenge expects competition to intensify in the future. As an integrated product
and service provider, Revenge competes with sellers of used motor boats and
yachts, manufacturers of new products, and existing service providers.
Management is not aware of any company which would compete directly in every
phase of the Company's operations. Instead, Revenge faces competition from a
number of different sources and on different levels. Viking, Travis Boats,
Brunswick, and Cabo all compete with Revenge in boat products. In addition to
these large national companies, Revenge also competes against numerous regional
and local companies in the service, refurbishing and dockage areas and many of
these competitors have longstanding customer relationships. For the smaller,
less expensive boats, there is intense competition both from other boat builders
of similar size as well as from alternative craft that might compete with
flats-boats and small yachts.
Some of the Company's competitors have greater financial, technical and
marketing resources. As a result, such companies may be able to respond more
quickly to new or emerging technologies and changes in customer needs or devote
more resources to the development, promotion and sales of their boats, yachts or
services than Revenge. In addition, competition could result in price decreases
and depress gross margins in the industry. Further declines in the Company's
gross margins may exacerbate the impact of fluctuating net revenues and
operating costs on the Company's operating results and have a material adverse
affect on the Company's business, operating results and financial condition.
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The principal competitive factors in the Company's industry include the
breadth and quality of product and service offerings, product availability,
pricing, and expertise of technical workforce, research and design innovations,
developments in marine architecture and the price of skilled labor in the local
market. Revenge believes that it competes favorably with respect to each of
these factors. However, there can be no assurance that Revenge will, in the
future, be able to compete successfully against existing or future competitors
or that such competition will not adversely affect Revenge's business, operating
results and financial condition.
EMPLOYEES
As of September 30, 1998, the Company had over 55 full-time employees,
including 3 in sales and marketing, 40 in production, manufacturing and service
and 12 in management, accounting and administration. None of the Company's
employees is subject to a collective bargaining agreement. The Company has never
experienced a work stoppage and considers its employee relations to be good.
Revenge believes that its future success depends, to a large extent,
upon the efforts and abilities of its executive officers, managers, skilled
laborers, designers, sub-contractors, technical and sales personnel. Revenge's
planned expansion of its service operations will require the recruiting and
training of a significant number of additional qualified administrative, skilled
labor and marketing personnel, including fiberglass production specialists,
skilled laborers proficient in the fiberglass and composite boat building
processes that Revenge employs. Competition for qualified technical, production
and sales personnel is intense. The Company competes with other boat builders as
well as with non-marine employers for qualified employees. The Company has, in
the past, experienced annual turnover of personnel of less than 5%. Failure by
the Company to attract and train skilled managers, technical and sales personnel
on a timely basis, or the inability of the Company to retain such personnel,
could materially and adversely affect the Company's business, financial
condition or results of operation.
PATENTS AND INTELLECTUAL PROPERTY RIGHTS
Although Revenge has 1 registered trademark, it has no registered
patents and relies almost entirely upon un-patented technology in its
production, manufacturing and design processes. There is no assurance that
employees of Revenge will not appropriate its manufacturing techniques on behalf
of existing or new competitors. In addition, there can be no assurances that
Revenge can adequately protect its un-patented boat designs, molds, composite
materials, processes or designs or that others may not independently develop
similar processes or designs or otherwise gain access to Revenge designs, molds,
composite materials, processes, or methods of production. If Revenge were to
fail to maintain a technological edge against its competitors, there could be a
significant impact on future revenues.
RELIANCE ON PRINCIPAL SUPPLIERS
Revenge's key suppliers for resin, fiberglass and carbon fiber are GLS,
ATC and BTI. Key suppliers for marine engines are Pompano Beach Marine Center,
OMC, Detroit Diesel and Caterpillar. Revenge believes its relationships with its
suppliers are stable and anticipates no disruptions in those relationships.
Nevertheless, Revenge is not dependent on any particular supplier and management
believes that other suppliers would be readily available were Revenge's present
suppliers unable to meet the Company's needs.
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BUSINESS FACTORS
IN EVALUATING THE COMPANY'S BUSINESS, THE FOLLOWING BUSINESS FACTORS
SHOULD BE CAREFULLY CONSIDERED. IN ADDITION, THIS DOCUMENT CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS AND TREND ANALYSIS BASED ON CURRENT EXPECTATIONS.
ACTUAL RESULTS MAY DIFFER MATERIALLY DUE TO A NUMBER OF FACTORS, INCLUDING THOSE
SET FORTH BELOW.
FLUCTUATIONS IN QUARTERLY RESULTS. The Company's quarterly results have
varied in the past and the Company expects its quarterly operating results to
continue to fluctuate. The Company's net revenues may fluctuate due to a variety
of factors, including the level of expenditures by purchasers of large yachts or
refurbishing repair demand, demand for marine related products and services in
general, demand for Revenge's boats and services in particular, the timing of
orders for Revenge's products and services, product supply constraints,
including manufacturing and integration difficulties and customer demand driven
by the introduction and adoption of new boats by Revenge and other
manufacturers. Due to its narrow product gross margins on inexpensive, smaller
boats, the Company's operating results may be especially sensitive to changes in
the mix of product option or service revenues, the margin mix of products sold,
the margin mix of services sold and the level of its operating expenses. The
Company's expenses may fluctuate as a result of numerous factors, including
interest rates, the timing and rate of new employee hiring, the amount and
timing of vendor-provided marketing funds, the utilization rate of service
personnel, competitive conditions and the impact of acquisitions. The Company's
costs are largely fixed in the near term and the Company may be unable to adjust
spending in a timely manner to compensate for an unexpected revenue shortfall.
As a result, revenue shortfalls may have an immediate and disproportionate
adverse effect on operating results. In addition, if the Company spends to build
its capacity to support higher revenue levels, the Company's near term operating
results will suffer until it achieves its revenue goals. For example, the
Company's retooling and repair of the Blackfin molds and ramping up for
production will involve significant expenses which may affect operating margins.
Due to the Company's recent growth, it is difficult to discern seasonal trends.
However, the Company believes that first and fourth quarter revenues may be
negatively affected due to generally lower boat purchases during the Summer
months. Due to all of these factors, the Company believes that its operating
results are likely to vary on a quarterly basis. As a result, period-to-period
comparisons of its operating results are not necessarily meaningful, and
quarterly results may not be indicative of results to be expected for a full
year.
NARROW GROSS MARGINS FOR PRODUCT SALES. Approximately 10% of the
Company's net revenues in fiscal 1998 were generated through service,
refurbishing and repair. As a result of intense price competition, the Company's
product gross margins on smaller boats will continue to be fairly low, projected
to be approximately 18% in fiscal 1999. The Company believes that competitive
conditions will continue to place pressures on its product gross margins. As a
result of the Company's narrow product gross margins, fluctuations in net
revenues and operating costs may have a disproportionate impact on the Company's
operating results. Further declines in the Company's product gross margins may
have a material adverse effect on the Company's business, financial condition
and operating results.
DEPENDENCE ON MIAMI FACILITY, DANIA FACILITY
Disruption of operations at Revenge's Miami facility for any reason,
including power or telecommunications failures, natural disasters such as
hurricanes, fires, tornados or floods, or work stoppages, would have a material
adverse effect on the Company's business, operating results and financial
condition. In addition, if Revenge were to be unable to secure the consent of
Miami River Partners, Ltd, its landlord, to sublet parts of the Miami facility
or to assign the lease-option in the Miami facility in the context of its
planned reorganization, it is possible that Revenge would be unable to continue
and would fail without the Miami facility.
In addition, Revenge is dependent on the continuing working
relationship with its landlord at the Dania facility. As Revenge does not have a
lease for the Dania facility, but operates month-to-month, a termination of or
significant changes to the financial or facility arrangements at Dania would
have a significant impact on Revenge's ability to be profitable.
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<PAGE> 10
INCREASED EMPHASIS ON REPAIR AND LARGE YACHT SALES. Revenge's service
operations and custom large yacht sales are characterized by higher gross
margins than those attainable in small product sales, such as the Egret line. As
a result, the Company's goal is to increase the proportion of revenues derived
from the provision of services and large yachts relative to small product sales.
The Company's success in increasing its service revenues will depend primarily
on the acceptance by the relatively small group of large yacht owners and
purchasers of the Revenge's brand, identity, product and reputation. To the
extent that the Company does not successfully increase the proportion of
revenues attributable to its large yacht and service/repair business, the
Company's operating margins may be adversely affected. The Company has also
recently implemented a more sophisticated cost-based methodology for pricing its
services. If service revenues do not increase sufficiently or the Company fails
to accurately price its services, the Company's business, operating results and
financial condition would be materially and adversely affected.
NEED TO RECRUIT AND RETAIN MANAGEMENT, TECHNICAL AND SALES PERSONNEL.
The Company believes that its future success depends, to a large extent, upon
the efforts and abilities of its executive officers, managers, technical and
sales personnel. Failure by the Company to attract and train skilled managers,
technical and sales personnel on a timely basis, or the inability of the Company
to retain such personnel, could materially and adversely affect the Company's
business, operating results or financial condition.
MANAGEMENT OF GROWTH. The Company has experienced enormous growth since
its entry into the marine industry and its extensive acquisitions. This rapid
growth has placed, and is expected to continue to place, a significant strain on
the Company's management, financial, sales, technical and support systems and
personnel. The Revenge's ability to manage its growth effectively will require
it to continue to develop and improve its operational, financial and other
internal systems and train, manage and motivate its employees. The Company has
in the past and will continue in the future to evaluate the acquisition of
businesses that complement or expand the Company's presence and profitability in
the marine industry. Integrating newly acquired companies could be costly and
may result in the loss of customers and key personnel and may disrupt
operations. Additionally, integrating newly acquired businesses may divert
significant management resources and attention from day to day operations.
Historically, Revenge has spent considerable amounts of its human and managerial
capital on the integration of acquisitions and streamlining of operations, a
process that is far from complete.
INTENSE COMPETITION The marine product and services industry is
intensely competitive. Revenge expects competition to intensify in the future.
As an integrated product and service provider, Revenge competes with sellers of
used motor boats and yachts, manufacturers of new products, and existing service
providers. Management is not aware of any company which would compete directly
in every phase of the Company's operations. Instead, Revenge faces competition
from a number of different sources and on different levels. Viking, Travis
Boats, Brunswick, and Cabo all compete with Revenge in boat products. In
addition to these large national companies, Revenge also competes against
numerous regional and local companies in the service, refurbishing and dockage
areas and many of these competitors have longstanding customer relationships.
For the smaller, less expensive boats, there is intense competition both from
other boat builders of similar size as well as from alternative craft that might
compete with flats-boats and small yachts.
Some of the Company's competitors have greater financial, technical and
marketing resources. As a result, such companies may be able to respond more
quickly to new or emerging technologies and changes in customer needs or devote
more resources to the development, promotion and sales of their boats, yachts or
services than Revenge. In addition, competition could result in price decreases
and depress gross margins in the industry. Further declines in the Company's
gross margins may exacerbate the impact of fluctuating net revenues
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<PAGE> 11
and operating costs on the Company's operating results and have a material
adverse affect on the Company's business, operating results and financial
condition.
The principal competitive factors in the Company's industry include the
breadth and quality of product and service offerings, product availability,
pricing, and expertise of technical workforce, research and design innovations,
developments in marine architecture and the price of skilled labor in the local
market. Revenge believes that it competes favorably with respect to each of
these factors. However, there can be no assurance that Revenge will, in the
future, be able to compete successfully against existing or future competitors
or that such competition will not adversely affect Revenge's business, operating
results and financial condition.
WARRANTY RISKS. The Company has begun implementing and intends to
expand the use of quality and product consistency controls. Nevertheless,
Revenge incurs significant exposure with the introduction of new production
models. Revenge will in all likelihood be obligated to correct any design or
manufacturing imperfections for a long period and at great expense in order to
develop and maintain its reputation for quality, accountability and service. As
a result, the Company must accurately estimate the resources required to provide
service on any warranty or repair work it is forced to provide. Failure by the
Company to estimate accurately support expenses or warranty costs could have a
material adverse effect on the Company's business, operating results or
financial condition.
DEPENDENCE ON DEALERS AND VENDORS. Although Revenge sells its products
directly, as well as through third party brokers, dealers and resellers, it is
dependent on those third parties for a significant volume of its sales. The
failure of third parties to continue to support the Revenge brands would have a
material and adverse effect on the Company. Revenge does not presently have the
capacity to market all of its products directly without the assistance of third
parties. It would take years for the Company to develop such a capacity.
Therefore, Revenge will remain dependent on its relationships with third party
dealers and there is no assurance that such relationships will be sustainable or
maintained.
HIGH DEGREE OF LEVERAGE; DEPENDENCE ON FINOVA CAPITAL CORPORATION;
FUTURE CAPITAL NEEDS. The Company requires substantial capital to fund its
business and, in particular, to finance product development, mold retooling,
acquisition integration, accounts receivable, capital expenditures, salaries and
lease payments on its Miami and Dania facilities. To date, the Company has
relied on an influx of equity and debt to finance its business and its
expansion. As a result, the Company is highly leveraged. Further Revenge has
financed a significant portion of its working capital needs, the Blackfin Asset
acquisition by Revenge Delaware, and certain capital improvements and payment of
accounts payable under the Company's $2.1 million Loan Agreement ("Loan
Agreement" of "Finova Loan") with Finova Capital Corporation ("Finova"), a loan
of secured by the Company's accounts receivables, inventory and other assets of
the Company, including its molds, its tools and its equipment. In addition,
certain members of management and certain large shareholders have individually
guaranteed the Finova Loan. Revenge is obligated under the Finova Loan to pay up
to $500,000 in success fees during the three year course of the loan. In
addition, the Company paid a closing fee of 1.5% of the loan amount. In
addition, there are other fees and costs contained in the Loan Agreement. Under
the Loan Agreement, Finova has the ability to severely restrict the ability of
the Company to make capital improvements, raise additional equity or debt
financing, raise salaries or provide incentives to management. While management
anticipates Finova will be a resource for future borrowings and a collaborative
partner in the Company's growth, agreeing to waive many of its rights under the
Loan Agreement to allow the Company increased operational flexibility on an as
needed basis, there is no assurance that this will happen. Events of default are
extensively enumerated in the Loan Agreement and many of these events of default
are likely to occur or may have already occurred.
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<PAGE> 12
There are consequences to the Company, including a forced sale of its assets,
that could result from such a default. There can be no assurance that any
deterioration in the lender-customer relationship between the Company and Finova
will not occur. Such a deterioration would severely impact the Company's
operations and its ability to secure adequate working capital and financing. No
assurance can be given that Finova will continue to provide financing for the
Company's expanding operations.
Substantially all of the Company's outstanding indebtedness is tied to
the prime rate. The Company is not currently a party to any financial
instruments which would mitigate the Company's exposure to increases in the
prime interest rate. Accordingly, increases in the prime rate could adversely
impact the Company's pretax income or otherwise materially and adversely affect
the Company's business, operating results or financial condition. Also, there
can be no assurance that the Company will be able to generate sufficient cash
from operations to satisfy future interest and principal payments under the Loan
Agreement. In the event that the Company is unable to meet its payment
obligations or needs additional capital to fund its business, the Company would
be required to seek alternative sources of financing or attempt to refinance its
existing credit facilities. There can be no assurance that such alternative
equity or debt funding would be available on terms acceptable to the Company, if
at all. Under such circumstances, the Company's inability to procure additional
funding or refinance existing indebtedness would have a material adverse effect
on the Company's business, operating results and financial condition.
ENVIRONMENTAL AND REGULATORY RISKS. The marine manufacture and repair
industry is highly regulated. The Company operates under a number of federal,
state and local environmental protection, river protection and worker safety
regulations. The Company's manufacturing processes employ a number of highly
toxic, hazardous substances. A spill or accident involving any of these
chemicals would have a serious and material effect on the Company's operations
and ability to continue as a going concern and could result in civil or criminal
penalties on behalf of the Company, its employees, officers and directors. While
the Company has all necessary regulatory permits for its business as presently
conducted, there can be no assurance that such permits will continue to be
available or will successfully transfer to Revenge Delaware in the event that
the contemplated reorganization is consummated. The loss of these regulatory
permits could cause the Company to fail.
CONTROL BY PRINCIPAL STOCKHOLDERS. The directors and executive officers
of the Company own a majority of the outstanding Common Stock in Revenge. In
particular, Desai Robinson and entities under her beneficial ownership or
control constitute the largest shareholder of the Company's Common Stock. Desai
Robinson is the wife of William C. Robinson, an officer and director. As a
result, Mrs. Robinson may be able to control the election of members of the
Company's Board of Directors and generally exercise control over the Company's
corporate actions. Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company.
ABSENCE OF DIVIDENDS. The Company has never declared or paid any cash
dividends on its Common Stock and does not presently intend to pay cash
dividends on the Common Stock in the foreseeable future, although some form of
Common or Preferred Stock dividend is contemplated in conjunction with the
restructuring, there is no assurance that such a dividend or the restructuring
itself will take place. Other than in the context of the restructuring, the
Company does not anticipate any dividends. The Company currently anticipates
that it will retain future earnings for reinvestment in its business.
Furthermore, the Loan Agreement prohibits the Company from paying cash dividends
on the Common Stock.
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<PAGE> 13
ITEM 2. FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and the notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere herein. The consolidated statement of operations
data set forth below with respect to the period from inception on September 5,
1997 until June 30, 1998, and the consolidated balance sheet data at June 30,
1998 are derived from, and are qualified by reference to, the audited
consolidated financial statements included elsewhere in this Registration
Statement, which have been audited by Cross and Robinson and should be read in
conjunction with those consolidated financial statements and notes thereto.
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD SEPTEMBER 5, 1997 (DATE OF INCEPTION)
TO JUNE 30, 1998
SALES $ 142,286
COST OF SALES 124,352
---------
GROSS PROFIT 17,934
---------
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Advertising 5,821
Contract labor 2,400
Commissions and fees 3,500
Office expense 5,269
Legal and professional fees 177,935
Penalties and fines 37,000
Postage and printing 6,563
Public relations 17,397
Video production 6,346
Telephone 6,764
Travel 27,289
Miscellaneous 19,202
---------
TOTAL SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 315,486
---------
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<PAGE> 14
OTHER INCOME (EXPENSES)
Interest income 15
Depreciation and amortization (Notes 4 and 5) (13,261)
Interest expense (8,134)
----------
TOTAL OTHER INCOME (EXPENSES) (21,380)
----------
NET LOSS FROM OPERATIONS $ (318,932)
==========
WEIGHTED AVERAGE SHARES OUTSTANDING (NOTE 9) 4,325,237
NET LOSS PER SHARE $ (0.07)
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
ASSETS
CURRENT ASSETS
Cash $ 102,793
Prepaid expenses (Note 1) 176,608
Work in progress (Note 1) 60,500
---------
TOTAL CURRENT ASSETS 339,901
---------
PROPERTY AND EQUIPMENT, AT COST (NOTE 4)
Equipment 85,000
Molds and prototype 242,523
Vehicles 45,493
Office equipment 5,429
Less: Accumulated depreciation (139,025)
--------
NET PROPERTY AND EQUIPMENT 239,420
--------
OTHER ASSETS
Deposit (Note 13) 50,000
Intangible assets, net (Note 5) 9,512
Investment in subsidiaries in excess of book value, net (Note 5) 2,356,971
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<PAGE> 15
TOTAL OTHER ASSETS 2,416,483
-----------
TOTAL ASSETS $ 2,995,804
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,916
Accounts payable--related parties (Note 6) 50,786
Accrued liabilities 9,283
Customer deposits 64,500
Notes payable (Note 7) 66,252
Notes payable--related parties (Notes 6 and 7) 94,742
-----------
TOTAL LIABILITIES 314,479
===========
SHAREHOLDER'S EQUITY (NOTE 8)
Preferred stock $0.001 par value,
5,000,000 shares authorized,
-0- shares issued and outstanding
Common stock $0.001 par value,
50,000,000 shares authorized,
6,675,720 shares issued and outstanding 6,676
Subscriptions receivable (100,000)
Additional paid-in capital 3,093,581
Deficit accumulated in the development stage (318,932)
-----------
TOTAL SHAREHOLDER'S EQUITY 2,681,325
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,995,804
===========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THIS SECTION CONTAINS TREND ANALYSIS AND OTHER FORWARD LOOKING
STATEMENTS BASED ON CURRENT EXPECTATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY,
DUE TO A NUMBER OF FACTORS INCLUDING THOSE SET FORTH IN THE PREVIOUS SECTION.
OVERVIEW
Revenge Marine, Inc., a Nevada Corporation ("Revenge" or the "Company")
is a leading manufacturer and servicer of advanced technology yachts and motor
boats. Revenge is positioned to offer its customers a wide variety of marine
products, from a 16' flats motor boat to a 110' custom built megayacht. Revenge
meets its customers' needs for high-performance, competitively priced, advanced
technology boats and yachts by employing the latest industry materials and
manufacturing techniques, as well as pioneering the use of advanced
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<PAGE> 16
composite materials and innovative hull designs. Revenge also offers significant
service and refurbishing capabilities. The breadth of Revenge's custom and
production line and servicing capability allows Revenge to service the needs of
a very wide segment of marine industry customers.
In October of 1998, Revenge contemplated entering into an arrangement
with Revenge Marine, Inc., a Delaware Corporation ("Revenge Delaware"), whereby
Revenge would sell all of its assets, operations and subsidiaries to Revenge
Delaware in exchange for a form and amount of consideration as yet undetermined.
Revenge Delaware is a Delaware corporation formed on October, 1998 and set-up
for the purpose of allowing Revenge to separate out its marine operations and to
cause those operations to develop separately. At the closing of the sale of the
assets of Revenge to Revenge Delaware, should such an event occur, Revenge would
have no assets or business operations other than the consideration received from
the sale of those assets. Revenge contemplates entering into merger or
acquisition transactions currently under negotiation in fields only tangentially
related, if at all, to marine operations. There is no assurance that the asset
sale will be consummated or that Revenge will be successful in any subsequent
attempts to engage in merger or acquisition activity.
PLAN OF OPERATION
Consistent with its reorganization and the integration of the marine
acquisition, management anticipates that Revenge Delaware will proceed with the
integration of the acquisitions, continue to build a customer base, seek
refurbishing and repair contracts, continue to build a dealer and direct
marketing network, streamline production and continue to develop new products.
During 1999, Revenge Delaware expects to invest in ongoing capital improvements
and increased production capacity.
After the completion of the reorganization, Revenge intends to
concentrate its efforts on acquisitions and mergers in the emerging technology
field. At the conclusion of the reorganization, Revenge will in all probability
have no assets or operations other than what may be achieved by means of future
acquisition or merger activity. Revenge is currently exploring such acquisition
and merger activity.
RESULTS OF OPERATIONS AND GOING CONCERN
Revenge is in the development stage and has not generated sufficient
revenues to meet its day-to-day operating expenses. Revenge has a net operating
loss of $318,000. Revenge may not be able to raise sufficient capital in the
future to cover its ongoing operating expenses. These conditions raise
substantial doubt about Revenge's ability to continue as a going concern.
LIQUIDITY AND CAPITAL RESOURCES
The substantial growth of Company's operations and its acquisitions has
utilized significant cash. The Company believes existing cash, cash generated
from operations, customer deposits, miscellaneous income from tenants in the
Miami facility and dockage fees will be sufficient to satisfy its currently
anticipated liquidity requirements through the next 3 months. Thereafter, the
Company may require additional funds to support its working capital requirements
or for other purposes and may seek to raise such additional funds through public
or private equity or debt financings or from other sources. There can be no
assurance that additional financing will be available at all or that, if
available, such financing will be obtainable on terms favorable to the Company
and would not be dilutive to the Company. The Company's future liquidity and
cash requirements will depend upon a number of factors, including its ability to
integrate production of the various product lines, to successfully sublease
unused portions of the Miami facility, to attract customer demand for its boats,
to produce those boats at a competitive price and to control its operating
costs.
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<PAGE> 17
SALES, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Sales, Marketing, General and Administrative Expenses include payroll
and related costs for Revenge's administrative and executive personnel, costs
related to the Company's marketing and promotional efforts, other overhead costs
including significant sums on legal, accounting and other professionals. Sales,
marketing, general and administrative expenses from inception through June 30,
1998 were $315,486. Revenge expects Sales, marketing, general and administrative
expenses to increase substantially in future periods as Revenge invests in
marketing activity to foster brand recognition and increased sales of its
products.
ITEM 3. PROPERTIES
The Company's headquarters are located in Miami, Florida, where the
Company leases a 8.67 acre, 100,000 square foot facility from Miami River
Partners, Ltd. ("Miami Partners") under a lease agreement which expires on May
5, 2008. The Company leases its Miami, Florida facility under a non-cancelable
operating lease. The agreement, as amended on July 10, 1998, calls for monthly
lease payments of $37,333 beginning in July 1998, with a twelve month, interest
free option to purchase the property at a purchase price of $3,259,500. After
the initial twelve month period, the option to purchase will begin to accrue
interest at an annual rate of 6%. The Company is responsible for paying
insurance and real estate taxes on the property, which are estimated to total
$5,720 per month. Pursuant to the July 10, 1998 Amended Agreement, $15,000 of
the initial $50,000 deposit was refunded to the Company in July 1998. The term
of the lease is ten years with an option to extend the lease for an additional
five years.
While the Company cannot cancel, assign or sublet the property without
the consent of Miami Partners, management anticipates obtaining such consents.
There is no assurance that Miami Partners will consent to any sublease or
assignment of the Miami facility. The withholding of such consents would have a
substantial and material impact on the Company's ability to meet its lease
obligations and to effect its planned reorganization. In addition, the Company
leases its Dania facility from the Derektor-Gunnell Shipyard on a month to month
basis. Although the Company anticipates no disruptions in its occupancy of the
Dania facility, such disruptions may in fact occur and would have a material
impact on the Company's ability to conduct its operations.
The minimum obligations for the lease agreement on the Miami facility
over the next five years are as follows:
Year Ended
June 30
-------
1999 516,636
2000 516,636
2001 516,636
2002 516,636
2003 516,636
-------
Total $2,583,180
==========
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of June 30, 1998 for (i)
each person or entity who is known by the Company to beneficially own five
percent or more of the outstanding Common Stock of the Company, (ii) each of the
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<PAGE> 18
Company's directors, (iii) each of the Named Officers, and (iv) all directors
and executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
NAME OF GROUP OR BENEFICIAL OWNERS NUMBER PERCENT
<S> <C> <C>
Capital Market Alliance, Inc. (2)................................................. 1,954,431 29.28%
Jim Gardiner...................................................................... 1,114,649 16.70%
Roy Meadows and affiliated companies.............................................. 533,761 8.00%
Scott Flanders.................................................................... 477,707 7.16%
Donald Mitchell................................................................... 45,000 *%
All officers and directors as a group, including affiliated entities.............. 3,691,787 55.30%
</TABLE>
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of June 30, 1998
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of each other
person. Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, each stockholder named in the table
has sole voting and investment power with respect to the shares set forth
opposite such stockholder's name.
(2) Shares owned by Capital Market Alliance, Inc. are under the beneficial
ownership of Mrs. Desai Robinson, wife of William C. Robinson, an officer
and director. Capital Markets Alliance, Inc., is owned by Allied Capital
Corporation, which is owned by the Desai V. Robinson Living Trust. In
addition, Allied Capital Corporation owns 40,000 shares of Common Stock.
100,000 shares of Common Stock are also held by the Desai Vol Robinson
Children's Trust for the benefit of Mrs. Robinson's children . See
"Certain Transactions."
(*) Constitutes less than 1% of the Company's outstanding shares.
STOCK IN REVENGE DELAWARE
In addition, the common stock of Revenge Delaware while presently un-issued, is
contemplated by the board of directors of Revenge Delaware to be purchased at
$0.01 per share, the fair market value as determined by the board of directors,
as follows:
Name Shares Purchase Price
Allied Capital Corporation 14,545 $ 145.45
Capital Markets Alliance Corporation 961,611 $ 9,616.11
Donald Mitchell 107,545 $ 1,075.45
James Gardiner 527,394 $ 5,273.94
Scott Flanders, Sr. 273,712 $ 2,737.12
*Linda Riznick 62,000 $ 620.00
*Dana Greenwood 62,000 $ 620.00
Tom Schroeder 34,545 $ 345.50
Robinson Children's Trust 236,363 $ 2,363.63
*Southeastern Venture Corp. designees 186,700 $ 1,867.00
Employee Trust of Revenge Marine, Inc. 45,563 $ 455.63
*Stockbroker Relations 60,000 $ 600.00
Total 2,571,978 $ 25,719.78
* Subject to the execution of satisfactory ancillary agreements or conditions
precedent.
There is no assurance that the purchases contemplated herein will actually
take place or that the board will not decide to alter this arrangement in the
context of its ongoing reorganization. This table represents purchases of shares
in Revenge Delaware that have been authorized by its board.
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<PAGE> 19
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT -- EXECUTIVE OFFICERS, DIRECTORS AND OTHER KEY EMPLOYEES
The executive officers, directors and other key employees of the
Company, and their ages and positions are as follows:
Name Age Position
- ---- --- --------
Donald Mitchell 65 President, CEO and Director of Revenge
William Robinson 42 Executive Vice President, Director and Secretary
of Revenge
James Gardiner 42 Vice President and Director of Revenge
Linda Riznick 53 Chief Financial Officer of Revenge
Scott Flanders 53 Director of Revenge
Dana Greenwood 40 Chief Operating Officer of Revenge
DONALD MITCHELL is the President and Chief Executive Officer of Revenge. Mr.
Mitchell is an expert in organizational development and has an extensive
background structuring and growing public and private companies. He is a partner
in and advisor to Asian Strategic Partners, a Hong Kong based investment fund
and also serves as Chairman of Baskin In The Sun, a recreational diving company
located in the British Virgin Islands. Formerly a Vice President of CBS in its
educational Merger and Acquisition activities, Mr. Mitchell has served in a
variety of executive officer positions both in the United States and abroad,
bringing more than 30 years of management experience to Revenge. Until November,
1979, Mr. Mitchell ran the largest English Instruction School in the world, The
Shokouh Institute for English in Tehran.
WILLIAM ROBINSON is a founder, director and officer of Revenge. During his 20
years of business and financial experience, Mr. Robinson has extensive
experience with marine management. He implemented team-manufacturing techniques
to build yachts, and completed retooling for two high volume production yacht
companies. Mr. Robinson has led multiple public and private stock offerings to
raise capital for new and existing corporations, and has managed investor
relations and communications. He has produced consistent top performance at
major financial corporations throughout his career. Mr. Robinson is responsible
for leading the transactions involved to establish Revenge.
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<PAGE> 20
JAMES GARDINER is a director and officer of Revenge. Under Jim's leadership,
Consolidated Yacht Corporation grew to an $8 million boat builder, re-fitter,
and repairer in five years, utilizing advanced composite materials that today
lead the industry. Egret Boat has become the recognized quality and design
leader in the highly specialized 16' and 18' fishing boat, or "flats boat",
industry that sells to affluent fishing enthusiasts. Prior to founding
Consolidated and Egret, Jim was a composite materials consultant to Gougeon
Bros., a custom builder of boats, plugs, and molds. He has also served as
production manager in charge of construction of plugs, molds, and custom
fiberglass motor yachts, developing advanced vacuum-bagged, cored fiberglass
construction.
LINDA RIZNICK is the Chief Financial Officer of Revenge. Ms. Riznick was
formerly Vice President of Operations for Broward Marine, Inc., a manufacturer
of custom aluminum yachts in Florida and Michigan. Prior to her management of
Broward, Ms. Riznick was the United States President for Lloyd's Shipsholdings,
PTY, Ltd., an Australian custom yacht manufacturer. Ms. Riznick ran the United
States and European operations of Lloyds. Ms. Riznick has also served as a
private consultant to Colonna Yachts and to Norship, a Norwegian yacht
manufacturer. Ms. Riznick is also a licensed yacht broker.
DANA GREENWOOD is the Chief Operating Officer of Revenge. He was previously the
President of Consolidated Yacht Corporation. Prior to Consolidated, Mr.
Greenwood was the General Manager of Barron Yachts, Beaufort, South Carolina,
where he directed the start-up of a new manufacturing facility. Mr. Greenwood
has also served as Director of Engineering for the Luhrs Corporation. Previously
Mr. Greenwood held various management and supervisory positions with Regal.
Revenge currently has five directors. All directors serve on the Board
of Directors of Revenge until the next annual meeting of the stockholders of
Revenge, and until their successors are elected and qualified. There are no
family relationships among any of the directors or officers of Revenge.
Revenge's executive officers serve at the discretion of the Board of Directors.
DIRECTOR COMPENSATION
Revenge does not pay cash compensation to its directors. However,
Revenge reimburses directors for expenses incurred in attending board and
committee meetings.
INTERLOCKS AND INSIDER PARTICIPATION
Please see the section at the front of this statement regarding the
reorganization of Revenge and the section entitled Certain Transactions.
EMPLOYMENT AGREEMENTS
All of the employees of the Company are employed at-will, terminable at
mutual option. The Company does not have any written employment agreements
currently.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
It is anticipated that Revenge Delaware's Amended and Restated
Certificate of Incorporation, which has not yet been filed, will limit the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that a corporation's certificate of incorporation may contain a
provision eliminating or limiting the personal liability of a director for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts
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<PAGE> 21
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit. Revenge Delaware's Bylaws provide that the
Company shall indemnify its directors and officers and may indemnify its
employees and agents to the fullest extent permitted by law. Revenge Delaware
believes that indemnification under its Bylaws covers at least negligence and
gross negligence on the part of indemnified parties.
Revenge's Amended and Restated Articles of Incorporation and Amended
and Restated By Laws indemnify its officers, directors and employees to the
fullest extent provided under Nevada law.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
ITEM 6. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid by Revenge and during the Company's fiscal year ending June 30, 1998 to the
Company's Chief Executive Officers. As Revenge has only a brief operating
history and is currently in the process of reorganization, amounts paid to
executive officers may change significantly in fiscal year 1999.
-21-
<PAGE> 22
SUMMARY COMPENSATION TABLE
FOR FISCAL YEAR 1998
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) (3) BONUS ($) OPTIONS(5) COMPENSATION ($)
<S> <C> <C> <C> <C>
Donald Mitchell (1)............................
President and Chief Executive Officer $15,000 $ 0 $0 $ 6,299
William C. Robinson (2).................. $ 0 $ 0 $0 $ 2,155
Interim President and Executive
Vice President
</TABLE>
(1) Mr. Mitchell did not receive any direct payment of salary during fiscal
year 1998. However, $15,000 was paid to Ilona Lang Associates, an
entity controlled by Mr. Mitchell's spouse, in partial compensation for
his services. It is contemplated by management that after the
reorganization is complete, Mr. Mitchell would receive an annual salary
of approximately $90,000 as well as certain stock incentives presently
under negotiation.
(2) Mr. Robinson has not been paid a salary during fiscal 1998. Mr.
Robinson served briefly as Interim President during fiscal year 1998.
It is contemplated by management that after the reorganization is
complete, Mr. Robinson would receive an annual salary as well as
certain stock incentives presently under negotiation. However, payments
have been made by the Company during fiscal year 1998 in the context of
certain related party transactions with entities beneficially owned or
controlled by Mrs. Robinson or her children. For a description of these
transactions, please see Item 7, Certain Transactions.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
CONSOLIDATED YACHT CORPORATION, INC.
Pursuant to the Company's acquisition of the assets of Consolidated
Yacht Corporation, Inc. in July, 1998, a promissory note was entered into
between the Company and James Gardiner, an officer and director of the Company,
whereby the Company agreed to pay Mr. Gardiner the principal sum of $458,162.00.
This sum represents the purchase price of the Consolidated Yacht assets. Mr.
Gardiner was required by Finova to subordinate this debt to the Finova Loan.
ALLIED CAPITAL CORPORATION; WILLIAM C. ROBINSON AND RELATED ENTITIES
Since inception of the development stage, Allied Capital Corporation
("Allied") has advanced cash to the Company totaling $98,324 for operating
expenses as of June 30, 1998. Further, Allied has directly paid legal and other
expenses on behalf of the Company totaling $158,714. Allied owns 40,000 shares
of the Company's common stock and is the owner of Capital Markets Alliance,
Inc., which is the Company's principal shareholder, owning 1,954,431 of the
6,675,720 shares of common stock that were outstanding at June 30, 1998. Allied
is wholly owned by the Desai V. Robinson Living Trust. Desai Robinson is the
former president of Revenge Marine and is the wife of William C. Robinson,
executive vice president of the
-22-
<PAGE> 23
Company.
As of June 30, 1998, the Company's total debt to Allied was $145,528.
The Company has signed a promissory note for $94,742 of this debt and the
remaining unsecured debt of $50,786 is reflected as accounts payable. Subsequent
to June 30, 1998, Allied directly paid or advanced expenses on behalf of the
Company totaling approximately $200,000. Thus, the total owed to Allied was
approximately $350,000. Upon the closing of the Loan Agreement with Finova,
$225,000 was paid to Allied by Finova out of the loan proceeds. Allied
subordinated the remainder of its right to receive payment from the Company to
Finova. Allied, the Desai V. Robinson Living Trust and Capital Markets Alliance,
all of which are entities beneficially owned or controlled by Mrs. Robinson or
her children, pledged their shares of the Company and other securities and
assets on behalf of the Company to secure the Finova loan. After deduction of
the Finova payment to Allied, Allied is still owed the $94,742 note and an
approximately an additional $30,000 in unsecured debt currently reflected as
accounts payable. It is intended that this remaining debt be evidenced by a
promissory note between Allied and the Company and that the repayment of such
debt be subordinated to the Finova loan and to the Company's capital
requirements.
Additionally, the Company has the right to redeem its convertible
debenture held by Sholem Libenthal, dated July 13, 1998 for a redemption price
of $93,187. The Company does not intend to exercise its right of redemption, but
instead intends to assign the right of redemption to the Desai Vol Robinson
Children's Trust. It is contemplated that after the Desai Vol Robinson
Children's Trust purchases the debenture, it will convert the debenture into
shares of the Company's Common Stock.
EGRET BOAT COMPANY AND CONSOLIDATED MARINE, INC. ACQUISITIONS
In the context of the Company's May acquisitions of Consolidated
Marine, Inc. and Egret Boat Company, Scott Flanders and James Gardiner, both
directors, significant shareholders and members of the management of the
Company, have recently asserted the right to certain additional compensation
related to the asset acquisitions. The Company believes that there is no basis
for such claims of additional compensation and that the purchases of
Consolidated Marine, Inc. and Egret Boat Company were fully paid for under the
terms of the respective Stock Exchange Agreements.
ITEM 8. LEGAL PROCEEDINGS
Revenge is not a party to any legal actions which could have a
material adverse effect on its business, financial condition or results of
operations.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET PRICE
The principal market where the Registrant's equity is traded is the
Nasdaq Bulletin Board. The range of high and low bids for the Registrant's
equity for each of the past 3 quarters since trading began in January, 1998 is
as follows:
-23-
<PAGE> 24
Year Quarter High Low
- ---- ------- ---- ---
1998 Jan/March 3.06 0.25
1998 April/June 2.50 1.03
1998 July/Sept 1.75 0.50
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
There are approximately 2090 holders of 7,196,222 common shares of the
Registrant.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not presently intend to pay cash dividends on the Common Stock in
the foreseeable future. Although some form of Common or Preferred Stock dividend
is contemplated in conjunction with the restructuring, there is no assurance
that such a dividend or the restructuring itself will take place. Other than in
the context of the restructuring, the Company does not anticipate any dividends.
The Company currently anticipates that it will retain future earnings for
reinvestment in its business. Furthermore, the Loan Agreement prohibits the
Company from paying cash dividends on the Common Stock.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
From inception through June 30, 1998 Revenge issued and sold the
following securities:
In September 1997 the Company received $1,000 from the issuance of
1,000,000 shares of common stock at par value.
In September 1997 the Company issued 2,000,000 shares of common stock
as the result of a private memorandum offering dated September 15, 1997.
Proceeds of the offering were $2,000.
In December 1997 the Company issued 240,000 shares of common stock
through the conversion of the Company's debentures, in exchange for a promissory
note in the amount of $900,000. The note and the 240,000 shares were
subsequently cancelled.
Pursuant to a January 23, 1998 stock exchange agreement, 3,240,000
shares of common stock of the Company were exchanged for 3,240,000 shares of
Global Energy Organization Corporation common stock. In accordance with the
agreement, the newly reorganized Company issued 258,390 shares of common stock
to the Global shareholders of record at the date of the agreement and an
additional 540,500 shares to selected Global shareholders, subject to a one year
lock-up agreement.
The company received $500 from the issuance of 500,000 shares of common
stock at par value in connection with a private memorandum offering dated
February 2, 1998.
The company issued 250,713 shares of common stock and received $250,000
in proceeds from the conversion of the Company's debentures dated March 27,
1998.
In May 1998, the Company issued 333,761 shares of common stock in
exchange for consulting services valued at $174,557.
The Company issued 200,000 shares of common stock as a result of a
private memorandum offering dated May 15, 1998. Proceeds of the offering were
$100,000 as of June 30, 1998 and the remaining $100,000 proceeds were received
during July 1998.
The Company issued 955,414 shares of stock valued at $1,500,000 to the
shareholders of Egret Boat Company, Inc., pursuant to a May 1998 stock exchange
agreement.
The Company issued 636,942 shares of stock valued at $1,000,000 to the
shareholder of
-24-
<PAGE> 25
Consolidated Marine, Inc., pursuant to a May 1998 stock exchange agreement,
discussed further in Note 2.
The issuances of the securities described above were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2),
Rule 701 promulgated thereunder, Section 3(a)(9) among other exemptions. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof and appropriate legends were affixed
to the share certificates issued in such transactions. All recipients had
access, through their relationships with the Registrant, to information about
the Registrant.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $0.001 per share par value and 5,000,000 shares of
Preferred Stock, $0.001 par value.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of applicable law and the provisions of the
Company's Amended and Restated Articles of Incorporation, which are included as
an exhibit to this Registration Statement.
COMMON STOCK
As of September 30, 1998, there were 7,196,222 shares of Common Stock
outstanding that were held of record by 2090 stockholders.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding shares of Preferred Stock,
the holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
for the payment of dividends. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment the
liquidation preference of the Preferred Stock and the payment of liabilities.
Holders of Common Stock have no preemptive rights or rights to convert their
Common Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are fully paid and non-assessable.
PREFERRED STOCK
Pursuant to the Company's Amended and Restated Articles of
Incorporation, the Board of Directors has the authority, subject to any
limitations prescribed by the Nevada law without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix the designations, powers, preferences, privileges, and
relative participating, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of the Common Stock. Depending on
the terms of the Preferred Stock established by the Board of Directors, any or
all series of Preferred Stock could have preference over the Common Stock with
respect to dividends and other distributions. Preferred Stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
the Company or make removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock, and may adversely affect the voting and other rights of the
holders of Common Stock. At present, there are no shares of Preferred Stock
outstanding and the Company has no plans to issue any of the shares of Preferred
Stock except possibly in connection with the contemplated reorganization.
-25-
<PAGE> 26
TRANSFER AGENT
The Transfer Agent for the Common Stock of the Company is Interwest
Transfer Co., Inc., 1981 East Murray Holladay Road, Suite 100, Salt Lake City,
Utah 89110.
ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Amended and Restated Articles of Incorporation provide
for indemnification to the full extent permitted by Nevada law of all persons it
has the power to indemnify under Nevada law. In addition, Article VII of the
Company's Amended and Restated By Laws provide for indemnification to the full
extent permitted by Nevada law of all persons it has the power to indemnify
under Nevada law. Such indemnification is not deemed to be exclusive of any
other rights to which those indemnified may be entitled, under any bylaw,
agreement, vote of stockholders or otherwise. The provisions of the Company's
Amended and Restated Articles of Incorporation and By Laws which provide
indemnification may reduce the likelihood of derivative litigation against the
Company's directors and officers for breach of their fiduciary duties, even
though such action, if successful, might otherwise benefit the Company and its
stockholders.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Audited Financial Statements and supplementary data index which appears on
page F-1 herein.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) (1) See Audited Financial Statements and supplementary data
index which appears on page F-1 herein.
(2) Schedules have been omitted because they are either not
applicable or the required information is shown in the
financial statements or notes thereto.
(3) Exhibits
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Certificate of Amendment of Restated Articles of
Incorporation of the Registrant
3.2 Amended and Restated Articles of Incorporation of
the Registrant
3.3 Amended and Restated Bylaws of the Registrant
4.1 Form of the Registrant's Common Stock Certificate
-26-
<PAGE> 27
4.2 Loan Agreement between Finova Capital Corporation
and Revenge Marine, Inc., a Delaware corporation,
dated October 23, 1998.
10.1 Lease Agreement between the Registrant and Miami
River Partners, Ltd., dated May 4, 1998.
10.2 Amendment dated July 10, 1998 to the Lease Agreement
between the Registrant and Miami River Partners,
Ltd., dated May 4, 1998.
10.3 Stock Exchange Agreement between Consolidated
Marine, Inc. and the Registrant dated May 29, 1998.
10.4 Stock Exchange Agreement between Egret Boat Company
and the Registrant dated May 21, 1998.
10.5 Promissory note between Consolidated Yacht
Corporation and the Registrant dated July 30, 1998.
10.6 Securities Subscription Agreement and Convertible
Debenture between Sholem Liebenthal and the
Registrant dated July 13, 1998
10.7 Purchase Agreement between BYC Acquisition
Corporation and Revenge Marine, Inc., a Delaware
corporation, dated October 22, 1998.
10.8 Contract between Arthur M. Barbeito & Associates,
Inc. and the Registrant dated October 27, 1998.
10.9 Stock Loan and Consulting Agreement between The Wall
St. Trading Group and the Registrant dated February
17, 1998.
10.10 Consulting Agreement between Stockbroker Relations,
Inc. and the Registrant dated May 14, 1998.
10.11 Consulting Agreement between Grant Douglas
Publishing, Inc. and the Registrant dated May 14,
1998.
21.1 List of Subsidiaries of the Registrant
21.2 Certificate of Incorporation of Revenge Marine,
Inc., a Delaware Corporation
21.3 Bylaws of Revenge Marine, Inc., a Delaware
Corporation
23.1 Consent of Cross and Robinson, independent auditors
-27-
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
REVENGE MARINE, INC.
- --------------------
(Registrant)
Date: October 28, 1998
----------------
By: /s/ Donald Mitchell
-------------------
Donald Mitchell
President and Chief Executive Officer
-28-
<PAGE> 29
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
AND
INDEPENDENT AUDITOR'S REPORT
<PAGE> 30
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation
C O N T E N T S
PAGE
Independent Auditor's Report 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 4
Consolidated Statement of Stockholders' Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 8-20
<PAGE> 31
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Revenge Marine, Inc.
We have audited the accompanying consolidated balance sheet of Revenge
Marine, Inc., a development stage company (formerly known as Global Energy
Organization Corporation) and subsidiaries as of June 30, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the period from inception, September 5, 1997 to June 30, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Revenge Marine, Inc. as of June 30, 1998, and the results of its operations and
its cash flows for the initial period then ended in conformity with generally
accepted accounting principles.
/s/ CROSS AND ROBINSON
-------------------------------
CROSS AND ROBINSON
Certified Public Accountants
September 8, 1998
1
<PAGE> 32
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED BALANCE SHEET
June 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 102,793
Prepaid expenses (Note 1) 176,608
Work in progress (Note 1) 60,500
----------
TOTAL CURRENT ASSETS 339,901
----------
PROPERTY AND EQUIPMENT, AT COST (NOTE 4)
Equipment 85,000
Molds and prototype 242,523
Vehicles 45,493
Office equipment 5,429
Less: Accumulated depreciation (139,025)
----------
NET PROPERTY AND EQUIPMENT 239,420
----------
OTHER ASSETS
Deposit (Note 13) 50,000
Intangible assets, net (Note 5) 9,512
Investment in subsidiaries in excess of book value, net (Note 5) 2,356,971
----------
TOTAL OTHER ASSETS 2,416,483
----------
TOTAL ASSETS $2,995,804
==========
</TABLE>
2
<PAGE> 33
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 28,916
Accounts payable--related parties (Note 6) 50,786
Accrued liabilities 9,283
Customer deposits 64,500
Notes payable (Note 7) 66,252
Notes payable--related parties (Notes 6 and 7) 94,742
----------
TOTAL LIABILITIES 314,479
----------
SHAREHOLDER'S EQUITY (NOTE 8)
Preferred stock $0.001 par value,
5,000,000 shares authorized,
-0- shares issued and outstanding
Common stock $0.001 par value,
50,000,000 shares authorized,
6,675,720 shares issued and outstanding 6,676
Subsriptions receivable (100,000)
Additional paid-in capital 3,093,581
Deficit accumulated in the development stage (318,932)
----------
TOTAL SHAREHOLDER'S EQUITY 2,681,325
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,995,804
==========
</TABLE>
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
3
<PAGE> 34
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
SALES $ 142,286
COST OF SALES 124,352
---------
GROSS PROFIT 17,934
---------
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Advertising 5,821
Contract labor 2,400
Commissions and fees 3,500
Office expense 5,269
Legal and professional fees 177,935
Penalties and fines 37,000
Postage and printing 6,563
Public relations 17,397
Video production 6,346
Telephone 6,764
Travel 27,289
Miscellaneous 19,202
---------
TOTAL SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 315,486
---------
OTHER INCOME (EXPENSES)
Interest income 15
Depreciation and amortization (Notes 4 and 5) (13,261)
Interest expense (8,134)
---------
TOTAL OTHER INCOME (EXPENSES) (21,380)
---------
NET LOSS FROM OPERATIONS $(318,932)
=========
WEIGHTED AVERAGE SHARES OUTSTANDING (NOTE 9) 4,325,237
---------
NET LOSS PER SHARE $ (0.07)
=========
</TABLE>
4
<PAGE> 35
REVENGE MARINE, INC.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
STATEMENT OF SHAREHOLDERS' EQUITY
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------- ------ ---------- -----------
<S> <C> <C> <C> <C>
BALANCE AT INCEPTION -- $ -- $ -- $ --
Common stock, par value $0.001
50,000,000 shares authorized:
Issued for cash, September 1997 3,000,000 3,000
Stock subscription, December 1997, less
issuance costs of $7,800 240,000 240 471,960
Issued to original Global shareholders,
per agreement dated January 23, 1998 798,890 799 (799)
Proceeds from 504 offering dated
February 2, 1998 500,000 500 --
Proceeds from conversion of debentures
dated March 27, 1998 250,713 251 249,749
Issued through private offering dated
May 10, 1998, in exchange for services 333,761 334 174,223
Private offering dated May 15, 1998:
Issued for cash 100,000 100 99,900
Subcribed to at June 30, 1998 100,000 100 99,900
Issued to the shareholders of Egret Boat
Company, May 1998 955,414 955 1,499,045
Issued to the shareholder of Consolidated
Marine, Inc., May 1998 636,942 637 999,363
Stock issuance costs January-June 1998 -- -- (20,000)
Stock subcription cancelled (240,000) (240) (479,760)
Net loss for the period -- -- -- (318,932)
--------- ------ ---------- ----------
BALANCE AT JUNE 30,1998 6,675,720 $6,676 $3,093,581 $ (318,932)
========= ====== ========== ==========
</TABLE>
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
5
<PAGE> 36
Revenge Marine, Inc.
AND SUBSIDIARIES
A Development Stage Company
(Formerly Global Energy Organization Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period September 5, 1997 (Date of Inception)
to June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Cash Flows From Operating Activities:
Cash received from customers $ 101,785
Interest received 15
Cash paid for goods and services (399,084)
----------
Net Cash Used by Operating Activities (297,284)
----------
Cash Flows From Investing Activities:
Cash acquired from acquisition of subsidiaries 56,216
Plant & equipment purchases (128,624)
----------
Net Cash Used by Investing Activities (72,408)
----------
Cash Flows From Financing Activities:
Issuance of common stock 353,500
Proceeds from short-term debt 147,742
Repayment of short-term debt (957)
Stock issuance costs incurred (27,800)
----------
Net Cash Provided by Financing Activities 472,485
----------
Net Increase in Cash 102,793
Cash at Beginning of Period --
----------
Cash at End of Period $ 102,793
==========
</TABLE>
6
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C>
Reconciliation of Net Loss to Net
Cash Used by Operating Activities:
Net loss (318,932)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 6,752
Amortization of intangible assets 6,511
Decrease in customer deposits (40,500)
Decrease in work in progress 20,679
Increase in deposits on rental property (50,000)
Decrease in accrued liabilities 1,613
Increase in intangible assets (3,450)
Increase in accounts payable 79,701
Decrease in deferred expenses 342
----------
Total adjustments 21,648
----------
Net Cash Used by Operating Activities $ (297,284)
==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest $ 8,134
Schedule of Other Non-cash Transactions:
333,761 shares of common stock were issued
during the year in exchange for services $ 174,557
1,592,356 shares of common stock were issued
during the year to acuire subsidiaries $2,500,000
100,000 shares of common stock were issued
pursuant to a subscription agreement $ 100,000
</TABLE>
ACCOMPANYING NOTES ARE ON INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
7
<PAGE> 38
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Revenge Marine, Inc. (the "Company"), is a publicly traded
Nevada company that was incorporated December 28, 1979. The Company
has operated under various names since its incorporation, most
recently operating as Global Energy Organization Corporation
("Global").
The Company entered the development stage after it
reorganized in January 1998 (see Note 2) and changed its primary focus
to acquiring yacht manufacturing and marine technology companies, with
future plans to produce and market a full line of boats from 16 to 110
feet in length. Since that time, the Company has devoted substantially
all of its efforts to raising capital and acquisition activities. As
of June 30, 1998, the Company's principal operations had not commenced
and their only reported revenues were from a recently acquired
subsidiary. Because the Company is in the development stage, the
accompanying consolidated financial statements should not be regarded
as typical for normal operating periods.
LIQUIDITY CONSIDERATIONS
Since its reorganization, the Company has expended
substantial financial resources in its acquisition and capital raising
activities. The Company believes it will commence its principal
operations and begin generating revenues in the fiscal year ending
June 30, 1999. As of June 30, 1998, the Company's accumulated deficit
was $318,932, which was funded primarily through short-term borrowings
and the proceeds from private placement offerings of its common stock.
Management believes it can fund planned operations through the
proceeds of stock issues and from its anticipated revenues or
reductions in its operating expenses.
PRINCIPALS OF CONSOLIDATION
The June 30, 1998 consolidated balance sheet includes the
accounts of Revenge Marine, Inc. and its wholly owned subsidiaries,
Revenge Marine, Inc., (an Oklahoma corporation), Egret Boat Company,
Inc., (a Florida corporation), and Consolidated Marine, Inc. (a
Florida corporation).
The June 30, 1998 consolidated statements of income,
shareholders' equity and cash flows include the accounts of Revenge
Marine, Inc. (Oklahoma)
8
<PAGE> 39
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
from September 5, 1997 (inception) through June 30, 1998 and the
accounts of Egret Boat Company, Inc. and Consolidated Marine, Inc.
from their acquisition dates (May 21 and May 27, 1998 respectively).
All material intercompany accounts and transactions have been
eliminated in consolidation.
The consolidated financial statements and notes of Revenge
Marine, Inc. are representations of the Company's management, who is
responsible for their integrity and objectivity. The accounting
policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to
development stage companies.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid investments (that are
readily convertible to cash) purchased with original maturity dates of
three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company's revenues through June 30, 1998 consist solely
of the earnings of Egret Boat Company from the date of acquisition
through June 30, 1998. Egret recognizes revenues when completed boats
are delivered to the customer. No other revenues had been recognized
as of June 30, 1998 for this Development Stage Company.
INTANGIBLE ASSETS
Intangible assets include organizational costs, costs
associated with developing a new line of yachts, and the Company's
investment in its subsidiaries in excess of the book value of the
subsidiaries' net assets. Intangible assets are amortized using the
straight-line method based on the economic useful lives of the assets,
principally over five years.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated
using the straight-line method over the estimated useful life of the
asset of five years. When assets are retired or otherwise disposed of,
the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in operations in the
period realized.
9
<PAGE> 40
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company uses the liability method of accounting for
income taxes as set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under the liability
method, deferred taxes are determined based on the differences between
the financial statement and tax bases of assets and liabilities at
enacted tax rates in effect in the years in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be
realized.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported revenues and expenses during the reporting period.
Accordingly, actual results could differ from those estimates.
EARNINGS (LOSS) PER SHARE
Primary income (loss) per share is calculated by dividing net
income (loss) by the weighted average shares of common stock of the
Company and common stock equivalents outstanding during the period
(see Note 9). Common stock equivalents represent the dilutive effect
of the assumed exercise of certain outstanding stock options and
warrants.
The calculation of fully diluted income (loss) per share of
common stock assumes the dilutive effect of the Company's outstanding
stock options and warrants converted into common stock at the later of
the beginning of the fiscal year or issue date. During a loss period,
the assumed exercise of outstanding stock options and warrants have an
antidilutive effect. As a result, these shares are not included in the
weighted average shares of 4,325,237 used in the calculation of loss
per share.
WORK IN PROGRESS
Work in Progress consists of customer deposits received by
Egret Boat Company, Inc. These deposits have been advanced to
Consolidated Yacht Corporation, Inc. as progress payments on boats
under construction at the balance sheet date (see "Related Party
Transactions", Note 6). These payments will become a component of the
Company's cost of goods sold in the period that revenue is recognized
on the completed boats.
10
<PAGE> 41
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREPAID EXPENSES
Prepaid expenses at June 30, 1998 consisted of prepaid
insurance and the fair market value of common stock issued by the
Company in exchange for consulting services to be rendered in the
forthcoming fiscal year (see Note 11).
FISCAL YEAR END
The Company's fiscal year ends on June 30. Egret Boat
Company, which previously had a December 31 year-end, will change its
fiscal year to June 30 as a result of the acquisition by the Company.
NOTE 2 - REORGANIZATION AND ACQUISITIONS
GLOBAL ENERGY ORGANIZATION CORPORATION
In January 1998, Revenge Marine, Inc. (formerly Revenge
Yachts, Inc.), an Oklahoma corporation, executed a Stock Exchange
Agreement (the "Agreement") with Global Energy Organization
Corporation ("Global"), a publicly traded Nevada corporation, which
had been inactive for the previous five years.
Pursuant to the Agreement dated January 23, 1998, Global
issued 3,240,000 shares of its $.001 par value common stock in
exchange for 100% of the issued and outstanding common stock of
Revenge Marine, Inc. As a result of this "reverse acquisition",
Revenge Marine, Inc. became a wholly owned subsidiary of Global. In
accordance with the terms of the agreement, Global (the Nevada parent)
adopted the name "Revenge Marine, Inc.".
Immediately preceding the Agreement, Global enacted a one for
ten (1 for 10) reverse split of its stock, leaving Global with 274,824
shares of $0.001 par value common stock issued and outstanding at the
date of the merger. As of June 30, 1998, 258,390 shares of Revenge
Marine, Inc. stock had been issued to replace these shares. The
remaining 16,434 shares will be issued as their respective owners are
identified. Additionally, Global effected the issuance of 540,500
shares of common stock to selected Global shareholders in exchange for
their services relating to the reorganization with Revenge Marine,
Inc. These shares were issued subject to a lock-up agreement, whereby
the shareholders were restricted from selling, assigning, or conveying
any of their shares for a period of twelve months. Revenge Marine
stock had been issued to these shareholders as of June 30, 1998.
11
<PAGE> 42
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 2 - REORGANIZATION AND ACQUISITIONS (CONTINUED)
EGRET BOAT COMPANY, INC.
Pursuant to a stock exchange agreement dated May 21, 1998,
the Company issued 955,414 shares of its common stock, valued at
$1,500,000, in exchange for all of the outstanding shares of Egret
Boat Company, Inc., a Florida corporation. The acquisition was
accounted for as a purchase and is included with consolidated
operations from the acquisition date through June 30, 1998. The
purchase price was allocated as follows:
Property and equipment, $ 117,547
Working capital, net 20,061
Other intangible assets $1,362,392
----------
Total $1,500,000
==========
CONSOLIDATED MARINE, INC.
Pursuant to a stock exchange agreement dated May 27, 1998,
the Company issued 636,942 shares of its common stock, valued at
$1,000,000 in exchange for all of the outstanding shares of
Consolidated Marine, Inc., a Florida corporation. The acquisition was
accounted for as a purchase and was included with consolidated
operation from the acquisition date through June 30, 1998. The
purchase price was allocated as follows:
Organization costs $ 500
Other intangible assets 999,500
----------
Total $1,000,000
==========
The consolidated pro forma results of operations which follow
assume that the acquisitions had occurred at the beginning of the
period presented. The calculations include adjustments for
depreciation, amortization, and interest. The pro forma statements may
not be indicative of the results that would have occurred if the
acquisition had been effective on the date indicated or of the results
that may be obtained in the future.
12
<PAGE> 43
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 2 - REORGANIZATION AND ACQUISITIONS (CONTINUED)
FROM INCEPTION
THROUGH JUNE 30, 1998
---------------------
Sales $1,164,162
Cost of goods sold 979,320
----------
Gross profit 184,842
Operating expenses 391,373
----------
Operating income (loss) (206,532)
Other income (expense), net (59,036)
----------
Net income (loss) $(265,568)
==========
NOTE 3- SUBSCRIPTIONS RECEIVABLE
Subscriptions receivable consists of a subscription agreement
to purchase a total of 200,000 shares of the Company's common stock at
a price of $1.00 per share. As of June 30, 1998, 100,000 shares had
not been purchased. These shares were purchased in July 1998.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30,
1998:
Molds and prototype $ 242,523
Equipment 85,000
Automobiles 45,493
Office equipment 5,429
---------
Total consolidated property and
equipment 378,445
Less accumulated depreciation (139,025)
---------
Net property and equipment $ 239,420
=========
Total depreciation expense for the period ended June 30, 1998
was $6,750.
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consists of the following at June 30, 1998:
13
<PAGE> 44
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 5 - INTANGIBLE ASSETS (CONTINUED)
ESTIMATED
USEFUL LIFE
-----------
Investment in subsidiaries
in excess of book value $ 2,361,892 40 years
Marine assets 8,602 5 years
Organizational costs 2,500 5 years
-----------
Total intangible assets 2,372,994
Less accumulated amortization (6,511)
Net intangible assets $ 2,366,483
===========
Total amortization expense for the period ended June 30, 1998
was $6,511.
NOTE 6 - RELATED PARTY TRANSACTIONS
ALLIED CAPITAL CORPORATION
Since inception of the development stage, Allied Capital
Corporation ("Allied") has advanced cash to the Company totaling
$98,324 for operating expenses. Further, Allied has directly paid
legal and other expenses on behalf of the Company totaling $158,714.
Allied owns 40,000 shares of the Company's common stock and is the
owner of Capital Markets Alliance, Inc., which is the Company's
principal shareholder, owning 1,954,431 of the 6,675,720 shares of
common stock that was outstanding at June 30, 1998. Allied is wholly
owned by the Desai Robinson Trust Fund. Desai Robinson is the former
president of Revenge Marine and is the wife of William C. Robinson,
executive vice president of the Company. Thomas Schroeder, who
resigned as Vice President and Chief Financial Officer of Revenge
Marine, Inc. effective June 30, 1998 is President of Capital Markets
Alliance.
As of June 30, 1998, the Company's total debt to Allied was
$145,528. The Company has signed a promissory note for $94,742 of this
debt (See Note 7) and the remaining unsecured debt of $50,786 is
reflected as accounts payable.
CONSOLIDATED YACHT CORPORATION, INC.
All of the boats sold by Egret Boat Company, a wholly owned
subsidiary of the Company, are manufactured by Consolidated Yacht
Corporation, Inc., a company owned by Jim Gardiner, with which Egret
shares its operating facilities. Mr. Gardiner is the president of
Consolidated Marine and a principal shareholder and officer of Revenge
Marine, Inc.
14
<PAGE> 45
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)
ROY MEADOWS AND AFFILIATED COMPANIES
Roy Meadows is the owner of Stockbroker Relations, Inc.,
Grant Douglas Publishing, Inc., ASBIA, Roy Starr, Inc., and James
Stockwell Capital, Inc., all of which received shares of the Company's
common stock pursuant to consulting agreements highlighted in Note 11
and the May 15, 1998 private offering highlighted in Note 12. At June
30, 1998, the aggregate number of shares issued to Roy Meadows and his
affiliated companies was 533,761, which equated to approximately eight
percent (8%) of the total shares issued and outstanding at that date.
NOTE 7 - NOTES PAYABLE
Notes payable consist of the following at June 30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Notes payable to related-party shareholders (see Note 6):
Promissory note, due on or before November 16, 1998 at
an interest rate of 10% per annum. $ 94,742
Notes payable to other entities:
Demand note due on or before June 1, 1998 currently in
default at an interest rate of 10% per annum. 7,153
Unsecured $75,000 operating line of credit with First Union
National Bank, with interest-only payments due monthly at
an interest rate equal to the prime rate plus
2% (10.5% at June 30, 1998). 53,000
Retail vehicle installment contract with Chrysler
Financial Corporation, due in monthly installments of
principal and interest of $613, with fixed interest at
8.9% until February 22, 1999. This note is secured by a
Dodge Caravan. 4,164
Retail vehicle installment contract with Ford Motor
Credit, due in monthly installments of principal and
interest of $613 with fixed interest at 8.25% until
December 29, 1998. This note is secured by a 1995
Ford Econoline Van. 1,935
---------
Total notes payable 154,554
Current portion (154,554)
---------
$ --
=========
</TABLE>
15
<PAGE> 46
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 8 - CAPITALIZATION
In September 1997 the Company received $1,000 from the
issuance of 1,000,000 shares of common stock at par value.
In September 1997 the Company issued 2,000,000 shares of
common stock as the result of a private memorandum offering dated
September 15, 1997. Proceeds of the offering were $2,000.
In December 1997 the Company issued 240,000 shares of common
stock through the conversion of the Company's debentures, in exchange
for a promissory note in the amount of $900,000. The note and the
240,000 shares were subsequently cancelled.
Pursuant to a January 23, 1998 stock exchange agreement (see
Note 2), the 3,240,000 shares referred to above were exchanged for
3,240,000 shares of Global Energy Organization Corporation common
stock. In accordance with the agreement, the newly reorganized Company
issued 258,390 shares of common stock to the Global shareholders of
record at the date of the agreement and an additional 540,500 shares
to selected Global shareholders, subject to a one year lock-up
agreement.
The company received $500 from the issuance of 500,000 shares
of common stock at par value in connection with a private memorandum
offering dated February 2, 1998.
The company issued 250,713 shares of common stock and
received $250,000 in proceeds from the conversion of the Company's
debentures dated March 27, 1998.
In May 1998, the Company issued 333,761 shares of common
stock in exchange for consulting services valued at $174,557.
The Company issued 200,000 shares of common stock as a result
of a private memorandum offering dated May 15,1998. Proceeds of the
offering were $100,000 as of June 30, 1998 and the remaining $100,000
proceeds were received during July 1998.
The Company issued 955,414 shares of stock valued at
$1,500,000 to the shareholders of Egret Boat Company, Inc., pursuant
to a May 1998 stock exchange agreement, discussed further in Note 2.
16
<PAGE> 47
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 8 - CAPITALIZATION (CONTINUED)
The Company issued 636,942 shares of stock valued at
$1,000,000 to the shareholder of Consolidated Marine, Inc., pursuant
to a May 1998 stock exchange agreement, discussed further in Note 2.
NOTE 9 - WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Common shares outstanding at June 30, 1998 6,675,720
Effect of using weighted average common
shares outstanding (2,350,483)
----------
Weighted average common shares outstanding 4,325,237
==========
NOTE 10 - PRINCIPAL SHAREHOLDERS
The Company's principal shareholders at June 30, 1998 are as
follows:
<TABLE>
<CAPTION>
Shares Percent
Shareholder Owned of Total
----------------------------- --------- --------
<S> <C> <C>
Capital Markets Alliance, Inc. 1,954,431 29.28
Jim Gardiner 1,114,649 16.70
Roy Meadows and affiliated companies 533,761 8.00
Scott Flanders 477,707 7.16
All others (less than 5% each) 2,595,172 38.87
--------- ------
6,675,720 100.00
========= ======
</TABLE>
NOTE 11 - PROFESSIONAL SERVICES
The Company has entered into various agreements for
consulting and broker services relating to future planned acquisitions
and other operations of the Company. The agreements are with a variety
of companies, most of whose owners or officers are shareholders of
Revenge Marine. In several of the agreements, the Company has issued
common stock, stock options, or stock warrants as partial or, in some
cases, total consideration for the services to be performed. The terms
of the significant agreements are highlighted as follows:
ROSS, FORSTER, SCILLIA, AND BROOKS, INC.
The Company has engaged Ross, Forster, Scillia, and Brooks,
Inc. as its corporate financial advisor and investment banker to
assist and advise the Company in future mergers or acquisitions. It is
estimated that the fees for these services could reach as high as
$266,900 if certain terms and obligations are met.
17
<PAGE> 48
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 11 - PROFESSIONAL SERVICES (CONTINUED)
STOCKBROKER RELATIONS, INC.
On May 14, 1998, the Company executed an agreement for
consulting services valued at $112,800 in exchange for 215,761 shares
of the Company's common stock. In addition, the Company issued
convertible stock options to Stockbroker Relations in the following
amounts.
These options may be exercised at any time until December 31,
1998.
Number of
Shares Price
--------- -----
175,000 $1.00
175,000 1.50
175,000 2.00
These options may be exercised at any time until December 31,
1998.
GRANT DOUGLAS PUBLISHING, INC.
On May 14, 1998, the Company entered into an agreement with
Grant Douglas Publishing, Inc. to advertise and publish information
about the Company in various publications produced by Grant Douglas
Publishing in exchange for 118,000 free trading shares of the
Company's common stock. The value of the services is estimated to be
$61,714.
WALL STREET TRADING GROUP
On February 17, 1998, the Company entered into a consulting
agreement with The Wall Street Trading Group ("WSTG"). As compensation
for the services provided, the Company will arrange with certain
Revenge shareholders to assign WSTG options to purchase 300,000 free
trading shares of the Company's common stock at $2.00 per share until
December 31, 2001. Additionally, the Company was obligated to arrange
a stock loan agreement between Wall Street Trading Group and another
company to loan Wall Street Trading Group 100,000 free trading shares
of Revenge Marine until July 31,1999.
MDI RESEARCH
The Company contracted with MDI Research to write a research
report for the Company. As partial consideration for the services
rendered, the Company issued common stock warrants with an option to
purchase 20,000 unrestricted shares of the Company's common stock at a
price of $1.50 per share. The warrants can be exercised at any time
from May 1, 1998 until May 1, 2002.
18
<PAGE> 49
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 12 - INCOME TAXES
Significant components of the Company's deferred tax assets
and liabilities as of June 30, 1998 are as follows:
Deferred tax liabilities:
Tax over book depreciation $ 18,680
Book over tax amortization (1,968)
---------
Net tax deferred liabilities 16,712
Deferred tax asset:
Net operating loss carryforward 127,573
Valuation allowance (110,861)
---------
Total deferred tax assets 16,712
---------
Net deferred tax liabilities $ --
=========
As of June 30, 1998, the Company had a net operating loss
carryforward of approximately $318,932, which expires in 2013.
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%.
A reconciliation between the amount of federal income taxes,
based on a forty percent (40%) tax rate, and the effective amount of
income taxes based on continuing operations is as follows:
Statutory federal income taxes (refund) $(127,573)
Tax over book depreciation 16,712
Book over tax amortization 1,968
Valuation allowance 110,861
---------
Effective income taxes $ --
=========
NOTE 13 - LEASE AGREEMENT
The Company leases its Miami, Florida facility under a
non-cancelable operating lease. The agreement, as amended on July 10,
1998, calls for monthly lease payments of $37,333 beginning in July
1998, with a twelve month, interest free option to purchase the
property at a purchase price of $3,259,500. After the initial twelve
month period, the option to purchase will begin to accrue interest at
a rate of 6%, compounded daily. The Company is responsible for paying
insurance and real estate taxes on the property, which are estimated
to total $5,720 per month. Pursuant to the July 10, 1998 Amended
Agreement, $15,000 of the initial $50,000 deposit was refunded to the
Company in July 1998. The term of the lease is ten years with an
option to extend the lease for an additional five years.
19
<PAGE> 50
REVENGE MARINE, INC.
A Development Stage Company
(Formerly Global Energy Organization Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 13 - LEASE AGREEMENT (CONTINUED)
The minimum obligations for the next five years are as
follows:
YEAR ENDED
JUNE 30
-----------
1999 $ 516,636
2000 516,636
2001 516,636
2002 516,636
2003 516,636
----------
Total $2,583,180
==========
NOTE 14 - SUBSEQUENT EVENTS
PURCHASE OF CONSOLIDATED YACHT CORPORATION ASSETS
On September 8, 1998, the Company entered into an agreement
to purchase the assets of Consolidated Yacht Corporation, Inc., a
Florida corporation, whose owner is a related party to the Company
(see Note 6).
20
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
REVENGE MARINE, INC.
TO THE SECRETARY OF STATE OF THE STATE OF NEVADA:
The undersigned, Revenge Marine, Inc. ("Corporation"), a Nevada
corporation, for the purpose of adopting this Amended and Restated Certificate
of Incorporation pursuant to the Nevada Corporation Act ("Act"), hereby
certifies:
1. The name of the Corporation is Revenge Marine, Inc.
2. The name under which the Corporation was originally incorporated is
Contracap, Inc.
3. The original Certificate of Incorporation of the Corporation was
filed with the Nevada Secretary of State on December 28, 1979 and was amended
on November 16, 1994, January 6, 1995, December 22, 1995, and February 20, 1998.
4. The principal amendments effected by this Amended and Restated
Certificate of Incorporation are:
(a) To simplify and enlarge the powers of the corporation; and
(b) To increase the authorized capital to 50,000,000 shares of
Common Stock, par value $.001 per share and 300,000 shares of
Preferred Stock, par value $.001; and
(c) To add a new article denying cumulative voting, a new article
denying preemptive rights, a new article relating to the Board
of Directors, a new article relating to amendment of the bylaws,
add a new article relating to possible conflicts of interest,
add a new article relating to Indemnification and add a new
article relating to director liability in certain cases; and
(d) To delete everything except the name, registered agent and
duration of the Corporation; and
(e) To renumber, edit, alter, modify, delete and change the language
of the remaining provisions in the Amended Certificate of
Incorporation for consistency and clarity.
5. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the Act, and restates, integrates and amends the
Amended Certificate of Incorporation.
6. The Amended and Restated Certificate of Incorporation of Revenge
Marine, as amended hereby, is restated in its entirety as follows:
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
REVENGE MARINE, INC.
ARTICLE I
NAME
The name of the Corporation is Revenge Marine, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The registered office of the Corporation in the State of Nevada is located
at 318 North Carson, Suite 208, Carson City, Nevada, 89701. The Corporation's
registered agent at that office is Paracorp, Inc.
ARTICLE III
The duration of the Corporation is perpetual.
ARTICLE IV
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Nevada Corporation Act.
ARTICLE V
CAPITALIZATION
The total number of shares which this Corporation is authorized to issue is
50,000,000 shares of Common Stock, par value $0.001 per share and 300,000 shares
of Preferred Stock par value $.001.
The Board of Directors shall have the power and authority to issue without
shareholder approval debentures or other securities convertible into, or
warrants or options to subscribe for or purchase, authorized shares of Common
Stock or Preferred Stock of the Corporation upon such terms and conditions as
shall be determined by action of the Board of Directors.
The Preferred Stock may be issued in one or more series. The Board of
Directors is hereby expressly authorized to issue shares of Preferred Stock in
such series and to fix from time to time before issuance thereof the number of
shares to be included in any series and the designation, relative rights,
powers, preferences, restrictions and limitations of all shares of such series.
The authority of the Board of Directors with respect to each series shall
include, without limitation, the
<PAGE> 2
determination of any or all of the following, and the shares of each series may
vary from the shares of any other series in the following respects:
(a) The number of shares constituting such series and the designation
thereof to distinguish the shares of such series from the shares of
all other series;
(b) The annual dividend rate on the shares of that series, if any, and
whether such dividends shall be cumulative and, if cumulative, the
date from which dividends shall accumulate;
(c) The voting rights, if any, in addition to the voting rights
prescribed by law and the terms of exercise of such voting rights;
(d) The right, if any, of shares of such series to be converted into
shares of any other series or class and the terms and conditions of
such conversion; and
(e) The redemption price for the shares in each particular series, if
redeemable, and the terms and conditions of such redemption;
(f) The preference, if any, of shares of such series in the event of
any liquidation, dissolution or winding up on the Corporation; and
(g) Any other relative rights, preferences, limitations and
restrictions applicable to that series.
The Board of Directors shall have the power and authority to issue without
shareholder approval debentures or other securities convertible into, or
warrants or options to subscribe for or purchase, authorized shares of Common
Stock of the Corporation upon such terms and conditions as shall be determined
by action of the Board of Directors.
ARTICLE VI
NO CUMULATIVE VOTING
The holders of record of the Common Stock or Preferred Stock shall have
one vote for each share held of record. Cumulative voting for the election of
directors or otherwise is not permitted.
ARTICLE VII
NO PREEMPTIVE RIGHTS
No holder of record of Common Stock or Preferred Stock shall have a
preemptive right or be entitled as a matter of right to subscribe for or
purchase any: (i) shares of capital stock of the Corporation of any class
whatsoever; (ii) warrants, options or rights of the Corporation; or (iii)
securities convertible into, or carrying warrants, options or rights to
subscribe for or purchase, capital stock of the Corporation of any class
whatsoever, whether now or hereafter authorized.
-2-
<PAGE> 3
ARTICLE VIII
BOARD OF DIRECTORS
The Board of Directors shall consist of from one (1) to seven (7) directors
who shall serve as directors until the next annual meeting of shareholders or
until their respective successor is duly elected and qualified. The number of
directors may be changed from time to time in accordance with the bylaws of the
Corporation then in effect. Election of directors at a meeting of shareholders
need not be written ballot.
ARTICLE IX
AMENDMENT OF BYLAWS
The Board of Directors of the Corporation is expressly authorized and
empowered to make, alter, amend or repeal the bylaws of the Corporation and to
adopt new bylaws.
ARTICLE X
POSSIBLE CONFLICTS OF INTEREST
No agreement or transaction involving the Corporation or any other
corporation, partnership, proprietorship, trust, association or other entity in
which the Corporation owns an interest or in which a director or officer of the
Corporation has a financial interest shall be void or voidable solely for this
reason or solely because any such director or officer is present at or
participates in the approval of such agreement or transaction.
ARTICLE XI
INDEMNIFICATION
To the full extent not prohibited by the law as in effect from time to
time, the Corporation shall indemnify any person (and the heirs, executors and
representatives of such person) who is or was a director, officer, employee or
agent of the Corporation, or who, at the request of this Corporation, is or was
a director, officer, employee, agent, partner, or trustee, as the case may be,
of any other corporation, partnership, proprietorship, trust, association or
other entity in which this Corporation owns an interest, against any and all
liabilities and reasonable expenses incurred by such person in connection with
or resulting from any claim, action, suit or proceeding, whether brought by or
in the right of the Corporation or otherwise and whether civil, criminal,
administrative or investigative in nature, and in connection with an appeal
relating thereto, in which such person is a party or is threatened to be made a
party by reason of serving or having served in any such capacity.
-3-
<PAGE> 4
ARTICLE XII
NO DIRECTOR LIABILITY IN CERTAIN CASES
To the maximum extent permitted by law as in effect from time to time,
no director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for breach of any fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director for: (i) any breach of the director's duty of loyalty
to the Corporation or its shareholders; (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) unlawful payment of dividends or stock redemptions; or (iv) any
transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its President and
attested by its Corporate Secretary this ______ of ___________, 1998.
ATTEST:
- ------------------------------ --------------------------
William A. Robinson, Secretary Donald Mitchell, President
STATE OF ________________)
)SS.
COUNTY OF _______________)
I, a Notary Public, hereby certify that on the ____ day of _____,
1998, personally appeared before me, Donald Mitchell, who after having been
duly sworn, declared that he is President and Chief Executive Officer of
Revenge Marine, Inc., that he signed the foregoing Amended and Restated
Certificate of Incorporation as his free and voluntary act and deed for and on
behalf of that Corporation for the use and purposes therein stated and that the
facts therein contained are true
IN WITNESS WHEREOF, I have hereunto set my hand and seal this ___ day
of _________, 1998.
-----------------------
Notary Public
My Commission expires:
- ---------------------
[seal]
-4-
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED BYLAWS
OF
REVENGE MARINE, INC.
ARTICLE I
OFFICES
SECTION 1.1. REGISTERED OFFICE AND REGISTERED AGENT. The
registered office and registered agent shall be designated in duly adopted
actions of the Board of Directors. Each registered office and registered agent
may be changed from time to time by a duly adopted action of the Board of
Directors, and the Corporation shall file an appropriate statement of change of
registered office or registered agent promptly after the taking of such action
in accordance with applicable law.
SECTION 1.02. OTHER OFFICES. The Corporation may also have offices
at such other places within or without the state of incorporation of the
Corporation as the Board of Directors may from time to time determine or the
business of the Corporation requires.
ARTICLE II
SHAREHOLDERS
SECTION 2.01. PLACE OF MEETING. All meetings of the shareholders of
the Corporation shall be held at the principal executive office of the
Corporation unless otherwise determined by the Board of Directors and specified
in the notice of meeting, in which event the meeting shall be held at the place
within or without the state of incorporation as shall be designated in the
notice of such meeting.
SECTION 2.02. ANNUAL MEETING. The Board of Directors may fix the
date and time of the annual meeting of the shareholders, but if no such date and
time is fixed by the Board, the annual meeting shall be held on a third Tuesday
in May, if not a legal holiday, and if a legal holiday, then on next succeeding
business day, at 10:00 a.m. local time. At the annual meeting, the shareholders
then entitled to vote shall elect directors and shall transact such other
business as may properly be brought before the meeting.
SECTION 2.03. SPECIAL MEETINGS. Special meetings of the
shareholders of the Corporation may be called for any purpose for which meetings
may lawfully be called at any time by the Chairman of the Board, if one is
elected, or by the President or by a majority of the Board of Directors, and
shall be called after the Corporation's receipt of the request in writing of
shareholders owning one-fourth of the amount of the entire capital stock of the
Corporation issued and outstanding
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and entitled to vote. Every request for a special meeting shall state the
specific purpose or purposes of the meeting. The date of the meeting shall be
held at such date and time as the Chairman of the Board may fix, not less than
10 nor more than 60 days after the receipt of the request, and the Secretary
shall give due notice thereof. If the Chairman of the Board shall neglect or
refuse to fix the time and date of such meeting and cause the Secretary to give
notice thereof, the person or persons calling the meeting may do so.
SECTION 2.04 Notice of Meetings. Written notice of the place,
date and hour of every meeting of the shareholders, whether annual or
special, shall be given to each shareholder of record entitled to vote at
the meeting not less than 10 nor more than 60 days before the date of the
meeting. Every notice of a special meeting shall state the purpose or
purposes thereof.
SECTION 2.05 Quorum and Adjourned Meeting. The record holders
of a majority of the stock issued and outstanding (not including treasury
stock) and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by law, by the
Corporation's Certificate of Incorporation or by these Bylaws. If,
however, such quorum shall not be present or represented at any meeting of
the shareholders, the shareholders entitled to vote thereat, present in
person or represented by proxy, any business may be transacted which might
have been transacted at the meeting as originally notified. When a quorum
is present at any meeting, the vote of the holders of the majority of the
stock having voting power present in person or represented by proxy shall
decide all questions brought before such meeting, unless the question is
one upon which, by expressed provision of applicable law, the
Corporation's Certificate of Incorporation or these Bylaws, a different
vote is require, in which case such expressed provision shall govern and
control the decision of such question. The shareholders present in person
or represented by proxy at a duly organized meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding
withdrawal of enough shareholders to leave less than a quorum.
SECTION 2.06. Conduct of Meetings. All annual and special
meetings of shareholders shall be conducted in accordance with such rules
and procedures as the Board of Directors may determine subject to the
requirements of applicable law and, as to matters not governed by such
rules and procedures, as the chairman of such meetings shall determine.
The chairman of any annual or special meeting of shareholders shall be
Chairman of the Board or in his absence, the President of the Corporation.
The Secretary, or in the absence of the Secretary, a person designated by
the chairman set all as secretary of then meeting.
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SECTION 2.07. VOTING. At every meeting of the shareholders, each
shareholder shall be entitled to one vote in person or by proxy for each share
of capital stock having voting power held of record by such shareholder. No
proxy shall be voted more than three years after its date, unless the proxy
specifically provides for a longer period.
SECTION 2.08. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any
action required or permitted to be taken at any annual or special meeting of
shareholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent in writing setting forth the action so
taken shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize the taking of
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of action by the shareholders
without a meeting by less than unanimous written consent shall be given to
those shareholders entitled to vote on the action who did not consent in
writing to such action.
SECTION 2.09. VOTING LISTS. At least ten (10) days before every meeting
of shareholders, the Secretary shall cause the Corporation to prepare a complete
list of the shareholders entitled to vote at the meeting. The list shall be
arranged in alphabetical order showing the address of each shareholder and the
number of shares registered in the name of each shareholder. Such list shall be
open to the examination of any shareholder for any lawful purpose during
ordinary business hours for a period of at least ten (10) days prior to the
meeting either at the principal executive office of the Corporation or at the
place where the meeting is to be held. The list shall also be available and open
for inspection during the whole time of the meeting and may be inspected by any
shareholder or authorized representative who is present.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. POWERS. The Board of Directors shall have full power to
manage the business and affairs of the Corporation; and all powers of the
Corporation, except those specifically reserved to the shareholders by law, the
Certificate of Incorporation or these Bylaws, are hereby granted to and vested
in the Board of Directors.
SECTION 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of such number of directors as may be determined from
time to time by resolution of the Board of Directors; provided that the Board
shall consist of not less than one (1) nor more than Seven (7) persons. No
director need be an officer or shareholder of the Corporation but each director
shall be a natural person 21 years of age or older. Each Director shall serve
until the next annual meeting of the shareholders or until his successor shall
have been duly elected and qualified except in the event of his death,
resignation or removal.
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SECTION 3.03. VACANCIES. Any director may be removed, either for or
without cause, at any meeting of shareholders by the affirmative vote of a
majority in number of shares of the shareholders present in person or by proxy
at such meeting and entitled to vote for the election of such director,
provided notice of the intention to act upon such matter shall have been given
in the notice calling such meeting. Vacancies and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by a majority of the Directors then in office, though less than a quorum, or by
a sole remaining Director, and any Director so chosen shall hold office until
the next annual election or until his successor is duly elected and qualified.
If there are no Directors in office, then an election of Directors may be held
in the manner provided by law. If, at the time of filing any vacancy or any
newly created directorship, the Directors then in office shall constitute less
than a majority of the whole Board (as constituted immediately prior to any
such increase), a court of competent jurisdiction may, upon application of
shareholders holding of record at least 10 percent of the total number of the
shares at the time outstanding having the right to vote for such Directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships or to replace the Directors chosen by the Directors then
in office.
SECTION 3.04. RESIGNATIONS. Any Director of the Corporation may resign
at any time by giving written notice to the Board of Directors, Chairman of the
Board, President or the Secretary of the Corporation. Such resignation shall
take effect upon receipt by the Corporation of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such registration shall not be necessary to make it effective.
SECTION 3.05. ORGANIZATION. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, the Director chosen by a
majority of the Directors present, shall preside, and the Secretary, or, in his
absence, the person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
SECTION 3.06. PLACE OF MEETING. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the state of incorporation as the Board of Directors may from time to time
select, as designated in the notice calling the meeting.
SECTION 3.07. ORGANIZATIONAL MEETING. The first meeting of each newly
elected Board of Directors shall be held without notice immediately following
the annual meeting of shareholders, unless the shareholders shall determine
otherwise.
SECTION 3.08. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall be
designated from time to time by a duly adopted action of the Board of Directors.
SECTION 3.09. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall
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be held whenever called by the Chairman of the Board or by two or more of the
Directors. Notice of each special meeting shall be given to each director by
telephone, telegram, telecopy, in writing or in person at least 24 hours (in the
case of notice by telephone, in person or actual notice however received) or 48
hours (in the case of notice by telegram, or telecopy or similar wire
communication) or five (5) days (in the case of notice by mail or otherwise)
before the time at which the meeting is to be held. Each such notice shall
state the date, time and place of the meeting to be so held.
SECTION 3.10. QUORUM AND ADJOURNED MEETINGS. At all meetings of the
Board, a majority of the Directors shall constitute a quorum for the
transaction of business; and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law or by the
Certificate of Incorporation. If a quorum shall not be present at any meeting
of the Board of Directors, a majority of the Directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
SECTION 3.11. UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING.
Unless otherwise restricted by law, the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any Committee thereof may be taken without a meeting,
without prior notice and without a vote if all members of the Board or the
Committee, as the case may be, consent thereto in writing either before or
after the taking of action with respect thereto. The written consent shall be
filed with the minutes of proceedings of the Board or the Committees.
SECTION 3.12. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors
may, by resolution adopted by a majority of the whole Board, designate an
Executive Committee and one or more other committees, each committee to consist
of one or more Directors. Any such Committee to the extent provided in the
resolution establishing such Committee and not otherwise restricted or limited
by applicable law or the Certificate of Incorporation or the Bylaws, shall have
and may exercise all the power and authority of the Board of Directors in the
management of the business and affairs of the Corporation, including the power
or authority to declare a dividend, to authorize the issuance of stock, to adopt
a certificate of ownership and merger and to authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
Committee shall have the power or authority in reference to (1) amending the
Certificate of Incorporation (except that a Committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of the stock adopted by the Board of Directors, as permitted by applicable law,
fix any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation), (2) adopting an agreement of merger or consolidation,
(3) recommending to the shareholders the sale, lease or exchange, of all or
substantially all of the Corporation's
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property and assets, (4) recommending to the shareholders the dissolution of
the Corporation or a revocation of a dissolution, or (5) amending the Bylaws of
the Corporation. Such Committee or Committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. Each Committee shall keep regular minutes of its meetings and file
the same with the minutes of the Board of Directors.
SECTION 3.13. COMPENSATION OF DIRECTORS. Unless otherwise restricted
by law, the Certificate of Incorporation or these Bylaws, the Board of
Directors shall have the authority to fix the compensation of Directors. The
Directors shall be reimbursed their actual reasonable expenses, if any, of
attendance at any meeting of the Board of Directors and any Committee thereof
and may be paid a fixed sum for attendance at each such meeting or a fixed
salary as determined by the Board of Directors. No such payment shall preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
NOTICE OF MEETINGS
SECTION 4.01. NOTICE. Whenever notice is required to be given to any
Director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such Director or
shareholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail. Notice to
shareholders may also be given in accordance with Section 2.04 of Article II
hereof, and notice to Directors may also be given in accordance with Section
3.09 of Article III hereof.
SECTION 4.02. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Except in the case of a special
meeting of shareholders and ad otherwise required by law, neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
shareholders, Directors, or Committee of Directors need be specified in any
written waiver of notice of such meeting.
SECTION 4.03. CONFERENCE TELEPHONE MEETINGS. One or more
shareholders, Directors or members of a Committee of Directors may participate
in a meeting of the shareholders, the Board, or of a Committee of the Board, by
means of conference telephone or similar communications equipment provided that
all persons participating in the meeting can hear each other and participate in
discussions thereof. Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
ARTICLE V
OFFICERS
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SECTION 5.01 NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a Chairman of
the Board, President, one or more Vice Presidents, a Secretary, a Treasurer, and
such other officers as may be elected in accordance with the provisions of
Section 5.03 of this Article. One person may hold more than one office.
Officers may be, but need not be, Directors or shareholders of the Corporation.
The Board of Directors may from time to time elect such other officers as it
deems necessary or appropriate, who shall exercise such powers and perform such
duties as are provided in these Bylaws and as the Board of Directors may from
time to time determine.
SECTION 5.02 ELECTION, TERM OF OFFICE AND RESIGNATION. The officers of
the Corporation shall be elected annually by the Board of Directors, and each
such officer shall hold his office until his successor shall have been elected
and qualified, or until his earlier death, resignation, or removal. Any officer
may resign at any time upon written notice to the Corporation. Such resignation
shall take effect upon receipt by the Corporation of such notice.
SECTION 5.03 REMOVAL OF OFFICERS. Any officer or agent elected or
appointed by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the whole Board of Directors. If
any office becomes vacant for any reason, the vacancy may be filled by the Board
of Directors.
SECTION 5.04 CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation. He shall
preside at all meetings of the shareholders and the Board of Directors and shall
assist the Board of Directors in the formulation of policies to be pursued by
the executive management of the Corporation. It shall be his responsibility to
see that the policies established by the Board of Directors are carried into
effect. He may sign and deliver on behalf of the Corporation any deeds,
mortgages, bonds, contracts, powers of attorney, or other instruments which the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation;
and he shall perform all duties incident to the office of Chief Executive
Officer of the Corporation and such other duties as may be prescribed by the
Board of Directors from time to time.
SECTION 5.05 PRESIDENT. The President shall be the Chief Operating
Officer of the Corporation, shall report to the Chairman of the Board, and shall
have general supervisory responsibility over all operations of the Corporation,
subject to the control of the Board of Directors. In the absence or incapacity
of the Chairman of the Board, the President shall perform all the duties of the
Chairman of the Board. He shall execute and deliver, in the name of the
Corporation, deeds, mortgages, bonds, contracts or other instruments, authorized
by the Board of Directors, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the
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Corporation; and, in general, subject to supervision by the Chairman of the
Board, the President shall perform all duties incident to the office of Chief
Operating Officer of the Corporation, and such other duties as from time to
time may be assigned to him by the Chairman of the Board or the Board of
Directors.
SECTION 5.06 VICE PRESIDENTS. The Vice Presidents, in the order of the
designation by the Board of Directors, shall perform the duties of the President
in his absence and such other duties as may from time to time be assigned to
them by the Board of Directors, the Chairman of the Board or by the President.
SECTION 5.07 SECRETARY. The Secretary shall attend all meetings of the
shareholders, the Board of Directors and Committees thereof, shall record the
minutes of the proceedings thereat and shall keep a current and complete record
thereof. The Secretary shall publish, keep and maintain records and reports of
the Corporation as required by law; shall be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on behalf
of the Corporation under its seal; and, in general, shall perform all
duties incident to the office of Secretary and such other duties as may from
time to time be assigned to him by the Board of Directors, the Chairman of the
Board or the President. Each Assistant Secretary shall have such powers and
perform such duties as the Board of Directors, the Chairman of the Board, or the
President may from time to time prescribe.
SECTION 5.08 TREASURER. The Treasurer shall be the Chief Financial
Officer of the Corporation; shall have responsibility for the proper care and
custody of all corporate funds and securities; shall keep full, accurate and
complete records, receipts and disbursements of the Corporation; and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements; shall
render a report to the Board of Directors, whenever requested, of the financial
condition of the Corporation; and shall perform such other duties as the Board
of Directors may prescribe. In the absence of a Corporate Controller, the
Treasurer shall be responsible for the performance of all the duties of the
Controller. Each Assistant Treasurer shall have such powers and perform such
duties as the Board of Directors, the Chairman of the Board or the President may
from time to time delegate.
SECTION 5.09 CONTROLLER. The Controller, if one is elected, shall be
the Chief Accounting Officer of the Corporation and shall cause to be kept full
and accurate books and accounts of all assets, liabilities and transactions of
the Corporation. The Controller shall establish and administer an adequate plan
for the control of operations, including systems and procedures required to
properly maintain internal controls on all financial transactions of the
Corporation. The Controller shall cause to be prepared statements of the
financial condition of the Corporation and proper profit and loss statements
covering the operations of the Corporation and such other additional financial
statements, if any, as the Chairman of the Board, the President, the Treasurer
or the Board of Directors from time to time shall require.
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The Controller shall work under the direct supervision of the Treasurer and
also shall perform such other duties as may be assigned to him by the Board of
Directors, the Chairman of the Board or the President.
SECTION 5.10 ASSISTANT OFFICERS. The Board of Directors may appoint one
or more assistant officers. Each assistant officer shall, at the request of or
in the absence or disability of the officer to whom he is an assistant, perform
the duties of such officer and shall have such other authority and perform such
other duties as the Board of Directors may prescribe.
SECTION 5.11 BONDS. If required by the Board of Directors, any officer
shall give the Corporation a bond in such form, in such sum, and with such
surety or sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in their possession or under their control belonging to the Corporation.
SECTION 5.12 SALARIES. The salaries of the officers of the Corporation
shall be fixed from time to time by the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 6.01 ISSUANCE. Each shareholder shall be entitled to a
certificate or certificates representing shares of stock of the Corporation
owned of record by him upon his request therefor. The stock certificates of the
Corporation shall be numbered and registered in the stock ledger and transfer of
books of the Corporation as issued. Certificates shall be signed by the
Chairman, President or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, and shall bear the corporate
seal. Any or all of the signatures and the corporate seal upon such certificate
may be a facsimile, engraved or printed. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been place upon, any
share certificate shall have ceased to be such officer, transfer agent or
registrar, the certificate shall be valid and of the same force and effect as if
he continued to be such officer, transfer agent or registrar.
SECTION 6.02 TRANSFER. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. No transfer shall be made which would be
inconsistent with law.
SECTION 6.03 STOCK CERTIFICATES. Stock certificates of the Corporation
shall be
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in such form as provided by statute and approved by the Board of Directors. The
stock transfer books and the blank stock certificate books shall be kept by the
Secretary or by any officer or agency designated by the Board of Directors for
that purpose.
SECTION 6.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed upon the receipt by the
Corporation of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing issuance of a
replacement certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 6.05. RECORD HOLDER OF SHARES. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the record and beneficial owner of shares to receive dividends, to exercise
voting rights and for all purposes; and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, even if the Corporation shall have notice thereof.
SECTION 6.06. DETERMINATION OF RECORD DATE. In order that the
Corporation may determine the shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which shall not be more than 60 nor less than 10 days before the date of
such meeting or any other action.
If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(2) The record date for determining shareholders entitled to express
consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is expressed.
(3) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
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A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
SECTION 7.01. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN THIRD
PARTY PROCEEDINGS. To the maximum extent not prohibited by law, the Corporation
shall indemnify any person who was or is an "authorized representative" of the
Corporation (which shall mean for purposes of this Article a Director or
officer of the Corporation, or a person serving at the request of the
Corporation as a director, officer, partner or trustee of another corporation,
partnership, joint venture, trust or other business enterprise) and who was or
is a "party" (which shall include for purposes of this Article the giving of
testimony or similar involvement) or is threatened to be made a party to any
"third party proceeding" (which shall mean for purposes of this Article any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitration, administrative or investigative other than an action by
or in the right of the Corporation) by reason of the fact that such person was
or is an authorized representative of the Corporation, against expenses (which
shall include for purposes of this Article attorneys' fees and expenses),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such third party
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal third party proceeding (which
could or does lead to a criminal third party proceeding) had no reasonable
cause to believe such conduct was unlawful. The termination of any third party
proceeding by judgment, order, settlement, indictment, conviction or upon a
plea of nolo contendere or its equivalent shall not of itself create a
presumption that the authorized representative did not act in good faith and in
a manner which such person reasonably believed to be in or not opposed to the
best interests of the Corporation and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.
SECTION 7.02. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN
CORPORATE PROCEEDINGS. The corporation shall indemnify any person who was or
is an authorized
11
<PAGE> 12
representative of the Corporation and who was or is a party or is threatened to
be made a party to any "corporate proceeding" (which shall mean for purposes of
this Article any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor or investigative
proceeding by the Corporation) by reason of the fact that such person was or is
an authorized representative of the Corporation, against expenses actually and
reasonably incurred by such person in connection with the defense or settlement
of such corporate action if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation, unless and only to the extent that a court of
competent jurisdiction shall determine that, despite the adjudication of
liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to be indemnified to the
extent such court shall order.
SECTION 7.03. MANDATORY INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES.
To the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party proceeding
or corporate proceeding or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses actually and reasonably
incurred by such person in connection therewith.
SECTION 7.04 INDEMNIFICATION. To the full extent not prohibited by
the law as in effect from time to time, the Corporation shall indemnify any
person (and the heirs, executors and representatives of such person) who is or
was a director, officer, employee or agent of the Corporation, or who, at the
request of this Corporation, is or was a director, officer, employee, agent,
partner, or trustee, as the case may be, of any other corporation, partnership,
proprietorship, trust, association or other entity in which this Corporation
owns an interest, against any and all liabilities and reasonable expenses
incurred by such person in connection with or resulting from any claim, action,
suit or proceeding, whether brought by or in the right of the Corporation or
otherwise and whether civil, criminal, administrative or investigative in
nature, and in connection with an appeal relating thereto, in which such person
is a party or is threatened to be made a party by reason of serving or having
served in any such capacity.
SECTION 7.05 NO DIRECTOR LIABILITY IN CERTAIN CASES. To the maximum
extent permitted by law as in effect from time to time, no director of the
Corporation shall be liable to the Corporation or its shareholders for monetary
damages for breach of any fiduciary duty as a director, provided that this
provision shall not eliminate or limit the liability of a director for: (i)
any breach of the director's duty of loyalty to the Corporation or its
shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; unlawful payment of
dividends or stock redemptions; or (iv) any transaction from which the director
derived an improper personal benefit.
SECTION 7.06 CERTAIN COMPROMISES. Whenever a compromise or arrangement
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<PAGE> 13
is proposed between this Corporation and its creditors or any class of them
and/or between this Corporation and its shareholders or any class of them, any
court of equitable jurisdiction within the State of Oklahoma, on the
application in a summary way of this Corporation or of any creditor or
shareholder thereof, or on the application of any receiver or receivers
appointed for this Corporation under the provisions of Section 1106 of Title 18
of the Oklahoma Statutes as in effect from time to time or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 1100 of Title 18 of the Oklahoma
Statutes as in effect from time to time, may order a meeting of the creditors
or class of creditors, and/or of the shareholders or class of shareholders of
this Corporation, as the case may be, to be summoned in such manner as the
court directs. If a majority in number representing three-fourths (3/4ths) in
value of the creditors or class of creditors, and/or of the shareholders or
class of shareholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as a
consequence of such compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, and/or
on all the shareholders or class of shareholders, of this Corporation, as the
case may be, and also on this Corporation.
SECTION 7.07. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the authorized
representative is proper in the circumstances because such person has either
met the applicable standards of conduct set forth in Section 7.01 or 7.02 or
has been successful on the merits or otherwise as set forth in Section 7.03 and
that the amount requested has been actually and reasonably incurred. Such
determination shall be made:
(1) By the Board of Directors by a majority of a quorum consisting of
Directors who were not parties to such third party or corporate
proceeding; or
(2) If such a quorum is not obtainable, or, even if obtainable, a
majority vote of such a quorum so directs, by independent legal
counsel in a written opinion; or
(3) By the shareholders.
SECTION 7.08. ADVANCING EXPENSES. Expenses actually and reasonably
incurred in defending a third party or corporate proceeding shall be paid on
behalf of an authorized representative by the Corporation in advance of the
final disposition of such third party or corporate proceeding as authorized in
the manner provided in Section 7.04 of this Article upon receipt of an
undertaking by or on behalf of the authorized representative to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Corporation as authorized in this Article. The financial
ability of such authorized representative to make such repayment shall not be a
prerequisite to the making of an advance.
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<PAGE> 14
SECTION 7.09. EMPLOYEE BENEFIT PLANS. For purposes of this Article,
the Corporation shall be deemed to have requested an authorized representative
to serve an employee benefit plan where the performance by such person of
duties to the Corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on an authorized representative with respect to an
employee benefit plan pursuant to applicable law shall be deemed "fines"; and
action taken or omitted by such person with respect to an employee benefit plan
in the performance of duties for a purpose reasonably believed to be in the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is not opposed to the best interests of the Corporation.
SECTION 7.10. SCOPE. The indemnification of and advancement of
expenses to authorized representatives, as authorized by this Article, shall
(1) not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
agreement, vote of shareholders or disinterested Directors or otherwise, both
as to action in an official capacity and as to action in another capacity, (2)
continue as to a person who has ceased to be an authorized representative, and
(3) inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 7.11. RELIANCE. Each person who shall act as an authorized
representative of the Corporation shall be deemed to be doing so in reliance
upon rights of indemnification provided by this Article.
SECTION 7.12. INSURANCE. The Corporation may but shall not be
obligated to purchase and maintain insurance at its expense on behalf of any
person who is or was an authorized representative against any liability
asserted against him in such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting only out of funds or property lawfully available therefor, pursuant to
law. Dividends may be paid in cash, in property, or in shares of the capital
stock or held by the Corporation subject to the provisions of the Certificate
of Incorporation. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum of sums as the
Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for
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<PAGE> 15
such other purpose as the Directors shall determine to be in the interests of
the Corporation, and the Board of Directors may modify or abolish such reserve
in the manner and at the time the Board of Directors or Committee thereof so
determines.
SECTION 8.02. ANNUAL STATEMENTS. The Board of Directors, through the
officers of the Corporation, shall present at each annual meeting, and at any
special meeting of the shareholders when called for by vote of the shareholders,
a full and clear statement of the business and condition of the Corporation.
SECTION 8.03. CONTRACTS. Except as otherwise provided in these Bylaws,
the Board of Directors may authorize any officer or officers or any agent or
agents to enter into any contract or to execute and deliver any instrument on
behalf of the Corporation and such authority may be general or confined to
specific instances.
SECTION 8.04. CHECKS. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the Board of
Directors may from time to time designate.
SECTION 8.05. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal", and the state of incorporation of the Corporation. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 8.06. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or their depositories as the Board of Directors may approve or
designate; and all such funds may be withdrawn only upon checks or withdrawal
requests signed by such one or more officers or employees as the Board of
Directors shall from time to time determine.
SECTION 8.07. AMENDMENT OF BYLAWS. These Bylaws may be altered, amended
or repealed or new bylaws may be adopted by the shareholders or by the Board of
Directors at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting.
SECTION 8.08. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January and end on the 31st day of December, unless
otherwise provided by resolution of the Board of Directors.
SECTION 8.09. INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one or more of its Directors or officers, or between the
Corporation and any other company, partnership, association or other
organization in which one or more of its
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<PAGE> 16
Directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
Director or officer is present at or participates in the meeting of the Board
of Directors or Committee thereof which authorizes the contract or transaction,
or solely because his or their vote is counted for such purpose; if: (1) the
material facts as to his relationship or interest are disclosed to the Board or
the Committee, and the Board or Committee in good faith authorizes the contract
or transaction by the affirmative vote of a majority of the disinterested
Directors, even though the disinterested Directors be less than a quorum; or
(2) the material facts as to his relationship or interest are disclosed to the
shareholders or Directors entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the shareholders
or Board of Directors; or (3) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved, adopted or ratified by
the Board of Directors or a Committee thereof or by the shareholders.
Interested Directors may be counted in determining the presence of a quorum at
a meeting of the Board or of a Committee of the Board which authorizes the
contract or transaction.
SECTION 8.10. FORM OF RECORDS. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall convert any
records so kept upon the request of any person entitled to inspect the same.
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<PAGE> 17
<PAGE> 1
EXHIBIT 4.1
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
<TABLE>
<S> <C> <C>
[NUMBER] [ SHARES ]
AEROSPACE AT SEA LEVEL
---------------------- CUSIP NO. 761381 10 2
REVENGE MARINE, INC.
</TABLE>
AUTHORIZED COMMON STOCK: 50,000,000 SHARES
PAR VALUE: $.001
<TABLE>
<S> <C>
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
</TABLE>
SHARES OF REVENGE MARINE, INC. COMMON STOCK
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
[REVENGE MARINE, INC.]
[CORPORATE SEAL NEVADA]
<TABLE>
<S> <C>
/s/ /s/
- ------------------------------- --------------------------------------
SECRETARY PRESIDENT
</TABLE>
<TABLE>
<S> <C>
INTERWEST TRANSFER CO. INC. P.O. BOX 17136/SALT LAKE CITY, UTAH 84117 COUNTERSIGNED & REGISTERED /s/
--------------------------
</TABLE>
<PAGE> 1
EXHIBIT 4.2
FINOVA [LOGO]
FINANCIAL INNOVATORS
LOAN AND SECURITY AGREEMENT
REVENGE MARINE, INC. (A DELAWARE CORPORATION)
2051 N.W. 11TH STREET
MIAMI, FLORIDA 33125
22-3609684
REVENGE MARINE, INC. (A NEVADA CORPORATION)
775-B TAYLOR LANE
DANIA, FLORIDA 33004
36-3051776
$2,100,000
CREDIT LIMIT
AS OF OCTOBER 23, 1998
===============================================================================
FINOVA BUSINESS CREDIT
===============================================================================
<PAGE> 2
THIS LOAN AND SECURITY AGREEMENT (collectively with the Schedule to Loan
Agreement (the "SCHEDULE") attached hereto, the "AGREEMENT") dated the date set
forth on the cover page, is entered into by and between the borrower named on
the cover page (individually and collectively, jointly and severally, the
"Borrower"), whose address is set forth on the cover page and FINOVA CAPITAL
CORPORATION ("FINOVA"), whose address is 111 West 40th Street, 14th Floor, New
York, NY 10018.
1. DEFINITIONS.
1.1 DEFINED TERMS. As used in this Agreement, the following terms have
the definitions set forth below:
"ACQUISITION" has the meaning set forth in Section 4.1(cc) hereof.
"ACQUISITION DOCUMENTS" has the meaning set forth in Section 4.1(cc)
hereof.
"ADA" has the meaning set forth in Section 4.1(z) hereof.
"ADDITIONAL SUMS" has the meaning set forth in Section 2.9(a) hereof.
"AFFILIATE" means any Person controlling, controlled by or under common
control with Borrower. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of any Person, whether through ownership of common
or preferred stock or other equity interests, by contract or otherwise. Without
limiting the generality of the foregoing, each of the following shall be an
Affiliate: any officer, director, employee or other agent of Borrower, any
shareholder, member or subsidiary of Borrower, and any other Person with whom or
which Borrower has common shareholders, officers or directors.
"AGREEMENT" has the meaning set forth in the preamble.
"APPLICABLE USURY LAW" has the meaning set forth in Section 2.9(b)
hereof.
"BLOCKED ACCOUNT" has the meaning set forth in Section 2.10(c) hereof.
"BUSINESS DAY" means any day on which commercial banks in both New
York, New York and Phoenix, Arizona are open for business.
"CAPITAL EXPENDITURES" means all expenditures made and liabilities
incurred for the acquisition of any fixed asset or improvement, replacement,
substitution or addition thereto which has a useful life of more than one year
and including, without limitation, those arising in connection with Capital
Leases.
"CAPITAL LEASE" means any lease of property by Borrower that, in
accordance with GAAP, should be capitalized for financial reporting purposes and
reflected as a liability on the balance sheet of Borrower.
"CLOSING FEE" has the meaning set forth in the Schedule.
"CLOSING DATE" means the date of the initial advance made by FINOVA
pursuant to this Agreement.
"CODE" means the Uniform Commercial Code as adopted and in effect in
the State of Arizona from time to time.
"COLLATERAL" has the meaning set forth in Section 3.1 hereof.
"COLLATERAL MONITORING FEE" has the meaning set forth in the Schedule.
"DEPOSIT ACCOUNTS" has the meaning set forth in Section 9105 of the
Code.
"DOMINION ACCOUNT" has the meaning set forth in Section 2.10(c) hereof.
"ELIGIBLE INVENTORY" means Inventory which FINOVA, in its Permitted
Discretion, deems Eligible Inventory, based on such considerations as FINOVA may
from time to time deem appropriate. Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory unless, in FINOVA's
Permitted Discretion, such Inventory (i) consists of raw materials and finished
goods, in good, new and salable condition which are not obsolete or
unmerchantable, and are not comprised of work in process, packaging materials or
supplies; (iii) meets all standards imposed by any governmental agency or
authority; (iv) conforms in all respects to the warranties and representations
set forth herein; (v) is at all times subject to FINOVA's duly perfected,
<PAGE> 3
first priority security interest; and (vi) is situated at a location in
compliance with Section 5.16 hereof.
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
FINOVA, in its Permitted Discretion, shall deem eligible based on such
considerations as FINOVA may from time to time deem appropriate. Without
limiting the foregoing, a Receivable shall not be deemed to be an Eligible
Receivable if (i) the account debtor has failed to pay the Receivable within a
period of ninety (90) days after invoice date, to the extent of any amount
remaining unpaid after such period; (ii) the account debtor has failed to pay
more than 25% of all outstanding Receivables owed by it to Borrower within
ninety (90) days after invoice date; (iii) the account debtor is an Affiliate of
Borrower; (iv) the goods relating thereto are placed on consignment, guaranteed
sale, "bill and hold," "COD" or other terms pursuant to which payment by the
account debtor may be conditional; (v) the account debtor is not located in the
United States, unless the Receivable is supported by a letter of credit or other
form of guaranty or security, in each case in form and substance satisfactory to
FINOVA; (vi) the account debtor is the United States or any department, agency
or instrumentality thereof or any State, city or municipality of the United
States; (vii) Borrower is or may become liable to the account debtor for goods
sold or services rendered by the account debtor to Borrower; (viii) the account
debtor's total obligations to Borrower exceed 15% of all Eligible Receivables,
to the extent of such excess; (ix) the account debtor disputes liability or
makes any claim with respect thereto (up to the amount of such liability or
claim), or is subject to any insolvency or bankruptcy proceeding, or becomes
insolvent, fails or goes out of a material portion of its business; (x) the
amount thereof consists of late charges or finance charges; (xi) the amount
thereof consists of a credit balance more than ninety (90) days past due; (xii)
the face amount thereof exceeds $10,000, unless accompanied by evidence of
shipment of the goods relating thereto satisfactory to FINOVA in its Permitted
Discretion; (xiii) the invoice constitutes a progress billing on a project not
yet completed, except that the final billing at such time as the matter has been
completed and delivered to the customer may be deemed an Eligible Receivable; or
(xiv) the amount thereof is not yet represented by an invoice or bill issued in
the name of the applicable account debtor.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a single
employer under ERISA Section 4001(b)(1), or IRC Section 414.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of
this Agreement.
"EXAMINATION FEE" has the meaning set forth in the Schedule.
"FINOVA AFFILIATE" has the meaning set forth in Section 9.22 hereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, for the
financial covenants set forth in this Agreement, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to Lender
prior to the date hereof.
"GENERAL INTANGIBLES" means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings, blueprints,
Trademarks, Licenses and Patents, names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
2
<PAGE> 4
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against FINOVA, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation
credit, liability, property and other insurance) tax refunds and claims,
computer programs, discs, tapes and tape files, claims under guaranties,
security interests or other security held by or granted to Borrower to secure
payment of any of the Receivables by an account debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"GUARANTOR(S)" has the meaning set forth in the Schedule.
"INDEBTEDNESS" means all of Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising, whether under
written or oral agreement, operation of law or otherwise, and includes, without
limiting the foregoing (i) the Obligations, (ii) obligations and liabilities of
any Person secured by a lien, claim, encumbrance or security interest upon
property owned by Borrower, even though Borrower has not assumed or become
liable therefor, (iii) obligations and liabilities created or arising under any
lease (including Capital Leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by Borrower, even
though the rights and remedies of the lessor, seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities and (v)
deferred taxes.
"INITIAL TERM" has the meaning set forth on the Schedule.
"INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease, all raw materials, work
in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in Borrower's business or
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, merchandise or other personal property, and all
documents of title or other documents representing them.
"INVENTORY LOANS" has the meaning set forth in the Schedule.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"LOANS" has the meaning set forth in Section 2.2 hereof.
"LOAN DOCUMENTS" means, collectively, this Agreement, any note or notes
executed by Borrower and payable to FINOVA, and any other present or future
agreement entered into in connection with this Agreement, together with all
alterations, amendments, changes, extensions, modifications, refinancings,
refundings, renewals, replacements, restatements, or supplements, of or to any
of the foregoing.
"LOAN PARTY" means Borrower, each Guarantor, each Subordinating
Creditor and each other party (other than FINOVA) to any Loan Document.
"LOAN RESERVES" means, as of any date of determination, such amounts as
FINOVA may from time to time establish and revise in good faith reducing the
amount of Revolving Credit Loans and Letters of Credit which would otherwise be
available to Borrower under the lending formula(s) provided in the Schedule: (a)
to reflect events, conditions, contingencies or risks which, as determined by
FINOVA in good faith, do or may affect either (i) the Collateral or any other
property which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Guarantor or (iii) the security
interests and other rights of FINOVA in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect FINOVA's good
faith belief that any collateral report or financial information furnished by or
on behalf of Borrower or any Guarantor to FINOVA is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any state
of facts which FINOVA determines in good faith constitutes an Event of Default
or may, with notice or passage of time or both, constitute an Event of Default."
"LOAN YEAR" means each twelve month period commencing on the Closing
Date.
"MAXIMUM INTEREST RATE" has the meaning set forth in Section 2.9(c)
hereof.
3
<PAGE> 5
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in ERISA
Sections 3(37) or 4001(a)(3) or IRC Section 414(f) which covers employees of
Borrower or any ERISA Affiliate.
"NET WORTH" at any date means the Borrower's net worth as determined in
accordance with GAAP.
"OBLIGATIONS" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time owing
by Borrower to FINOVA, whether evidenced by this Agreement, any note or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, banker's acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment and any participation by FINOVA in Borrower's debts owing
to others), absolute or contingent, due or to become due, including, without
limitation, all interest, charges, expenses, fees, attorney's fees, expert
witness fees, Examination Fee, letter of credit fees, Collateral Monitoring Fee,
Closing Fee, Facility Fee, Termination Fee, Minimum Interest Charge and any
other sums chargeable to Borrower hereunder or under any other agreement with
FINOVA.
"OPERATING CASH FLOW/ACTUAL" means, for any period, Borrower's net
income or loss (excluding the effect of any extraordinary gains or losses),
determined in accordance with GAAP, PLUS or MINUS each of the following items,
to the extent deducted from or added to the revenues of Borrower in the
calculation of net income or loss: (i) depreciation; (ii) amortization and other
non-cash charges; (iii) interest expense paid or accrued; (iv) total federal and
state income tax expense determined as the accrued liability of Borrower in
respect of such period, regardless of what portion of such expense has actually
been paid by Borrower during such period; and (v) Management Fees paid, to the
extent permitted hereunder, and after deduction for each of (a) federal and
state income taxes, to the extent actually paid during such period; (b) any
non-cash income; and (c) all actual Capital Expenditures made during such period
and not financed.
"OVERADVANCE" has the meaning set forth in Section 2.3.
"OVERLINE" has the meaning set forth in Section 2.3.
"PBGC" means the Pension Benefit Guarantee Corporation.
"PERMITTED DISCRETION" means FINOVA's judgment exercised in good faith
based upon its consideration of any factor which FINOVA believes in good faith:
(i) will or could adversely affect the value of any Collateral, the
enforceability or priority of FINOVA's liens thereon or the amount which FINOVA
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral; (ii) suggests that
any collateral report or financial information delivered to FINOVA by any Person
on behalf of the Borrower is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving the Borrower, any Loan
Party or any of the Collateral, or (iv) creates or reasonably could be expected
to create an Event of Default. In exercising such judgment, FINOVA may consider
such factors already included in or tested by the definition of Eligible
Receivables or Eligible Inventory, as well as any of the following: (i) the
financial and business climate of the Borrower's industry and general
macroeconomic conditions, (ii) changes in collection history and dilution with
respect to the Receivables, (iii) changes in demand for, and pricing of,
Inventory, (iv) changes in any concentration of risk with respect to Receivables
and/or Inventory, and (v) any other factors that change the credit risk of
lending to the Borrower on the security of the Receivables and Inventory. The
burden of establishing lack of good faith hereunder shall be on the Borrower.
"PERMITTED ENCUMBRANCE" means each of the liens, mortgages and other
security interests set forth on the Schedule.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, government, or any agency or political division thereof, or
any other entity.
"PLAN" means any plan described in ERISA Section 3(2) maintained for
employees of Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
"PREPARED FINANCIALS" means the balance sheets of Borrower as of the
date set forth in the Schedule in the section entitled 'Reporting Requirements',
and as of each subsequent date on
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which audited balance sheets are delivered to FINOVA from time to time
hereunder, and the related statements of operations, changes in stockholder's
equity and changes in cash flow for the periods ended on such dates.
"PRIME RATE" has the meaning set forth in the Schedule.
"PROHIBITED TRANSACTION" means any transaction described in Section 406
of ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Section 4975(c)(2) of the IRC.
"RECEIVABLE LOANS" has the meaning set forth on the Schedule.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), proceeds of any letters of
credit naming Borrower as beneficiary, contract rights, chattel paper,
instruments, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, whether secured or
unsecured, all merchandise returned to or repossessed by Borrower, and all
rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
"RENEWAL TERM" has the meaning set forth on the Schedule.
"REPORTABLE EVENT" means a reportable event described in Section 4043
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4068(f)
of ERISA.
"REVOLVING CREDIT LOANS" has the meaning set forth in the Schedule.
"REVOLVING CREDIT LIMIT" has the meaning set forth in the Schedule.
"REVOLVING INTEREST RATE" has the meaning set forth in the Schedule.
"SCHEDULE" has the meaning set forth in the preamble.
"SELLER" has the meaning set forth in the Schedule.
"SELLER NONCOMPETE AGREEMENT" has the meaning set forth in the
Schedule.
"START DATE" has the meaning set forth in the Schedule.
"SUBORDINATED DEBT" means liabilities of Borrower the repayment of
which is subordinated, to the payment and performance of the Obligations,
pursuant to a subordination agreement acceptable to FINOVA.
"SUBORDINATING CREDITOR" has the meaning set forth in the Schedule.
"Success Fee" has the meaning set forth in the Schedule.
"TERM LOANS" has the meaning set forth in the Schedule.
"TERMINATION FEE" has the meaning set forth in Section 9.2(d) hereof.
"TOTAL FACILITY" has the meaning set forth in Section 2.1 hereof.
"TRADEMARKS, COPYRIGHTS, LICENSES AND PATENTS" means all of Borrower's
right, title and interest in and to, whether now owned or hereafter acquired:
(i) trademarks, trademark registrations, trade names, trade name registrations,
and trademark or trade name applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to sue for past, present and future
infringements thereof, (d) all rights corresponding thereto throughout the
world, and (e) the goodwill of the business operated by Borrower connected with
and symbolized by any trademarks or trade names; (ii) copyrights, copyright
registrations and copyright applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to sue for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world;
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(iii) license agreements, including without limitation such as are listed on the
Schedule attached hereto and made a part hereof, and the right to prepare for
sale, sell and advertise for sale any Inventory now or hereafter owned by
Borrower and now or hereafter covered by such licenses; and (iv) patents and
patent applications, registered or pending, including without limitation such as
are listed on the Schedule attached hereto, together with all income, royalties,
shop rights, damages and payments thereto, the right to sue for infringements
thereof, and all rights thereto throughout the world and all reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof.
1.2 OTHER TERMS. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
2. LOANS; INTEREST RATE AND OTHER CHARGES.
2.1 TOTAL FACILITY. Upon the terms and conditions set forth herein and
provided that no Event of Default or event which, with the giving of notice or
the passage of time, or both, would constitute an Event of Default, shall have
occurred and be continuing, FINOVA shall, upon Borrower's request, make advances
to Borrower from time to time in an aggregate outstanding principal amount not
to exceed the Total Facility amount (the "TOTAL FACILITY") set forth on the
Schedule hereto, subject to deduction of reserves for accrued interest and such
other reserves as FINOVA deems proper from time to time, and less amounts FINOVA
may be obligated to pay in the future on behalf of Borrower. The Schedule is an
integral part of this Agreement and all references to "herein", "herewith" and
words of similar import shall for all purposes be deemed to include the
Schedule.
2.2 LOANS. Advances under the Total Facility ("LOANS" and individually,
a "LOAN") shall be comprised of the amounts shown on the Schedule.
2.3 OVERLINES; OVERADVANCES. If at any time or for any reason the
outstanding amount of advances (including all Letters of Credit) extended or
issued pursuant hereto exceeds any of the dollar limitations ("OVERLINE") or
percentage limitations ("OVERADVANCE") in the Schedule, then Borrower shall,
upon FINOVA's demand, immediately pay to FINOVA, in cash, the full amount of
such Overline or Overadvance which, at FINOVA's option, may be applied to reduce
the outstanding principal balance of the Loans and/or cash collateralize all or
any part of any outstanding Letters of Credit. Without limiting Borrower's
obligation to repay to FINOVA on demand the amount of any Overline or
Overadvance, Borrower agrees to pay FINOVA interest on the outstanding principal
amount of any Overline or Overadvance, on demand, at the rate set forth on the
Schedule and applicable to the Revolving Credit Loans.
2.4 INTENTIONALLY OMITTED.
2.5 LOAN ACCOUNT. All advances made hereunder (including without
limitation all advances made by FINOVA under or in connection with any Letter of
Credit) shall be added to and deemed part of the Obligations when made. FINOVA
may from time to time charge all Obligations of Borrower to Borrower's loan
account with FINOVA.
2.6 INTEREST; FEES. Borrower shall pay FINOVA interest on the average
daily outstanding balance of the Obligations at the per annum rate set forth on
the Schedule. Borrower shall also pay FINOVA the fees set forth on the Schedule.
2.7 DEFAULT INTEREST RATE. Upon the occurrence and during the
continuation of an Event of Default, Borrower shall pay FINOVA interest on the
daily outstanding balance of the Obligations and any L/C Fee at a rate per annum
which is two percent (2%) in excess of the rate which would otherwise be
applicable thereto pursuant to the Schedule.
2.8 EXAMINATION FEE. Borrower agrees to pay to FINOVA the Examination
Fee in the amount set forth on the Schedule in connection with each audit or
examination of Borrower performed by FINOVA prior to or after the date hereof.
Without limiting the generality of the foregoing, Borrower shall pay to FINOVA
an initial Examination Fee in an amount equal to the amount set forth on the
Schedule. Such initial Examination Fee shall be deemed fully earned at the time
of payment and due and payable upon the closing of this transaction, and shall
be deducted from any good faith deposit paid by Borrower to FINOVA prior to the
date of this Agreement.
2.9 EXCESS INTEREST.
(a) The contracted for rate of interest of the loan contemplated
hereby, without limitation,
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shall consist of the following: (i) the interest rate set forth on the Schedule,
calculated and applied to the balance of the Obligations in accordance with the
provisions of this Agreement; (ii) interest after an Event of Default,
calculated and applied to the amount of the Obligations in accordance with the
provisions hereof; and (iii) all Additional Sums (as herein defined), if any.
Borrower agrees to pay an effective contracted for rate of interest which is the
sum of the above-referenced elements. The Examination Fee, attorneys fees,
expert witness fees, letter of credit fees, collateral monitoring fees, closing
fees, facility fees, Termination Fees, Success Fees, other charges, goods,
things in action or any other sums or things of value paid or payable by
Borrower (collectively, the "ADDITIONAL SUMS"), whether pursuant to this
Agreement or any other documents or instruments in any way pertaining to this
lending transaction, or otherwise with respect to this lending transaction, that
under any applicable law may be deemed to be interest with respect to this
lending transaction, for the purpose of any applicable law that may limit the
maximum amount of interest to be charged with respect to this lending
transaction, shall be payable by Borrower as, and shall be deemed to be,
additional interest and for such purposes only, the agreed upon and "contracted
for rate of interest" of this lending transaction shall be deemed to be
increased by the rate of interest resulting from the inclusion of the Additional
Sums.
(b) It is the intent of the parties to comply with the usury laws of
the State of Arizona (the "APPLICABLE USURY LAW"). Accordingly, it is agreed
that notwithstanding any provisions to the contrary in this Agreement, or in any
of the documents securing payment hereof or otherwise relating hereto, in no
event shall this Agreement or such documents require the payment or permit the
collection of interest in excess of the maximum contract rate permitted by the
Applicable Usury Law (the "MAXIMUM INTEREST RATE"). In the event (a) any such
excess of interest otherwise would be contracted for, charged or received from
Borrower or otherwise in connection with the loan evidenced hereby, or (b) the
maturity of the Obligations is accelerated in whole or in part, or (c) all or
part of the Obligations shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, shared or received in
connection with the loan evidenced hereby, would exceed the Maximum Interest
Rate, then in any such event (1) the provisions of this paragraph shall govern
and control, (2) neither Borrower nor any other Person now or hereafter liable
for the payment of the Obligations shall be obligated to pay the amount of such
interest to the extent that it is in excess of the Maximum Interest Rate, (3)
any such excess which may have been collected shall be either applied as a
credit against the then unpaid principal amount of the Obligations or refunded
to Borrower, at FINOVA's option, and (4) the effective rate of interest shall be
automatically reduced to the Maximum Interest Rate. It is further agreed,
without limiting the generality of the foregoing, that to the extent permitted
by the Applicable Usury Law; (i) all calculations of interest which are made for
the purpose of determining whether such rate would exceed the Maximum Interest
Rate shall be made by amortizing, prorating, allocating and spreading during the
period of the full stated term of the loan evidenced hereby, all interest at any
time contracted for, charged or received from Borrower or otherwise in
connection with such loan; and (ii) in the event that the effective rate of
interest on the loan should at any time exceed the Maximum Interest Rate, such
excess interest that would otherwise have been collected had there been no
ceiling imposed by the Applicable Usury Law shall be paid to FINOVA from time to
time, if and when the effective interest rate on the loan otherwise falls below
the Maximum Interest Rate, to the extent that interest paid to the date of
calculation does not exceed the Maximum Interest Rate, until the entire amount
of interest which would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Borrower further
agrees that should the Maximum Interest Rate be increased at any time hereafter
because of a change in the Applicable Usury Law, then to the extent not
prohibited by the Applicable Usury Law, such increases shall apply to all
indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the Maximum Interest
Rate be decreased because of a change in the Applicable Usury Law, such
decreases shall not apply to the indebtedness evidenced hereby regardless of
when incurred.
2.10 PRINCIPAL PAYMENTS; PROCEEDS OF COLLATERAL.
(a) PRINCIPAL PAYMENTS. Except where evidenced by notes or other
instruments issued or made by Borrower to FINOVA specifically containing payment
provisions which are in conflict with this Section 2.10 (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), that portion of the Obligations consisting of principal payable on
account of Loans shall be payable by Borrower to FINOVA immediately upon the
earliest of (i) the receipt by
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FINOVA or Borrower of any proceeds of any of the Collateral, to the extent of
said proceeds, (ii) the occurrence of an Event of Default in consequence of
which FINOVA elects to accelerate the maturity and payment of such loans, or
(iii) any termination of this Agreement pursuant to Section 9.2 hereof;
PROVIDED, HOWEVER, that any Overadvance or Overline shall be payable on demand
pursuant to the provisions of Section 2.3 hereof.
(b) COLLECTIONS. Until FINOVA notifies Borrower to the contrary,
Borrower may make collection of all Receivables for FINOVA and shall receive all
such payments or sums as trustee of FINOVA and immediately deliver all such
payments or sums to FINOVA in their original form, duly endorsed in blank or
cause the same to be deposited into a Blocked Account or Dominion Account.
FINOVA or its designee may, at any time, notify account debtors that the
Receivables have been assigned to FINOVA and of FINOVA's security interest
therein, and may collect the Receivables directly and charge the collection
costs and expenses to Borrower's loan account. Borrower agrees that, in
computing the charges under this Agreement, all items of payment shall be deemed
applied by FINOVA on account of the Obligations three (3) Business Days after
receipt by FINOVA of good funds which have been finally credited to FINOVA's
account, whether such funds are received directly from Borrower or from the
Blocked Account bank or the Dominion Account bank, pursuant to Section 2.10(c)
hereof, and this provision shall apply regardless of the amount of the
Obligations outstanding or whether any Obligations are outstanding; provided,
that if any such good funds are received after 12:00 p.m. noon (New York time)
on any Business Day or at any time on any day not constituting a Business Day,
such funds shall be deemed received on the immediately following Business Day.
FINOVA is not, however, required to credit Borrower's account for the amount of
any item of payment which is unsatisfactory to FINOVA in its Permitted
Discretion and FINOVA may charge Borrower's loan account for the amount of any
item of payment which is returned to FINOVA unpaid.
(c) ESTABLISHMENT OF A LOCKBOX ACCOUNT OR DOMINION ACCOUNT. Unless
Borrower shall be otherwise directed by FINOVA in writing, Borrower shall cause
all proceeds of Collateral to be deposited into a lockbox account, or such other
"blocked account" as FINOVA may require (each, a "BLOCKED ACCOUNT") pursuant to
an arrangement with such bank as may be selected by Borrower and be acceptable
to FINOVA which proceeds, unless otherwise provided herein, shall be applied in
payment of the Obligations in such order as FINOVA determines in its Permitted
Discretion. Borrower shall issue to any such bank an irrevocable letter of
instruction directing said bank to transfer such funds so deposited to FINOVA,
either to any account maintained by FINOVA at said bank or by wire transfer to
appropriate account(s) of FINOVA. All funds deposited in a Blocked Account shall
immediately become the sole property of FINOVA and Borrower shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. FINOVA assumes no responsibility for any Blocked Account arrangement,
including without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder. Alternatively, FINOVA
may establish depository accounts in the name of FINOVA at a bank or banks for
the deposit of such funds (each, a "DOMINION ACCOUNT") and Borrower shall
deposit all proceeds of Receivables and all cash proceeds of any sale of
Inventory or, to the extent permitted herein, Equipment or cause same to be
deposited, in kind, in such Dominion Accounts of FINOVA in lieu of depositing
same to Blocked Accounts, and, unless otherwise provided herein, all such funds
shall be applied by FINOVA to the Obligations in such order as FINOVA determines
in its Permitted Discretion.
(d) PAYMENTS WITHOUT DEDUCTIONS. Borrower shall pay principal,
interest, and all other amounts payable hereunder, or under any other Loan
Document, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.
(e) MONTHLY ACCOUNTINGS. FINOVA shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by FINOVA), unless Borrower
notifies FINOVA in writing to the contrary within thirty (30) days after each
account is rendered, describing the nature of any alleged errors or admissions.
2.11 APPLICATION OF COLLATERAL. Except as otherwise provided herein,
FINOVA shall have the continuing and exclusive right to apply or reverse and
re-apply any and all payments to any portion of the Obligations in such order
and manner as FINOVA shall determine in its Permitted Discretion. To the extent
that Borrower makes a payment or FINOVA
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receives any payment or proceeds of the Collateral for Borrower's benefit which
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver or
any other party under any bankruptcy law, common law or equitable cause, or
otherwise, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not
been received by FINOVA.
2.12 APPLICATION OF PAYMENTS. The amount of all payments or amounts
received by FINOVA with respect to the Loan shall be applied to the extent
applicable under this Agreement: (i) first, to accrued interest through the date
of such payment, including any Default Interest; (ii) then, to any late fees,
overdue risk assessments, Examination Fee and expenses, collection fees and
expenses and any other fees and expenses due to FINOVA hereunder; and (iii)
last, the remaining balance, if any, to the unpaid principal balance of the
Loan; provided however, while an Event of Default exists under this Agreement,
or under any other Loan Document, each payment hereunder shall be (1) held as
cash collateral to secure Obligations relating to any Letters of Credit or other
contingent obligations arising under the Loan Documents and/or (2) applied to
amounts owed to FINOVA by Borrower as FINOVA in its Permitted Discretion may
determine. In calculating interest and applying payments as set forth above: (a)
interest shall be calculated and collected through the date a payment is
actually applied by FINOVA under the terms of this Agreement; (b) interest on
the outstanding balance shall be charged during any grace period permitted
hereunder; (c) at the end of each month, all accrued and unpaid interest and
other charges provided for hereunder shall be added to the principal balance of
the Loan; and (d) to the extent that Borrower makes a payment or FINOVA receives
any payment or proceeds of the Collateral for Borrower's benefit that is
subsequently invalidated, set aside or required to be repaid to any other
Person, then, to such extent, the Obligations intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
FINOVA and FINOVA may adjust the Loan balances as FINOVA, in its Permitted
Discretion, deems appropriate under the circumstances.
2.13 INTENTIONALLY OMITTED.
3. SECURITY.
3.1 SECURITY INTEREST IN THE COLLATERAL. To secure the payment and
performance of the Obligations when due, Borrower hereby grants to FINOVA a
first priority security interest (subject only to Permitted Encumbrances) in all
of Borrower's now owned or hereafter acquired or arising Inventory, Equipment,
Receivables, life insurance policies and the proceeds thereof, Trademarks,
Copyrights, Licenses and Patents, Borrower's rights, but not its obligations,
under the Acquisition Documents, Investment Property (as defined in Section
9-115 of the Code) and General Intangibles, including, without limitation, all
of Borrower's Deposit Accounts, money, any and all property now or at any time
hereafter in FINOVA's possession (including claims and credit balances), and all
proceeds (including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties), all products and all books and records and
computer data related to any of the foregoing (all of the foregoing, together
with all other property in which FINOVA may be granted a lien or security
interest, is referred to herein, collectively, as the "COLLATERAL").
3.2 PERFECTION AND PROTECTION OF SECURITY INTEREST. Borrower shall, at
its expense, take all actions requested by FINOVA at any time to perfect,
maintain, protect and enforce FINOVA's first priority security interest and
other rights in the Collateral and the priority thereof from time to time,
including, without limitation, (i) executing and filing financing or
continuation statements and amendments thereof and executing and delivering such
documents and titles in connection with motor vehicles as FINOVA shall require,
all in form and substance satisfactory to FINOVA, (ii) maintaining a perpetual
inventory and complete and accurate stock records, (iii) delivering to FINOVA
warehouse receipts covering any portion of the Collateral located in warehouses
and for which warehouse receipts are issued, and transferring Inventory to
warehouses designated by FINOVA, (iv) placing notations on Borrower's books of
account to disclose FINOVA's security interest therein and (v) delivering to
FINOVA all letters of credit on which Borrower is named beneficiary. FINOVA may
file, without Borrower's signature, one or more financing statements disclosing
FINOVA's security interest under this Agreement. Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. If any Collateral is
at any time in the possession or control of any warehouseman, bailee or any of
Borrower's agents or processors, Borrower shall notify such Person of FINOVA's
security interest in such Collateral and, upon FINOVA's request, instruct them
to hold all such Collateral for FINOVA's
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account subject to FINOVA's instructions. From time to time, Borrower shall,
upon FINOVA's request, execute and deliver confirmatory written instruments
pledging the Collateral to FINOVA, but Borrower's failure to do so shall not
affect or limit FINOVA's security interest or other rights in and to the
Collateral. Until the Obligations have been fully satisfied and FINOVA's
obligation to make further advances hereunder has terminated, FINOVA's security
interest in the Collateral shall continue in full force and effect.
3.3 PRESERVATION OF COLLATERAL. FINOVA may, in its Permitted
Discretion, at any time discharge any lien or encumbrance on the Collateral or
bond the same, pay any insurance, maintain guards, pay any service bureau,
obtain any record or take any other action to preserve the Collateral and charge
the cost thereof to Borrower's loan account as an Obligation.
3.4 INSURANCE. Borrower will maintain and deliver evidence to FINOVA of
such insurance as is required by FINOVA, written by insurers, in amounts, and
with lender's loss payee, additional insured, and other endorsements,
satisfactory to FINOVA. All premiums with respect to such insurance shall be
paid by Borrower as and when due. Accurate and certified copies of the policies
shall be delivered by Borrower to FINOVA. If Borrower fails to comply with this
Section, FINOVA may (but shall not be required to) procure such insurance and
endorsements at Borrower's expense and charge the cost thereof to Borrower's
loan account as an Obligation.
3.5 COLLATERAL REPORTING; INVENTORY.
(a) INVOICES. Borrower shall not re-date any invoice or sale from the
original date thereof or make sales on extended terms beyond those customary in
Borrower's industry, or otherwise extend or modify the term of any Receivable.
If Borrower becomes aware of any matter affecting any Receivable, including
information affecting the credit of the account debtor thereon, Borrower shall
promptly notify FINOVA in writing. Borrower shall sequentially number each
invoice.
(b) INSTRUMENTS. In the event any Receivable is or becomes evidenced by
a promissory note, trade acceptance or any other instrument for the payment of
money, Borrower shall immediately deliver such instrument to FINOVA
appropriately endorsed to FINOVA and, regardless of the form of any presentment,
demand, notice of dishonor, protest and notice of protest with respect thereto,
Borrower shall remain liable thereon until such instrument is paid in full.
(c) PHYSICAL INVENTORY. Borrower shall conduct a physical count of the
Inventory at such intervals as FINOVA requests and promptly supply FINOVA with a
copy of such accounts accompanied by a report of the value (calculated at the
lower of cost or market value on a first in, first out basis) of the Inventory
and such additional information with respect to the Inventory as FINOVA may
request from time to time.
(d) RETURNS. For so long as no Event of Default has occurred and is
continuing and subject to the provisions of Section 3.6(b), if any account
debtor returns any Inventory to Borrower in the ordinary course of its business,
Borrower shall promptly determine the reason for such return and promptly issue
a credit memorandum to the account debtor (sending a copy to FINOVA) in the
appropriate amount. In the event any attempted return occurs after the
occurrence of any Event of Default, Borrower shall (i) hold the returned
Inventory in trust for FINOVA, (ii) segregate all returned Inventory from all of
Borrower's other property, (iii) conspicuously label the returned Inventory as
FINOVA's property, and (iv) immediately notify FINOVA of the return of any
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory, and on FINOVA's request deliver such returned Inventory
to FINOVA.
(e) Borrower shall not consign any Inventory, without FINOVA's prior
written consent, which consent shall not be unreasonably withheld but which may
not be granted unless and until FINOVA has filed a UCC-1 Financing Statement in
the appropriate jurisdiction evidencing FINOVA's securing interest in such
consigned inventory.
3.6 RECEIVABLES.
(a) ELIGIBILITY. (i) Borrower represents and warrants that each
Receivable covers and shall cover a bona fide sale or lease and delivery by it
of goods or the rendition by it of services in the ordinary course of its
business, and shall be for a liquidated amount and FINOVA's security interest
shall not be subject to any offset, deduction, counterclaim, rights of return or
cancellation, lien or other condition. If any representation or warranty herein
is breached as to any Receivable or any Receivable ceases to be an Eligible
Receivable for any reason other than
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payment thereof, then FINOVA may, in addition to its other rights hereunder,
designate any and all Receivables owing by that account debtor as not Eligible
Receivables; PROVIDED, that FINOVA shall in any such event retain its security
interest in all Receivables, whether or not Eligible Receivables, until the
Obligations have been fully satisfied and FINOVA's obligation to provide loans
hereunder has terminated.
(ii) FINOVA at any time shall be entitled to (i) establish and increase
or decrease Loan Reserves against Eligible Receivables and Eligible Inventory,
(ii) reduce the advance rates in the Schedule or restore such advance rates to
any level equal to or below the advance rates set forth in the Schedule or (iii)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "Eligible Receivables" and "Eligible
Inventory," in the exercise of its Permitted Discretion. FINOVA may but shall
not be required to rely on the schedules an/or reports delivered to FINOVA in
connection herewith in determining the then eligibility of Receivables and
Inventory. Reliance thereon by FINOVA from time to time shall not be deemed to
limit the right of FINOVA to revise advance rates or standards of eligibility as
provided above.
(b) DISPUTES. Borrower shall notify FINOVA promptly of all disputes or
claims and settle or adjust such disputes or claims at no expense to FINOVA, but
no discount, credit or allowance shall be granted to any account debtor and no
returns of merchandise shall be accepted by Borrower without FINOVA's consent,
except for discounts, credits and allowances made or given in the ordinary
course of Borrower's business. FINOVA may, at any time after the occurrence of
an Event of Default, settle or adjust disputes or claims directly with account
debtors for amounts and upon terms which FINOVA considers advisable in its
reasonable credit judgment and, in all cases, FINOVA shall credit Borrower's
loan account with only the net amounts received by FINOVA in payment of any
Receivables.
3.7 EQUIPMENT. Borrower shall keep and maintain the Equipment in good
operating condition and repair and make all necessary replacements thereto to
maintain and preserve the value and operating efficiency thereof at all times
consistent with Borrower's past practice, ordinary wear and tear excepted.
Borrower shall not permit any item of Equipment to become a fixture (other than
a trade fixture) to real estate or an accession to other property.
3.8 OTHER LIENS; NO DISPOSITION OF COLLATERAL. Borrower represents,
warrants and covenants that except for FINOVA's security interest, Permitted
Encumbrances, and such other liens, claims and encumbrances as may be permitted
by FINOVA in its Permitted Discretion from time to time in writing, (a) all
Collateral is and shall continue to be owned by it free and clear of all liens,
claims and encumbrances whatsoever and (b) Borrower shall not, without FINOVA's
prior written approval, sell, encumber or dispose of or permit the sale,
encumbrance or disposal of any Collateral or all or any substantial part of any
of its other assets (or any interest of Borrower therein), except for the sale
of Inventory in the ordinary course of Borrower's business. In the event FINOVA
gives any such prior written approval with respect to any such sale of
Collateral, the same may be conditioned on the sale price being equal to, or
greater than, an amount acceptable to FINOVA. The proceeds of any such sales of
Collateral shall be remitted to FINOVA pursuant to this Agreement for
application to the Obligations.
3.9 COLLATERAL SECURITY. The Obligations shall constitute one loan
secured by the Collateral. FINOVA may, in its Permitted Discretion, (i)
exchange, enforce, waive or release any of the Collateral, (ii) apply Collateral
and direct the order or manner of sale thereof as it may determine, and (iii)
settle, compromise, collect or otherwise liquidate any Collateral in any manner
without affecting its right to take any other action with respect to any other
Collateral.
4. CONDITIONS OF CLOSING.
4.1 INITIAL ADVANCE. The obligation of FINOVA to make the initial
advance hereunder or to issue or arrange for the issuance of the initial Letter
of Credit hereunder is subject to the fulfillment, to the satisfaction of FINOVA
and its counsel, of each of the following conditions on or prior to the date set
forth on the Schedule:
(a) LOAN DOCUMENTS. FINOVA shall have received each of the following
Loan Documents: (i) the Agreement fully and properly executed by Borrower; (ii)
promissory notes in such amounts and on such terms and conditions as FINOVA
shall specify, executed by Borrower; (iii) Guaranties executed by each of the
Guarantors and/or Validity and Support Agreements executed by the applicable
parties; (iv) such security agreements, intellectual property assignments,
pledge agreements,
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mortgages and deeds of trust as FINOVA may require with respect to this
Agreement and any Guaranties, executed by each of the parties thereto and, if
applicable, duly acknowledged for recording or filing in the appropriate
governmental offices; (v) Subordination Agreements in form and substance
acceptable to FINOVA, executed by each of the Subordinating Creditors, together
with copies of all instruments subject thereto showing a legend indicating such
subordination; (vi) such Blocked Account or Dominion Account agreements as it
shall determine; and (vii) such other documents, instruments and agreements in
connection herewith as FINOVA shall require, executed, certified and/or
acknowledged by such parties as FINOVA shall designate;
(b) INTENTIONALLY OMITTED.
(c) TERMINATIONS BY EXISTING LENDER. Borrower's existing lender(s)
shall have executed and delivered UCC termination statements and other
documentation evidencing the termination of its liens and security interests in
the assets of Borrower or a subordination agreement in form and substance
satisfactory to FINOVA;
(d) CHARTER DOCUMENTS. FINOVA shall have received copies of Borrower's
By-laws and Articles or Certificate of Incorporation, as amended, modified, or
supplemented to the Closing Date, certified by the Secretary of Borrower;
(e) GOOD STANDING. FINOVA shall have received a certificate of
corporate status with respect to Borrower, dated within ten (10) days of the
Closing Date, by the Secretary of State of the state of incorporation of
Borrower, which certificate shall indicate that Borrower is in good standing in
such state;
(f) FOREIGN QUALIFICATION. FINOVA shall have received certificates of
corporate status with respect to Borrower and each other Loan Party, each dated
within ten (10) days of the Closing Date, issued by the Secretary of State of
each state in which such party's failure to be duly qualified or licensed would
have a material adverse effect on its financial condition or assets, indicating
that such party is in good standing;
(g) AUTHORIZING RESOLUTIONS AND INCUMBENCY. FINOVA shall have received
a certificate from the Secretary of Borrower attesting to (i) the adoption of
resolutions of Borrower's Board of Directors, and shareholders or members if
necessary, authorizing the borrowing of money from FINOVA and execution and
delivery of this Agreement and the other Loan Documents to which Borrower is a
party, and authorizing specific officers of Borrower to execute same, and (ii)
the authenticity of original specimen signatures of such officers;
(h) INSURANCE. FINOVA shall have received the insurance certificates
and certified copies of policies required by Section 3.4 hereof, in form and
substance satisfactory to FINOVA and its counsel, together with an additional
insured endorsement in favor of FINOVA with respect to all liability policies
and a lender's loss payable endorsement in favor of FINOVA with respect to all
casualty and business interruption policies, each in form and substance
acceptable to FINOVA and its counsel;
(i) TITLE INSURANCE. FINOVA shall have received binding commitments to
issue such title insurance with respect to Collateral or security for Guaranties
which is comprised of real property as it shall determine;
(j) SEARCHES; CERTIFICATES OF TITLE. FINOVA shall have received
searches reflecting the filing of its financing statements and fixture filings
in such jurisdictions as it shall determine, and shall have received
certificates of title with respect to the Collateral which shall have been duly
executed in a manner sufficient to perfect all of the security interests granted
to FINOVA;
(k) LANDLORD, BAILEE AND MORTGAGEE WAIVERS. FINOVA shall have received
landlord, bailee and/or mortgagee waivers from the lessors, bailees and/or
mortgagees of all locations where any Collateral is located;
(l) FEES. Borrower shall have paid all fees payable by it on the
Closing Date pursuant to this Agreement;
(m) OPINION OF COUNSEL. FINOVA shall have received an opinion of
Borrower's counsel covering such matters as FINOVA shall determine in its
Permitted Discretion;
(n) OFFICER CERTIFICATE. FINOVA shall have received a certificate of
the President and the Chief Financial Officer or similar official of Borrower,
attesting to the accuracy of each of the representations and warranties of
Borrower set forth in this Agreement and the fulfillment of all conditions
precedent to the initial advance hereunder;
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(o) SOLVENCY CERTIFICATE. If requested, FINOVA shall have received a
signed certificate of the Borrower's duly elected Chief Financial Officer
concerning the solvency and financial condition of Borrower, on FINOVA's
standard form;
(p) BLOCKED ACCOUNT. The Blocked Account referred to in Section 2.10(c)
hereof shall have been established to the satisfaction of FINOVA in its
Permitted Discretion;
(q) ENVIRONMENTAL ASSESSMENT. If required by FINOVA, Borrower shall
have caused a Phase I Environmental Assessment to be conducted on the property
or properties owned or occupied by Borrower, all at Borrower's own expense and
the results of such assessment(s) shall have been in form and substance
satisfactory to FINOVA. Such assessment(s) shall have included, at FINOVA's
option, core samplings, and shall have been conducted by an environmental
engineer acceptable to FINOVA;
(r) ENVIRONMENTAL CERTIFICATE. At FINOVA's option, FINOVA shall have
received an Environmental Certificate from Borrower, in form and substance
satisfactory to FINOVA, with respect to all locations of Collateral;
(s) SEARCH AND REFERENCES. FINOVA shall have received and approved the
results of UCC, tax lien, litigation, judgment, and bankruptcy searches
regarding Buyer, Borrower, Seller, Investors and such members of the senior
management of Seller as shall remain with Borrower, and shall have received
satisfactory customer, vendor and credit reference checks on Seller.
(t) LEASE AND LANDLORD'S CONSENT. FINOVA shall require that the Lease
in favor of Borrower from Seller regarding Borrower's facility at the
location(s) listed in the Schedule shall be for a term (including renewal
options) through the Maturity Date. FINOVA shall further require that, prior to
the Closing Date, Seller enter in a Landlord's Consent Agreement and Estoppel
Certificate, in form and substance satisfactory to FINOVA to cure defaults under
such lease and continue in occupancy of such premises in the event of defaults
by Borrower pursuant either to the Lease or the Loan Documents.
(u) INTENTIONALLY OMITTED.
(v) NO MATERIAL ADVERSE CHANGES. Prior to the Closing Date, there shall
have occurred no material adverse change in the financial condition of Seller or
Borrower, or in the condition of the assets of Seller, from that shown on the
draft financial statements for Seller dated on the date set forth in the
Schedule. At the closing, Borrower shall deliver to FINOVA an officer's
certification confirming that Borrower is unaware of the existence of any such
material adverse change in Seller's financial condition.
(w) MATERIAL AGREEMENTS. FINOVA shall have received, reviewed and
approved all material agreements to which Borrower shall be a party, including
any such agreements of Seller which Borrower shall assume.
(x) PROJECTIONS. Borrower shall submit cash flow projections and pro
forma balance sheet with adjusting entries (i) showing that the proposed
financing will provide sufficient funds for the Borrower's projected working
capital needs, and (ii) showing: (1) that the Borrower will have reasonably
sufficient capital for the conduct of its business following the initial
funding, and (2) that the Borrower will not incur debts beyond its ability to
pay such debts as they mature.
(y) OPINIONS. To the extent any Person other than Borrower shall be
parties to the Loan Documents, FINOVA reserves the right to require satisfactory
opinions of counsel for each such Person concerning the proper organization of
such Person and the due authorization, execution, delivery, enforceability,
validity and binding effect of the Loan Documents to which such Person is a
party. Each such opinion of counsel shall confirm, to the satisfaction of
FINOVA, that the opinion is being delivered to FINOVA at the instruction of the
party represented by such counsel, that FINOVA is entitled to rely on such
opinion and that for purposes of such reliance, FINOVA is deemed to be in
privity with the opining counsel.
(z) ADA COMPLIANCE. If necessary, as of the Closing Date, Borrower
shall be in compliance with the Americans with Disabilities Act of 1990 ("ADA"),
or, if any renovations of Borrower's facilities or modifications of Borrower's
employment practices shall be required to bring them into compliance with the
ADA, review and approval by FINOVA of Borrower's proposed plan to come into such
compliance. Borrower shall deliver representations and warranties to FINOVA
concerning Borrower's compliance with the ADA, and no evidence shall have come
to the attention of FINOVA indicating that Borrower is not in
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compliance with the ADA (except to the extent that FINOVA has reviewed and
approved Borrower's plan to come into compliance).
(aa) SUBORDINATION AND INTERCREDITOR AGREEMENTS. FINOVA and each
Subordinating Creditor shall have entered into a Subordination Agreement, in
form and substance satisfactory to FINOVA. Without limiting the generality of
the foregoing, Seller shall enter into one or more Subordination Agreements with
FINOVA, in form and substance satisfactory to FINOVA, providing that Seller's
right to payments in respect of the Seller Subordinated Indebtedness shall be
subordinated in right of payment to the Loan.
(bb) INTENTIONALLY OMITTED.
(cc) ACQUISITION DOCUMENTS. FINOVA must review and find satisfactory
the Asset Purchase Agreement, including copies of all exhibits and schedules
thereto, the Seller Noncompete Agreement (which Seller Noncompete Agreement
shall provide for payments in an amount as previously represented to FINOVA),
and all other documents referred to therein, and all other instruments to be
executed between Borrower and Seller in connection with the acquisition (the
"ACQUISITION"; all such documents and instruments being referred to herein
collectively as the "ACQUISITION DOCUMENTS"). The Acquisition Documents must
contain specific representations and warranties, in form and substance
satisfactory to FINOVA, with respect to the accuracy of the financial
information submitted by Seller, and shall further contain indemnity provisions
acceptable to FINOVA which shall address, among other items, liability for
environmental contamination and clean up, if any. In addition, FINOVA must
review and find satisfactory all terms and conditions applicable to any
promissory notes delivered to evidence the Seller Subordinated Indebtedness.
(dd) EMPLOYMENT AND NON-COMPETE AGREEMENTS. FINOVA shall have reviewed
and approved all employment and non-compete agreements to be in effect as of the
Closing Date between Borrower and (1) Seller or (2) any former officer,
director, member or shareholder of Seller.
(ee) ASSET APPRAISAL. Borrower shall have provided to FINOVA, at
Borrower's sole cost and expense, an asset appraisal of all Borrower's fixed
assets upon which FINOVA shall be granted a first priority lien and security
interest, which appraisal must be acceptable to FINOVA in all respects.
(ff) TRANSACTION COSTS. Borrower shall provide to FINOVA a complete,
itemized summary of all transaction costs paid or incurred by any Person in
connection with the making of the Loan and the consummation of the Acquisition,
which transaction costs shall not exceed the amount set forth in the Schedule,
as well as appropriate documentation evidencing such costs and the payment
thereof. All such information must be acceptable to FINOVA, in FINOVA's
Permitted Discretion.
(gg) SCHEDULE CONDITIONS. Borrower shall have complied with all
additional conditions precedent as set forth in the Schedule attached hereto.
(hh) OTHER MATTERS. All other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed and recorded and shall be in form and substance satisfactory to FINOVA
and its counsel including, without limitation, each of the items listed on the
Closing Checklist attached as EXHIBIT 4.1 hereto.
4.2 SUBSEQUENT ADVANCES. The obligation of FINOVA to make any advance
or issue or cause any Letter of Credit to be issued hereunder (including the
initial advance or Letter of Credit) shall be subject to the further conditions
precedent that, on and as of the date of such advance or Letter of Credit
issuance: (a) the representations and warranties of Borrower set forth in this
Agreement shall be accurate, before and after giving effect to such advance or
issuance and to the application of any proceeds thereof; (b) no Event of Default
and no event which, with notice or passage of time or both, would constitute an
Event of Default has occurred and is continuing, or would result from such
advance or issuance or from the application of any proceeds thereof; (c) no
material adverse change has occurred in the Borrower's business, operations,
financial condition, in the condition of the Collateral or other assets of
Borrower or in the prospect of repayment of the Obligations; and (d) FINOVA
shall have received such other approvals, opinions or documents as FINOVA shall
reasonably request.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
5.1 DUE ORGANIZATION. It is a corporation duly organized, validly
existing and in good standing under the laws of the State set forth on the
Schedule,
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is qualified and authorized to do business and is in good standing in all states
in which such qualification and good standing are necessary in order for it to
conduct its business and own its property, and has all requisite power and
authority to conduct its business as presently conducted, to own its property
and to execute and deliver each of the Loan Documents to which it is a party and
perform all of its Obligations thereunder, and has not taken any steps to
wind-up, dissolve or otherwise liquidate its assets;
5.2 OTHER NAMES. Borrower has not, during the preceding five (5) years,
been known by or used any other corporate or fictitious name except as set forth
on the Schedule, nor has Borrower been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during such time;
5.3 DUE AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party have been authorized by
all necessary corporate action and does not and shall not constitute a violation
of any applicable law or of Borrower's Articles or Certificate of Incorporation
or By-Laws or any other document, agreement or instrument to which Borrower is a
party or by which Borrower or its assets are bound;
5.4 BINDING OBLIGATION. Each of the Loan Documents to which Borrower is
a party is the legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms;
5.5 INTANGIBLE PROPERTY. Borrower possesses adequate assets, licenses,
patents, patent applications, copyrights, trademarks, trademark applications and
trade names for the present and planned future conduct of its business without
any known conflict with the rights of others, and each is valid and has been
duly registered or filed with the appropriate governmental authorities; each of
Borrower's patents, patent applications, copyrights, trademarks and trademark
applications which have been registered or filed with any governmental authority
(including the U.S. Patent and Trademark Office and the Library of Congress) are
listed by name, date and filing number on the Schedule;
5.6 CAPITAL. Borrower has capital sufficient to conduct its business,
is able to pay its debts as they mature, and owns property having a fair salable
value greater than the amount required to pay all of its debts (including
contingent debts);
5.7 MATERIAL LITIGATION. Borrower has no pending or overtly threatened
litigation, actions or proceedings which would materially and adversely affect
its business, assets, operations, prospects or condition, financial or
otherwise, or the Collateral or any of FINOVA's interests therein;
5.8 TITLE; SECURITY INTERESTS OF FINOVA. Borrower has good,
indefeasible and merchantable title to the Collateral and, upon the execution
and delivery of the Loan Documents, the filing of UCC-1 Financing Statements,
delivery of the certificate(s) evidencing any pledged securities, the filing of
any collateral assignments or security agreements regarding Borrower,
Trademarks, Copyrights, Licenses and/or Patents, if any, with the appropriate
governmental offices and the recording of any mortgages or deeds of trust with
respect to real property, in each case in the appropriate offices, this
Agreement and such documents shall create valid and perfected first priority
liens in the Collateral, subject only to Permitted Encumbrances;
5.9 RESTRICTIVE AGREEMENTS; LABOR CONTRACTS. Borrower is not a party or
subject to any contract or subject to any charge, corporate restriction,
judgment, decree or order materially and adversely affecting its business,
assets, operations, prospects or condition, financial or otherwise, or which
restricts its right or ability to incur Indebtedness, and it is not party to any
labor dispute. In addition, no labor contract is scheduled to expire during the
Initial Term of this Agreement, except as disclosed to FINOVA in writing prior
to the date hereof;
5.10 LAWS. Borrower is not in violation of any applicable statute,
regulation, ordinance or any order of any court, tribunal or governmental
agency, in any respect materially and adversely affecting the Collateral or its
business, assets, operations, prospects or condition, financial or otherwise;
5.11 CONSENTS. Borrower has obtained or caused to be obtained or issued
any required consent of a governmental agency or other Person in connection with
the financing contemplated hereby;
5.12 DEFAULTS. Borrower is not in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed or other agreement to which it
is a party or by which it or its assets are bound, nor has any event occurred
which, with the giving of notice or the lapse of time, or both, would cause such
a default;
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5.13 FINANCIAL CONDITION. The Prepared Financials fairly present
Borrower's financial condition and results of operations and those of such other
Persons described therein as of the date thereof in accordance with GAAP; there
are no material omissions from the Prepared Financials or other facts or
circumstances not reflected in the Prepared Financials; and there has been no
material and adverse change in such financial condition or operations since the
date of the initial Prepared Financials delivered to FINOVA hereunder;
5.14 ERISA. Neither Borrower, nor any ERISA Affiliate, nor any Plan is
or has been in violation of any of the provisions of ERISA, any of the
qualification requirements of IRC Section 401(a) or any of the published
interpretations thereunder, nor has Borrower or any ERISA Affiliate received any
notice to such effect. No notice of intent to terminate a Plan has been filed
under Section 4041 of ERISA, nor has any Plan been terminated under ERISA. The
PBGC has not instituted proceedings to terminate, or appointed a trustee to
administer, a Plan. No lien upon the assets of Borrower has arisen with respect
to a Plan. No prohibited transaction or Reportable Event has occurred with
respect to a Plan. Neither Borrower nor any ERISA Affiliate has incurred any
withdrawal liability with respect to any Multiemployer Plan. Borrower and each
ERISA Affiliate have made all contributions required to be made by them to any
Plan or Multiemployer Plan when due. There is no accumulated funding deficiency
in any Plan, whether or not waived;
5.15 TAXES. Borrower has filed all tax returns and such other reports
as it is required by law to file and has paid or made adequate provision for the
payment on or prior to the date when due of all taxes, assessments and similar
charges that are due and payable;
5.16 LOCATIONS; FEDERAL TAX ID NO. Borrower's chief executive office
and the offices and locations where it keeps the Collateral (except for
Inventory in transit) are at the locations set forth on the Schedule, except to
the extent that such locations may have been changed after notice to FINOVA in
accordance with Section 6.1.4 hereof; Borrower's federal tax identification
number is as shown on the Schedule;
5.17 BUSINESS RELATIONSHIPS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially and
adversely affect Borrower or prevent Borrower from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted; and
5.18 REAFFIRMATIONS. Each request for a loan made by Borrower pursuant
to this Agreement shall constitute (i) an automatic representation and warranty
by Borrower to FINOVA that there does not then exist any Event of Default and
(ii) a reaffirmation as of the date of said request of all of the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents.
5.19 YEAR 2000. Borrower has taken all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999.
6. COVENANTS.
6.1 AFFIRMATIVE COVENANTS. Borrower covenants that, so long as any
Obligation remains outstanding and this Agreement is in effect, it shall:
6.1.1 TAXES. File all tax returns and pay or make adequate
provision for the payment of all taxes, assessments and other charges on or
prior to the date when due;
6.1.2 NOTICE OF LITIGATION. Promptly notify FINOVA in writing of
any litigation, suit or administrative proceeding which may materially and
adversely affect the Collateral or Borrower's business, assets, operations,
prospects or condition, financial or otherwise, whether or not the claim is
covered by insurance;
6.1.3 ERISA. Notify FINOVA in writing (i) promptly upon the
occurrence of any event described in Paragraph 4043 of ERISA, other than a
termination, partial termination or merger of a Plan or a transfer of a Plan's
assets and (ii) prior to any termination, partial termination or merger of a
Plan or a transfer of a Plan's assets;
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6.1.4 CHANGE IN LOCATION. Notify FINOVA in writing forty-five
(45) days prior to any change in the location of Borrower's chief executive
office or the location of any Collateral, or Borrower's opening or closing of
any other place of business;
6.1.5 CORPORATE EXISTENCE. Maintain its corporate existence and
its qualification to do business and good standing in all states necessary for
the conduct of its business and the ownership of its property and maintain
adequate assets, licenses, patents, copyrights, trademarks and trade names for
the conduct of its business;
6.1.6 LABOR DISPUTES. Promptly notify FINOVA in writing of any
labor dispute to which Borrower is or may become subject and the expiration of
any labor contract to which Borrower is a party or bound;
6.1.7 VIOLATIONS OF LAW. Promptly notify FINOVA in writing of
any violation of any law, statute, regulation or ordinance of any governmental
entity, or of any agency thereof, applicable to Borrower which may materially
and adversely affect the Collateral or Borrower's business, assets, prospects,
operations or condition, financial or otherwise;
6.1.8 DEFAULTS. Notify FINOVA in writing within five (5)
Business Days of Borrower's default under any note, indenture, loan agreement,
mortgage, lease or other agreement to which Borrower is a party or by which
Borrower is bound, or of any other default under any Indebtedness of Borrower;
6.1.9 CAPITAL EXPENDITURES. Promptly notify FINOVA in writing of
the making of any Capital Expenditure materially affecting Borrower's business,
assets, prospects, operations or condition, financial or otherwise, except to
the extent permitted in the Schedule;
6.1.10 BOOKS AND RECORDS. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP, reflecting all of its financial transactions;
6.1.11 LEASES; WAREHOUSE AGREEMENTS. Provide FINOVA with (i)
copies of all agreements between Borrower and any landlord, warehouseman or
bailee which owns any premises at which any Collateral may, from time to time,
be located (whether for processing, storage or otherwise), and (ii) without
limiting the landlord, bailee and/or mortgagee waivers to be provided pursuant
to Section 4.1(k) hereof, additional landlord, bailee and/or mortgagee waivers
in form acceptable to FINOVA with respect to all locations where any Collateral
is hereafter located;
6.1.12 ADDITIONAL DOCUMENTS. At FINOVA's request, promptly
execute or cause to be executed and delivered to FINOVA any and all documents,
instruments or agreements deemed necessary by FINOVA to facilitate the
collection of the Obligations or the Collateral or otherwise to give effect to
or carry out the terms or intent of this Agreement or any of the other Loan
Documents. Without limiting the generality of the foregoing, if any of the
Receivables with a face value in excess of $1,000 arises out of a contract with
the United States of America or any department, agency, subdivision or
instrumentality thereof, Borrower shall promptly notify FINOVA of such fact in
writing and shall execute any instruments and take any other action required or
requested by FINOVA to comply with the provisions of the Federal Assignment of
Claims Act; and
6.1.13 FINANCIAL COVENANTS. Comply with the financial covenants
set forth on the Schedule.
6.2 NEGATIVE COVENANTS. Without FINOVA's prior written consent, which
consent FINOVA may withhold in its Permitted Discretion, so long as any
Obligation remains outstanding and this Agreement is in effect, Borrower shall
not:
6.2.1 MERGERS. Merge or consolidate with or acquire any other
Person, or make any other material change in its capital structure or in its
business or operations which might adversely affect the repayment of the
Obligations;
6.2.2 LOANS. Make advances, loans or extensions of credit to, or
invest in, any Person, except for loans or cash advances to employees which are
permitted in the Schedule;
6.2.3 DIVIDENDS. Declare or pay cash dividends upon any of its
stock or distribute any of its property or redeem, retire, purchase or acquire
directly or indirectly any of its stock;
6.2.4 ADVERSE TRANSACTIONS. Enter into any transaction which
materially and adversely affects the Collateral or its ability to repay the
Obligations in full as and when due;
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6.2.5 INDEBTEDNESS OF OTHERS. Guarantee or become directly or
contingently liable for the Indebtedness of any Person, except by endorsement of
instruments for deposit and except for the existing guarantees made by Borrower
prior to the date hereof, if any, which are set forth in the Schedule;
6.2.6 REPURCHASE. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or any other repurchase or return basis;
6.2.7 NAME. Use any corporate or fictitious name other than its
corporate name as set forth in its Articles or Certificate of Incorporation on
the date hereof or as set forth on the Schedule;
6.2.8 PREPAYMENT. Prepay any Indebtedness other than trade
payables and other than the Obligations;
6.2.9 CAPITAL EXPENDITURE. Make or incur any Capital Expenditure
if, after giving effect thereto, the aggregate amount of all Capital
Expenditures by Borrower in any fiscal year would exceed the amount set forth on
the Schedule;
6.2.10 COMPENSATION. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts and other payments,
whether directly or indirectly, in money or otherwise, during any fiscal year to
all of Borrower's executives, officers and directors (or any relative thereof)
in an amount in excess of the amount set forth on the Schedule;
6.2.11 INDEBTEDNESS. Create, incur, assume or permit to exist
any Indebtedness (including Indebtedness in connection with Capital Leases) in
excess of the amount set forth on the Schedule, other than (i) the Obligations,
(ii) trade payables and other contractual obligations to suppliers and customers
incurred in the ordinary course of business, and (iii) other Indebtedness
existing on the date of this Agreement and reflected in the Prepared Financials
(except Indebtedness paid on the date of this Agreement from proceeds of the
initial advances hereunder), and (iv) Subordinated Debt;
6.2.12 AFFILIATE TRANSACTIONS. Except as set forth below, sell,
transfer, distribute or pay any money or property to any Affiliate, or invest in
(by capital contribution or otherwise) or purchase or repurchase any stock or
Indebtedness, or any property, of any Affiliate, or become liable on any
guaranty of the indebtedness, dividends or other obligations of any Affiliate.
Notwithstanding the foregoing, Borrower may pay compensation permitted by
Section 6.23 to employees who are Affiliates and, if no Event of Default has
occurred, Borrower may (i) engage in transactions with Affiliates in the normal
course of business, in amounts and upon terms which are fully disclosed to
FINOVA and which are no less favorable to Borrower than would be obtainable in a
comparable arm's length transaction with a Person who is not an Affiliate, and
(ii) make payments to a Subordinating Creditor that is an Affiliate, subject to
and only to the extent expressly permitted in the Subordination Agreement
between such Subordinating Creditor and FINOVA;
6.2.13 NATURE OF BUSINESS. Enter into any new business or make
any material change in any of Borrower's business objectives, purposes or
operations;
6.2.14 FINOVA'S NAME. Use the name of FINOVA in connection with
any of Borrower's business or activities, except in connection with internal
business matters or as required in dealings with governmental agencies and
financial institutions or with trade creditors of Borrower, solely for credit
reference purposes; or
6.2.15 MARGIN SECURITY. Borrower will not (and has not in the
past) engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G or Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Loan or other
advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock, or in any
manner which might cause such Loan or other advance or the application of such
proceeds to violate (or require any regulatory filing under) Regulation G,
Regulation T, Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System, in each case as in effect on the date
or dates of such Loan or other advance and such use of proceeds. Further, no
proceeds of any Loan or other advance will be used to acquire any security of a
class which is registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
6.2.16 REAL PROPERTY. Purchase or acquire any real property
without FINOVA's prior
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written consent, which shall not be unreasonably withheld, a condition of which
consent shall include delivery of appropriate environmental reports and
analysis, in form and substance satisfactory to FINOVA and its counsel.
6.2.17. YEAR 2000. Borrower shall take all action necessary to
assure that there will be no material adverse change to Borrower's business by
reason of the advent of the year 2000, including without limitation that all
computer-based systems, embedded microchips and other processing capabilities
effectively recognize and process dates after April 1, 1999. At FINOVA's
request, Borrower shall provide to FINOVA assurance reasonably acceptable to
FINOVA that Borrower's computer-based systems, embedded microchips and other
processing capabilities are year 2000 compatible.
7. DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. Any one or more of the following events
shall constitute an Event of Default under this Agreement:
(a) Borrower fails to pay when due and payable any portion of the
Obligations at stated maturity, upon acceleration or otherwise, and such failure
is not cured within three (3) days;
(b) Borrower or any other Loan Party fails or neglects to perform,
keep, or observe any Obligation including, but not limited to, any term,
provision, condition, covenant or agreement contained in any Loan Document to
which Borrower or such other Loan Party is a party;
(c) Any material adverse change occurs in Borrower's business, assets,
operations, prospects or condition, financial or otherwise;
(d) The prospect of repayment of any portion of the Obligations or the
value or priority of FINOVA's security interest in the Collateral is materially
impaired;
(e) Any portion of Borrower's assets is seized, attached, subjected to
a writ or distress warrant, is levied upon or comes into the possession of any
judicial officer; and is not vacated or bonded within ten (10) days;
(f) Borrower shall generally not pay its debts as they become due or
shall enter into any agreement (whether written or oral), or offer to enter into
any agreement, with all or a significant number of its creditors regarding any
moratorium or other indulgence with respect to its debts or the participation of
such creditors or their representatives in the supervision, management or
control of the business of Borrower;
(g) Any bankruptcy or other insolvency proceeding is commenced by
Borrower, or any such proceeding is commenced against Borrower and remains
undischarged or unstayed for forty-five (45) days;
(h) Any notice of lien, levy or assessment is filed of record with
respect to any of Borrower's assets; and is not vacated and bonded within ten
(10) days;
(i) Any judgments are entered against Borrower in an aggregate amount
exceeding $25,000 in any fiscal year; and is not bonded and appealed within ten
(10) days;
(j) Any default shall occur under (i) any material agreement between
Borrower and any third party including, without limitation, any default which
would result in a right by such third party to accelerate the maturity of any
Indebtedness of Borrower to such third party, or (ii) any Subordinated Debt;
(k) Any representation or warranty made or deemed to be made by
Borrower, any Affiliate or any other Loan Party in any Loan Document or any
other statement, document or report made or delivered to FINOVA in connection
therewith shall prove to have been misleading in any material respect;
(l) Any Guarantor becomes incapacitated, dies, terminates or attempts
to terminate its Guaranty or any security therefor or becomes subject to any
bankruptcy or other insolvency proceeding;
(m) Any Prohibited Transaction or Reportable Event shall occur with
respect to a Plan which could have a material adverse effect on the financial
condition of Borrower; any lien upon the assets of Borrower in connection with
any Plan shall arise; Borrower or any of its ERISA Affiliates shall fail to make
full payment when due of all amounts which Borrower or any of its ERISA
Affiliates may be required to pay to any Plan or any Multiemployer Plan as one
or more contributions thereto; Borrower or any of its ERISA Affiliates creates
or permits the
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creation of any accumulated funding deficiency, whether or not waived; or
(n) Without FINOVA's prior written consent, any transfer of more than
ten percent (10%) of the issued and outstanding shares of common stock or other
evidence of ownership of Borrower, that results in a fundamental change in
control.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, FINOVA RESERVES THE
RIGHT TO CEASE MAKING ANY LOANS DURING ANY CURE PERIOD STATED ABOVE, AND
THEREAFTER IF AN EVENT OF DEFAULT HAS OCCURRED.
7.2 REMEDIES. Upon the occurrence of an Event of Default, FINOVA may,
at its option and in its Permitted Discretion and in addition to all of its
other rights under the Loan Documents, cease making Loans, terminate this
Agreement and/or declare all of the Obligations to be immediately payable in
full. Borrower agrees that FINOVA shall also have all of its rights and remedies
under applicable law, including, without limitation, the default rights and
remedies of a secured party under the Code, and upon the occurrence of an Event
of Default Borrower hereby consents to the appointment of a receiver by FINOVA
in any action initiated by FINOVA pursuant to this Agreement and to the
jurisdiction and venue set forth in Section 9.26 hereof, and Borrower waives
notice and posting of a bond in connection therewith. Further, FINOVA may, at
any time, take possession of the Collateral and keep it on Borrower's premises,
at no cost to FINOVA, or remove any part of it to such other place(s) as FINOVA
may desire, or Borrower shall, upon FINOVA's demand, at Borrower's sole cost,
assemble the Collateral and make it available to FINOVA at a place reasonably
convenient to FINOVA. FINOVA may sell and deliver any Collateral at public or
private sales, for cash, upon credit or otherwise, at such prices and upon such
terms as FINOVA deems advisable, at FINOVA's Permitted Discretion, and may, if
FINOVA deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Borrower agrees that FINOVA has no
obligation to preserve rights to the Collateral or marshall any Collateral for
the benefit of any Person. FINOVA is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, name, trade
secrets, trade names, trademarks and advertising matter, or any similar
property, in completing production, advertising or selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
FINOVA's benefit. Any requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at its address set forth in the
heading to this Agreement at least five (5) days before sale or other
disposition. The proceeds of sale shall be applied, first, to all attorneys fees
and other expenses of sale, and second, to the Obligations in such order as
FINOVA shall elect, in its Permitted Discretion. FINOVA shall return any excess
to Borrower and Borrower shall remain liable for any deficiency to the fullest
extent permitted by law.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
FINOVA agree that the following conduct by FINOVA with respect to any
disposition of Collateral shall conclusively be deemed commercially reasonable
(but other conduct by FINOVA, including, but not limited to, FINOVA's use in its
Permitted Discretion of other or different times, places and manners of noticing
and conducting any disposition of Collateral shall not be deemed unreasonable):
Any public or private disposition: (i) as to which on no later than the fifth
calendar day prior thereto written notice thereof is mailed or personally
delivered to Borrower and, with respect to any public disposition, on no later
than the fifth calendar day prior thereto notice thereof describing in general
non-specific terms, the Collateral to be disposed of is published once in a
newspaper of general circulation in the county where the sale is to be conducted
(provided that no notice of any public or private disposition need be given to
the Borrower or published if the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market); (ii) which is conducted at any place designated by FINOVA, with or
without the Collateral being present; and (iii) which commences at any time
between 8:00 a.m. and 5:00 p.m. Without limiting the generality of the
foregoing, Borrower expressly agrees that, with respect to any disposition of
accounts, instruments and general intangibles, it shall be commercially
reasonable for FINOVA to direct any prospective purchaser thereof to ascertain
directly from Borrower any and all information concerning the same, including,
but not limited to, the terms of payment, aging and delinquency, if any, the
financial condition of any obligor or account debtor thereon or guarantor
thereof, and any collateral therefor.
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8. EXPENSES AND INDEMNITIES
8.1 EXPENSES. Borrower covenants that, so long as any Obligation
remains outstanding and this Agreement remains in effect, it shall promptly
reimburse FINOVA for all costs, fees and expenses incurred by FINOVA in
connection with the negotiation, preparation, execution, delivery,
administration and enforcement of each of the Loan Documents, including, but not
limited to, the attorneys' and paralegals' fees of in-house and outside counsel,
expert witness fees, lien, title search and insurance fees, appraisal fees, all
charges and expenses incurred in connection with any and all environmental
reports and environmental remediation activities, and all other costs, expenses,
taxes and filing or recording fees payable in connection with the transactions
contemplated by this Agreement, including without limitation all such costs,
fees and expenses as FINOVA shall incur or for which FINOVA shall become
obligated in connection with (i) any inspection or verification of the
Collateral, (ii) any proceeding relating to the Loan Documents or the
Collateral, (iii) actions taken with respect to the Collateral and FINOVA's
security interest therein, including, without limitation, the defense or
prosecution of any action involving FINOVA and Borrower or any third party, (iv)
enforcement of any of FINOVA's rights and remedies with respect to the
Obligations or Collateral and (v) consultation with FINOVA's attorneys and
participation in any workout, bankruptcy or other insolvency or other proceeding
involving any Loan Party or any Affiliate, whether or not suit is filed or the
issues are peculiar to federal bankruptcy or state insolvency laws. Borrower
shall also pay all FINOVA charges in connection with bank wire transfers,
forwarding of loan proceeds, deposits of checks and other items of payment,
returned checks, establishment and maintenance of lockboxes and other Blocked
Accounts, and all other bank and administrative matters, in accordance with
FINOVA's schedule of bank and administrative fees and charges in effect from
time to time.
8.2 ENVIRONMENTAL MATTERS.
The Environmental Certificate dated on or about the date of this
Agreement is incorporated herein for all purposes as if fully stated in this
Agreement.
9. MISCELLANEOUS.
9.1 EXAMINATION OF RECORDS; FINANCIAL REPORTING.
(a) EXAMINATIONS. FINOVA shall at all reasonable times have full access
to and the right to examine, audit, make abstracts and copies from and inspect
Borrower's records, files, books of account and all other documents, instruments
and agreements relating to the Collateral and the right to check, test and
appraise the Collateral. Borrower shall deliver to FINOVA any instrument
necessary for FINOVA to obtain records from any service bureau maintaining
records for Borrower. All instruments and certificates prepared by Borrower
showing the value of any of the Collateral shall be accompanied, upon FINOVA's
request, by copies of related purchase orders and invoices. FINOVA may, at any
time after the occurrence of an Event of Default, remove from Borrower's
premises Borrower's books and records (or copies thereof) or require Borrower to
deliver such books and records or copies to FINOVA. FINOVA may, without expense
to FINOVA, use such of Borrower's personnel, supplies and premises as may be
reasonably necessary for maintaining or enforcing FINOVA's security interest.
(b) REPORTING REQUIREMENTS. Borrower shall furnish FINOVA, upon
request, such information and statements as FINOVA shall request from time to
time regarding Borrower's business affairs, financial condition and the results
of its operations. Without limiting the generality of the foregoing, Borrower
shall provide FINOVA with: (i) FINOVA's standard form collateral and loan
report, daily, and upon FINOVA's request, copies of sales journals, cash receipt
journals, and deposit slips; (ii) upon FINOVA's request, copies of sales
invoices, customer statements and credit memoranda issued, remittance advices
and reports; (iii) copies of shipping and delivery documents, upon request; (iv)
on or prior to the date set forth on the Schedule, monthly agings (aged from
invoice date) and reconciliations of Receivables (with listings of concentrated
accounts), payables reports, inventory reports, compliance certificates and
unaudited financial statements with respect to the prior month prepared on a
basis consistent with such statements prepared in prior months and otherwise in
accordance with GAAP; (v) audited annual consolidated and consolidating
financial statements, prepared in accordance with GAAP applied on a basis
consistent with the most recent Prepared Financials provided to FINOVA by
Borrower, including balance sheets, income and cash flow statements, accompanied
by the unqualified report thereon of independent certified public accountants
acceptable to FINOVA, as soon as available, and in any event, within ninety (90)
days after the end of each of Borrower's fiscal
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years; and (vi) such certificates relating to the foregoing as FINOVA may
request, including, without limitation, a monthly certificate from the president
and the chief financial officer of Borrower showing Borrower's compliance with
each of the financial covenants set forth in this Agreement, and stating whether
any Event of Default has occurred or event which, with giving of notice or the
passage of time, or both, would constitute an Event of Default, and if so, the
steps being taken to prevent or cure such Event of Default. All reports or
financial statements submitted by Borrower shall be in reasonable detail and
shall be certified by the principal financial officer of Borrower as being
complete and correct.
(c) GUARANTOR'S FINANCIAL STATEMENTS AND TAX RETURNS. Borrower shall
cause each of the Guarantors to deliver to FINOVA such Guarantor's annual
financial statement (in form acceptable to FINOVA) and a copy of such
Guarantor's federal income tax return with respect to the corresponding year, in
each case on the date when such tax return is due or, if earlier, on the date
when available.
9.2 TERM; TERMINATION.
(a) TERM. The Initial Term of the Loan facility and the obligation of
FINOVA to make advances with respect thereto in accordance with this Agreement
shall be as set forth on the Schedule unless earlier terminated as provided
herein.
(b) PRIOR NOTICE. Each party shall have the right to terminate this
Agreement effective at the end of the Initial Term or at the end of any Renewal
Term by giving the other party written notice not less than sixty (60) days
prior to the effective date of such termination, by registered or certified
mail.
(c) PAYMENT IN FULL. Upon the effective date of termination, the
Obligations shall become immediately due and payable in full in cash.
(d) EARLY TERMINATION; TERMINATION FEE. In addition to the procedure
set forth in Section 9.2(b), Borrower may terminate this Agreement at any time
but only upon sixty (60) days' prior written notice and prepayment of the
Obligations. Upon any such early termination by Borrower or any termination of
this Agreement by FINOVA upon the occurrence of an Event of Default, then, and
in any such event, Borrower shall pay to FINOVA upon the effective date of such
termination a fee (the "TERMINATION FEE") in an amount equal to the amount shown
on the Schedule.
9.3 RECOURSE TO SECURITY; CERTAIN WAIVERS. All Obligations shall be
payable by Borrower as provided for herein and, in full, at the termination of
this Agreement; recourse to security shall not be required at any time. Borrower
waives presentment and protest of any instrument and notice thereof, notice of
default and, to the extent permitted by applicable law, all other notices to
which Borrower might otherwise be entitled.
9.4 NO WAIVER BY FINOVA. Neither FINOVA's failure to exercise any
right, remedy or option under this Agreement, any supplement, the Loan Documents
or other agreement between FINOVA and Borrower nor any delay by FINOVA in
exercising the same shall operate as a waiver. No waiver by FINOVA shall be
effective unless in writing and then only to the extent stated. No waiver by
FINOVA shall affect its right to require strict performance of this Agreement.
FINOVA's rights and remedies shall be cumulative and not exclusive.
9.5 BINDING ON SUCCESSOR AND ASSIGNS. All terms, conditions, promises,
covenants, provisions and warranties shall inure to the benefit of and bind
FINOVA's and Borrower's respective representatives, successors and assigns.
9.6 SEVERABILITY. If any provision of this Agreement shall be
prohibited or invalid under applicable law, it shall be ineffective only to such
extent, without invalidating the remainder of this Agreement.
9.7 AMENDMENTS; ASSIGNMENTS. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower and
FINOVA. Borrower may not sell, assign or transfer any interest in this Agreement
or any other Loan Document, or any portion thereof, including, without
limitation, any of Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. Borrower hereby consents to FINOVA's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement and any of the other Loan Documents, or of
any portion hereof or thereof, including, without limitation, FINOVA's rights,
title, interests, remedies, powers and duties hereunder or thereunder. In
connection therewith, FINOVA may disclose all documents and information which
FINOVA now or hereafter may have relating to Borrower or Borrower's business. To
the extent that FINOVA assigns its rights and obligations hereunder to a third
party, FINOVA shall thereafter be released
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from such assigned obligations to Borrower and such assignment shall effect a
novation between Borrower and such third party.
9.8 INTEGRATION. This Agreement, together with the Schedule (which is a
part hereof) and the other Loan Documents, reflect the entire understanding of
the parties with respect to the transactions contemplated hereby.
9.9 SURVIVAL. All of the representations and warranties of Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
of this Agreement by the parties. No termination of this Agreement or of any
guaranty of the Obligations shall affect or impair the powers, obligations,
duties, rights, representations, warranties or liabilities of the parties hereto
and all shall survive such termination.
9.10 EVIDENCE OF OBLIGATIONS. Each Obligation may, in FINOVA's
Permitted Discretion, be evidenced by notes or other instruments issued or made
by Borrower to FINOVA. If not so evidenced, such Obligation shall be evidenced
solely by entries upon FINOVA's books and records.
9.11 LOAN REQUESTS. Each oral or written request for a loan by any
Person who purports to be any employee, officer or authorized agent of Borrower
shall be made to FINOVA on or prior to 11:00 a.m., Eastern time, on the Business
Day on which the proceeds thereof are requested to be paid to Borrower and shall
be conclusively presumed to be made by a Person authorized by Borrower to do so
and the crediting of a loan to Borrower's operating account shall conclusively
establish Borrower's obligation to repay such loan. Unless and until Borrower
otherwise directs FINOVA in writing, all loans shall be wired to Borrower's
operating account set forth on the Schedule.
9.12 NOTICES. Any notice required hereunder shall be in writing and
addressed to the Borrower and FINOVA at their addresses set forth at the
beginning of this Agreement with a copy to Vard Griffith, VP, at 355 S. Grand
Ave., Suite 2400, Los Angeles, CA 90071, and a copy to Joseph R. D'Amore,
VP-Associate General Counsel, at 1850 N. Central Ave., Suite 1141, Phoenix, AZ
85002. Notices hereunder shall be deemed received on the earlier of receipt,
whether by mail, personal delivery, facsimile, or otherwise, or upon deposit in
the United States mail, postage prepaid.
9.13 BROKERAGE FEES. Borrower represents and warrants to FINOVA that,
with respect to the financing transaction herein contemplated, no Person is
entitled to any brokerage fee or other commission except as already disclosed to
FINOVA and which FINOVA is not obligated to pay, and Borrower agrees to
indemnify and hold FINOVA harmless against any and all such claims.
9.14 DISCLOSURE. No representation or warranty made by Borrower in this
Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to FINOVA in writing with respect to the transactions contemplated by this
Agreement which materially and adversely affects the business, assets,
operations, prospects or condition (financial or otherwise), of Borrower.
9.15 PUBLICITY. FINOVA is hereby authorized to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof.
9.16 CAPTIONS. The Section titles contained in this Agreement are
without substantive meaning and are not part of this Agreement.
9.17 INJUNCTIVE RELIEF. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its Obligations under this
Agreement, any remedy at law may prove to be inadequate relief to FINOVA.
Therefore, FINOVA, if it so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
9.18 COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed
in one or more counterparts, each of which taken together shall constitute one
and the same instrument, admissible into evidence. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile shall also
deliver a manually executed counterpart of this Agreement, but the failure to
deliver a manually executed counterpart shall not
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affect the validity, enforceability, and binding effect of this Agreement.
9.19 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
or exhibits hereto.
9.20 TIME OF ESSENCE. Time is of the essence for the performance by
Borrower of the Obligations set forth in this Agreement.
9.21 LIMITATION OF ACTIONS. Borrower agrees that any claim or cause of
action by Borrower against FINOVA, or any of FINOVA's directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Agreement, or any other present or future agreement, or any
other transaction contemplated hereby or thereby or relating hereto or thereto,
or any other matter, cause or thing whatsoever, whether or not relating hereto
or thereto, occurred, done, omitted or suffered to be done by FINOVA, or by
FINOVA's directors, officers, employees, agents, accountants or attorneys,
whether sounding in contract or in tort or otherwise, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within one year after the
first act, occurrence or omission upon which such claim or cause of action, or
any part thereof, is based and service of a summons and complaint on an officer
of FINOVA or any other Person authorized to accept service of process on behalf
of FINOVA, within 30 days thereafter. Borrower agrees that such one-year period
of time is a reasonable and sufficient time for Borrower to investigate and act
upon any such claim or cause of action. The one-year period provided herein
shall not be waived, tolled, or extended except by a specific written agreement
of FINOVA. This provision shall survive any termination of this Loan Agreement
or any other agreement.
9.22 LIABILITY. Neither FINOVA nor any FINOVA Affiliate shall be liable
for any indirect, special, incidental or consequential damages in connection
with any breach of contract, tort or other wrong relating to this Agreement or
the Obligations or the establishment, administration or collection thereof
(including without limitation damages for loss of profits, business
interruption, or the like), whether such damages are foreseeable or
unforeseeable, even if FINOVA has been advised of the possibility of such
damages. Neither FINOVA, nor any FINOVA Affiliate shall be liable for any
claims, demands, losses or damages, of any kind whatsoever, made, claimed,
incurred or suffered by the Borrower through the ordinary negligence of FINOVA,
or any FINOVA Affiliate. "FINOVA AFFILIATE" shall mean FINOVA's directors,
officers, employees, agents, attorneys or any other Person or entity affiliated
with or representing FINOVA.
9.23 NOTICE OF BREACH BY FINOVA. Borrower agrees to give FINOVA written
notice of (i) any action or inaction by FINOVA or any attorney of FINOVA in
connection with any Loan Documents that may be actionable against FINOVA or any
attorney of FINOVA or (ii) any defense to the payment of the Obligations for any
reason, including, but not limited to, commission of a tort or violation of any
contractual duty or duty implied by law. Borrower agrees that unless such notice
is fully given as promptly as possible (and in any event within thirty (30)
days) after Borrower has knowledge, or with the exercise of reasonable diligence
should have had knowledge, of any such action, inaction or defense, Borrower
shall not assert, and Borrower shall be deemed to have waived, any claim or
defense arising therefrom.
9.24 APPLICATION OF INSURANCE PROCEEDS. The net proceeds of any
casualty insurance insuring the Collateral, after deducting all costs and
expenses (including attorneys' fees) of collection, shall be applied, at
FINOVA's option, either toward replacing or restoring the Collateral, in a
manner and on terms satisfactory to FINOVA, or toward payment of the
Obligations. Any proceeds applied to the payment of Obligations shall be applied
in such manner as FINOVA may elect. In no event shall such application relieve
Borrower from payment in full of all installments of principal and interest
which thereafter become due in the order of maturity thereof.
9.25 POWER OF ATTORNEY. Borrower appoints FINOVA and its designees as
Borrower's attorney, with the power to endorse Borrower's name on any checks,
notes, acceptances, money orders or other forms of payment or security that come
into FINOVA's possession; to sign Borrower's name on any invoice or bill of
lading relating to any Receivable, on drafts against customers, on assignments
of Receivables, on notices of assignment, financing statements and other public
records, on verifications of accounts and on notices to customers or account
debtors; to send requests for verification of Receivables to customers or
account
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debtors; after the occurrence of any Event of Default, to notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by FINOVA and to open and dispose of all mail addressed to Borrower;
and to do all other things FINOVA deems necessary or desirable to carry out the
terms of this Agreement. Borrower hereby ratifies and approves all acts of such
attorney. Neither FINOVA nor any of its designees shall be liable for any acts
or omissions nor for any error of judgment or mistake of fact or law while
acting as Borrower's attorney. This power, being coupled with an interest, is
irrevocable until the Obligations have been fully satisfied and FINOVA's
obligation to provide loans hereunder shall have terminated
9.26 GOVERNING LAW; WAIVERS. THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ENFORCEMENT OF THE OBLIGATIONS, SHALL BE INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF
ARIZONA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF MARICOPA IN THE STATE OF ARIZONA OR, AT THE SOLE
OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. BORROWER WAIVES ANY OBJECTION OF FORUM NON CONVENIENS AND VENUE.
BORROWER FURTHER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE IN THE MANNER SET FORTH IN
SECTION 9.12 HEREOF FOR THE GIVING OF NOTICE. BORROWER FURTHER WAIVES ANY RIGHT
IT MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.
9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND BORROWER EACH
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; (II) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN FINOVA AND BORROWER; OR (III)
ANY CONDUCT, ACTS OR OMISSIONS OF FINOVA OR BORROWER OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
FINOVA OR BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
REVENGE MARINE, INC. (A DELAWARE CORPORATION)
FED. TAX ID #22-3609684
REVENGE MARINE, INC. (A NEVADA CORPORATION)
FED. TAX ID #36-3051776
BY___________________________________________________
WILLIAM ROBINSON, THEIR EXECUTIVE VICE PRESIDENT
25
<PAGE> 27
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of October, in the year 1998, before me, the undersigned,
a Notary Public in and for said state, personally appeared William Robinson,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity and that by his signature on the
instrument, the person or the entity upon behalf of which the person acted,
executed the instrument.
---------------------------------------
NOTARY PUBLIC
FINOVA CAPITAL CORPORATION
BY_______________________________
MARK PICILLO, VICE PRESIDENT
26
<PAGE> 28
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: REVENGE MARINE, INC.
(A DELAWARE CORPORATION)
2051 N.W. 11TH STREET
MIAMI, FLORIDA 33125
REVENGE MARINE, INC.
(A NEVADA CORPORATION)
775-B TAYLOR LANE
DANIA, FLORIDA 33004
DATE: OCTOBER 23, 1998
This Schedule forms an integral part of the Loan and Security Agreement between
the above Borrower and FINOVA Capital Corporation dated the above date, and all
references herein and therein to "this Agreement" shall be deemed to refer to
said Agreement and to this Schedule.
===============================================================================
DEFINITIONS (SECTION 1):
"GUARANTOR(S)" means William Robinson, James Gardiner, Scott D.
Flanders, Sr., Allied CapitalCorp., Egret Boat Company, Inc.,
Consolidated Marine, Inc., Revenge Marine, Inc. (a Nevada Corporation),
Revenge Marine, Inc. (an Oklahoma Corporation) and Revenge Marine, Inc.
(a Delaware Corporation)
"SELLER" means BYC Acquisition Corp.
"SUBORDINATING CREDITOR" means Desai Robinson, Consolidated Yacht
Corporation.
===============================================================================
TOTAL FACILITY (SECTION 2.1):
$2,100,000
===============================================================================
LOANS (SECTION 2.2):
TERM LOAN: one or more term loans against the
forced liquidation sale value of Borrower's
machinery and equipment ("TERM LOANS") in an
aggregate outstanding principal amount not to
exceed $2,100,000; PROVIDED, that the Term Loans,
if any, shall be in such amounts and on
<PAGE> 29
such terms as are set forth on separate promissory
notes of Borrower from time to time, each in form
and substance satisfactory to FINOVA.
===============================================================================
INTEREST AND FEES (SECTION 2.6):
TERM INTEREST RATE: Borrower shall pay FINOVA
interest on the daily outstanding balance of the
Term Loans at a per annum rate of 2% in excess of
the rate of interest announced publicly by
Citibank, N.A., (or any successor thereto), from
time to time as its "prime rate" (the " PRIME
RATE") which may not be such institution's lowest
rate. The interest rate chargeable hereunder in
respect of the Revolving Credit Loans (herein, the
"TERM INTEREST RATE") shall be increased or
decreased, as the case may be, without notice or
demand of any kind, upon the announcement of any
change in the Prime Rate. Each change in the Prime
Rate shall be effective hereunder on the first day
following the announcement of such change.
Interest charges and all other fees and charges
herein shall be computed on the basis of a year of
360 days and actual days elapsed and shall be
payable to FINOVA in arrears on the first day of
each month.
COLLATERAL MONITORING FEE. On the first day of
each calendar month following the closing of this
transaction, Borrower shall pay FINOVA a
collateral monitoring fee of $500 ("COLLATERAL
MONITORING FEE"); provided however, that Borrower
agrees and acknowledges that each Loan Year a full
year's fee shall be deemed earned at the beginning
of the respective Loan Year.
CLOSING FEE. At the closing of this transaction,
Borrower shall pay to FINOVA a closing fee in an
amount equal to 1.5% of the Total Facility
("CLOSING FEE"), which shall be deemed fully
earned on the date such payment is due.
SUCCESS FEE. Borrower shall pay to FINOVA a
success fee equal to $500,000 upon payment in full
of all Obligations due to FINOVA, if such payment
is made after the second anniversary of the Loan
(the "Year Three Success Fee"). In the event
Borrower prepays the Obligations in full after the
first anniversary and during the second Loan Year,
the Borrower shall pay a success fee in an amount
equal to $300,000 (the "Year Two Success Fee"). In
the event Borrower prepays the Obligations in full
during the first Loan Year, the Borrower shall pay
a success fee in an amount equal to $150,000 (the
"Year One Success Fee").
EXAMINATION FEE. Borrower agrees to pay to FINOVA
an examination fee in the amount of $500 per
person per day in connection with each
2
<PAGE> 30
audit or examination of Borrower performed by
FINOVA prior to or after the date hereof, plus all
costs and expenses incurred in connection
therewith (the "EXAMINATION FEE"). Without
limiting the generality of the foregoing, Borrower
shall pay to FINOVA an initial Examination Fee in
an amount equal to $500 per person per day, plus
all costs and expenses incurred in connection
therewith. Such initial Examination Fee shall be
deemed fully earned at the time of payment and due
and payable upon the closing of this transaction,
and shall be deducted from any good faith deposit
paid by Borrower to FINOVA prior to the date of
this Agreement.
===============================================================================
CONDITIONS OF CLOSING (SECTION 4.1):
The obligation of FINOVA to make the initial
advance hereunder or to issue or arrange for the
issuance of the initial Letter of Credit hereunder
is subject to the fulfillment, to the satisfaction
of FINOVA and its counsel, of each of the
following conditions, in addition to the
conditions set forth in Sections 4.1 and 4.2
above:
Borrower shall cause the conditions precedent set
forth in Section 4.1 of this Agreement and set
forth above in this Schedule to be satisfied, and
shall provide evidence to FINOVA that all such
conditions precedent have been satisfied, on or
before Closing Date.
===============================================================================
BORROWER INFORMATION:
Borrower's State of Incorporation (Section 5.1):Delaware and Nevada.
Borrower's copyrights, patents trademarks, and licenses (Section 5.5):
[BORROWER TO SUPPLY ON SEPARATE EXHIBIT].
Fictitious Names/Prior Corporate Names (Section 5.2):
Prior Corporate Names: None.
Fictitious Names: [Borrower to supply on separate Exhibit]
Borrower Locations and addresses where collateral may be located (Section
5.16)
2051 N.W. 11th Street, Miami, Florida 33125
3
<PAGE> 31
775-B Taylor Lane, Dania, Florida
c/o Detroit Diesel Capital Corporation
4141 S.W. 30th Avenue, Fort Lauderdale, Florida
Borrower's Federal Tax Identification Number (Section 5.16):
Revenge Marine, Inc. (a Delaware Corporation) - 22-3609684
Revenge Marine, Inc. (a Nevada Corporation) - 36-3051776
Permitted Encumbrances (Section 1.1): Upon FINOVA's prior written consent,
Borrower may have granted a purchase
money security interest in equipment
only in those situations where the
vendor is financing at least 75% of the
invoiced cost of the equipment.
===============================================================================
FINANCIAL COVENANTS (SECTION 6.1.13):
Borrower shall comply with all of the
following covenants. Compliance shall be
determined as of the end of each month or
quarter (as determined by FINOVA in its
Permitted Discretion), except as otherwise
specifically provided below:
DEBT TO NET WORTH. Borrower shall maintain a ratio of
Indebtedness to Net Worth of not greater
than 1.5 to 1.0; and
NET WORTH. Borrower shall maintain Net Worth of not
less than Two Hundred Fifty Thousand
Dollars ($250,000) at all times;
===============================================================================
NEGATIVE COVENANTS (SECTION 6.2):
EMPLOYEE ADVANCES: Borrower shall not make any loans or
advances to Employees except in the ordinary
course of business and consistent with past
practices of Borrower in an aggregate amount
not exceeding at any time $5,000.
EXISTING GUARANTIES: [Borrower to describe on separate Exhibit.]
CAPITAL EXPENDITURES: Borrower shall not make or incur any
Capital Expenditure if, after giving
effect thereto, the aggregate amount of
all Capital Expenditures by Borrower in
any fiscal year (beginning with the
current fiscal year) would exceed
$750,000. Without limiting the foregoing,
Borrower may also make those certain
capital expenditures disclosed by Borrower
in its pro forma projections for that
period commencing as of the date hereof
and continuing
4
<PAGE> 32
through and including the end of the second
year of the Term of the Loan.
COMPENSATION: Borrower shall not pay total compensation,
including salaries, withdrawals, fees,
bonuses, commissions, drawing accounts and
other payments, whether directly or
indirectly, in money or otherwise, during
any fiscal year to all of Borrower's
executives, officers and directors (or any
relative thereof) in an amount in excess of
115% of such total compensation projected
for the immediately preceding fiscal year
without FINOVA's prior written consent which
shall not be unreasonably withheld.
Notwithstanding the foregoing, Borrower may
pay bonuses PROVIDED FINOVA has not alleged
the occurrence of an Event of Default and
the Borrower meets all of its projections.
INDEBTEDNESS: Borrower shall not create, incur, assume or
permit to exist any Indebtedness (including
Indebtedness in connection with Capital
Leases) in excess of $25,000 other than (i)
the Obligations, (ii) trade payables and
other contractual obligations to suppliers
and customers incurred in the ordinary
course of business and (iii) other
Indebtedness existing on the date of this
Agreement and reflected in Exhibit 6.2.11
attached hereto (other than Indebtedness
paid on the date of this Agreement from
proceeds of the initial advances hereunder).
===============================================================================
REPORTING REQUIREMENTS (SECTION 9.1):
1. Borrower shall provide FINOVA with monthly
unaudited financial statements within thirty
(30) days after the end of each month.
2. Borrower shall provide FINOVA with monthly
accounts payable agings aged by invoice date,
outstanding or held check registers and
inventory certificates within ten (10) days
after the end of each month.
3. Borrower shall provide FINOVA with audited
consolidated and consolidating fiscal financial
statements within ninety (90) days after the end
of each fiscal year, as more specifically
described in Section 9.1(b) hereof, and with an
opinion issued by a Certified Public Accountant
which is acceptable to FINOVA.
4. Borrower shall provide FINOVA with annual
operating budgets (including income statements,
balance sheets and cash flow statements, by
month) for the upcoming fiscal year of Borrower
within thirty (30) days prior to the end of each
fiscal year of Borrower.
5
<PAGE> 33
5. Borrower's balance sheets for purposes of the
definition of Prepared Financials shall be as of
current fiscal year.
===============================================================================
TERM (SECTION 9.2):
The initial term of this Agreement shall be
three year(s) from the date hereof (the "INITIAL
TERM") and shall be automatically renewed for
successive periods of one (1) year each (each, a
"RENEWAL TERM"), unless earlier terminated as
provided in Section 7 or 9.2 above or elsewhere
in this Agreement.
===============================================================================
TERMINATION FEE (SECTION 9.2):
(A) TERM LOANS. The Termination Fee applicable
to the Term Loans provided for in Section 9.2(d)
shall be equal to :
(i) Three percent (3%) of the amount prepaid if
such prepayment is made during the Loan Year
beginning on the Closing Date;
(ii) Two percent (2%) of the amount prepaid if
such prepayment is made during the Loan Year
beginning on the first anniversary of the
Closing Date; and
(iii) One percent (1%) of the amount prepaid if
such prepayment is made during the Loan Year
beginning on the second anniversary of the
Closing Date;
===============================================================================
DISBURSEMENT (SECTION 9.11):
Unless and until Borrower otherwise directs
FINOVA in writing, all loans shall be wired to
Borrower's following operating account:
-----------------------------------------------
-----------------------------------------------
===============================================================================
REVENGE MARINE, INC. FINOVA CAPITAL CORPORATION
(A DELAWARE CORPORATION)
REVENGE MARINE, INC.
(A NEVADA CORPORATION)
BY______________________________________ BY_______________________________
WILLIAM ROBINSON, MARK PICILLO, VICE PRESIDENT
THEIR EXECUTIVE VICE PRESIDENT
6
<PAGE> 34
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of October, in the year 1998, before me, the undersigned,
a Notary Public in and for said state, personally appeared William Robinson,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity and that by his signature on the
instrument, the person or the entity upon behalf of which the person acted,
executed the instrument.
---------------------------------------
NOTARY PUBLIC
7
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. DEFINITIONS.......................................................................................1
1.1 Defined Terms............................................................................1
1.2 Other Terms..............................................................................6
2. LOANS; INTEREST RATE AND OTHER CHARGES............................................................6
2.1 Total Facility...........................................................................6
2.2 Loans....................................................................................6
2.3 Overlines; Overadvances..................................................................6
2.4 Letters of Credit........................................................................6
2.5 Loan Account.............................................................................6
2.6 Interest; Fees...........................................................................6
2.7 Default Interest Rate....................................................................6
2.8 Examination Fee..........................................................................6
2.9 Excess Interest..........................................................................6
2.10 Principal Payments; Proceeds of Collateral..............................................7
2.11 Application of Collateral................................................................8
2.12 Application of Payments..................................................................9
2.13 Notification of Closing..................................................................9
3. SECURITY..........................................................................................9
3.1 Security Interest in the Collateral......................................................9
3.2 Perfection and Protection of Security Interest...........................................9
3.3 Preservation of Collateral..............................................................10
3.4 Insurance...............................................................................10
3.5 Collateral Reporting; Inventory.........................................................10
3.6 Receivables.............................................................................10
3.7 Equipment...............................................................................11
3.8 Other Liens; No Disposition of Collateral...............................................11
3.9 Collateral Security.....................................................................11
4. CONDITIONS OF CLOSING............................................................................11
4.1 Initial Advance.........................................................................11
4.2 Subsequent Advances.....................................................................14
5. REPRESENTATIONS AND WARRANTIES...................................................................14
5.1 Due Organization........................................................................14
5.2 Other Names.............................................................................15
5.3 Due Authorization.......................................................................15
5.4 Binding Obligation......................................................................15
5.5 Intangible Property.....................................................................15
5.6 Capital.................................................................................15
5.7 Material Litigation.....................................................................15
5.8 Title; Security Interests of FINOVA.....................................................15
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
<S> <C> <C>
5.9 Restrictive Agreements; Labor Contracts.................................................15
5.10 Laws....................................................................................15
5.11 Consents................................................................................15
5.12 Defaults................................................................................15
5.13 Financial Condition.....................................................................16
5.14 ERISA...................................................................................16
5.15 Taxes...................................................................................16
5.16 Locations; Federal Tax ID No............................................................16
5.17 Business Relationships..................................................................16
5.18 Reaffirmations..........................................................................16
5.19 Year 2000...............................................................................16
6. COVENANTS........................................................................................16
6.1 Affirmative Covenants...................................................................16
6.1.1 Taxes..........................................................................16
6.1.2 Notice of Litigation...........................................................16
6.1.3 ERISA..........................................................................16
6.1.4 Change in Location.............................................................17
6.1.5 Corporate Existence............................................................17
6.1.6 Labor Disputes.................................................................17
6.1.7 Violations of Law..............................................................17
6.1.8 Defaults.......................................................................17
6.1.9 Capital Expenditures...........................................................17
6.1.10 Books and Records..............................................................17
6.1.11 Leases; Warehouse Agreements...................................................17
6.1.12 Additional Documents...........................................................17
6.1.13 Financial Covenants............................................................17
6.2 Negative Covenants. ....................................................................17
6.2.1 Mergers........................................................................17
6.2.2 Loans..........................................................................17
6.2.3 Dividends......................................................................17
6.2.4 Adverse Transactions...........................................................17
6.2.5 Indebtedness of Others.........................................................18
6.2.6 Repurchase.....................................................................18
6.2.7 Name...........................................................................18
6.2.8 Prepayment.....................................................................18
6.2.9 Capital Expenditure............................................................18
6.2.10 Compensation...................................................................18
6.2.11 Indebtedness...................................................................18
6.2.12 Affiliate Transactions.........................................................18
6.2.13 Nature of Business.............................................................18
6.2.14 FINOVA's Name..................................................................18
6.2.15 Margin Security................................................................18
6.2.16 Real Property..................................................................18
6.2.17 Year 2000......................................................................19
</TABLE>
ii
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C> <C>
7. DEFAULT AND REMEDIES.............................................................................19
7.1 Events of Default.......................................................................19
7.2 Remedies................................................................................20
7.3 Standards for Determining Commercial Reasonableness.....................................20
8. EXPENSES AND INDEMNITIES.........................................................................21
8.1 Expenses................................................................................21
8.2 Environmental Matters..................................................................21
9. MISCELLANEOUS....................................................................................22
9.1 Examination of Records; Financial Reporting.............................................22
9.2 Term; Termination.......................................................................22
9.3 Recourse to Security; Certain Waivers...................................................22
9.4 No Waiver by FINOVA.....................................................................22
9.5 Binding on Successor and Assigns........................................................22
9.6 Severability............................................................................22
9.7 Amendments; Assignments.................................................................22
9.8 Integration.............................................................................23
9.9 Survival................................................................................23
9.10 Evidence of Obligations.................................................................23
9.11 Loan Requests...........................................................................23
9.12 Notices.................................................................................23
9.13 Brokerage Fees..........................................................................23
9.14 Disclosure..............................................................................23
9.15 Publicity...............................................................................23
9.16 Captions................................................................................23
9.17 Injunctive Relief.......................................................................23
9.18 Counterparts; Facsimile Execution.......................................................23
9.19 Construction............................................................................24
9.20 Time of Essence.........................................................................24
9.21 Limitation of Actions...................................................................24
9.22 Liability...............................................................................24
9.23 Notice of Breach by FINOVA..............................................................24
9.24 Application of Insurance Proceeds. ....................................................24
9.25 Power of Attorney.......................................................................24
9.26 Governing Law; Waivers..................................................................25
9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL....................................................25
</TABLE>
<PAGE> 1
EXHIBIT 10.1
LEASE AGREEMENT
THIS LEASE, is entered into as of the day of April, 1998, by and
between MIAMI RIVER PARTNERS, LTD., a Florida limited partnership, his
successors and/or assigns, hereinafter referred to as "Landlord" and REVENGE
MARINE, INC., a Nevada corporation, hereinafter referred to as "Tenant."
W I T N E S S E T H :
ARTICLE I
DEMISE AND TERM
SECTION 1.01 DEMISE AND ACCEPTANCE GENERALLY: Landlord hereby demises and
leases to Tenant, and Tenant hereby rents and leases from Landlord, the Premises
hereinafter described subject to all matters affecting title to the Premises as
of the date of this Lease and subject to the terms and conditions hereinafter
set forth.
SECTION 1.02 PREMISES: The Landlord owns certain real estate located in
the City of Miami, Dade County, Florida and more particularly described by a
legal description and drawing attached hereto as EXHIBIT A and made a part
hereof (which real estate together with all buildings and improvements now or
hereafter erected or placed thereon and air rights related thereto, are
hereinafter referred to as the "Premises").
SECTION 1.03 COMMENCEMENT AND DURATION OF LEASE: The term and duration of
this Lease shall be for a period of ten (10) years commencing on the date
Landlord acquires fee simple title to the Premises and provided that prior
thereto this Lease has been executed by each party required to execute this
Lease (the "Commencement Date"), plus the partial calendar month, if any,
following the Commencement Date and ending on the last day of the 120th month
after the Commencement Date or on such earlier date as the Lease is terminated
pursuant to the terms hereof. Tenant shall have the option to extend the term of
this Lease for an additional five (5) year period, to follow the original term
of this Lease, as provided in Section 22.01 below.
Except as otherwise expressly provided in this Lease, and without limiting
the generality of any other provisions of this Lease, this Lease shall not
terminate, nor shall Tenant have any right to terminate this Lease or be
entitled to the abatement of rent or any reduction thereof, nor shall the
obligations hereunder of Tenant be otherwise affected, by reason of any damage
to or the destruction of all or any part of the Premises from whatsoever cause,
the taking of the Premises or any portion thereof by condemnation or otherwise,
the prohibition, limitation, or restriction of Tenant's use of the Premises, or
the interference with such use by any private person or corporation, or for any
other cause whether similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding. It is the intention of the parties
hereto that all rental payments reserved hereunder shall continue to be payable
in all events (except where Tenant's use of the Premises is prohibited, limited
or restricted by reason of any eviction by paramount title) and the obligations
of Tenant hereunder shall continue unaffected, unless the requirement to pay or
perform the same shall be determined pursuant to an express provision of this
Lease. Tenant agrees that it will remain obligated under this Lease in
accordance with its terms, and that Tenant will not take any action to
terminate, rescind or avoid this Lease, notwithstanding the bankruptcy,
insolvency, reorganization, liquidation, dissolution or other proceeding
affecting Landlord or any assignee of Landlord in any such proceeding and
notwithstanding any action with respect to this Lease which may be taken by any
trustee or receiver of Landlord or of any assignee of Landlord in any such
proceeding or by any court in any such proceeding.
1
<PAGE> 2
To the maximum extent allowed by law, Tenant waives all rights now or
hereafter conferred by law (a) to quit, terminate or surrender this Lease or the
Premises or any part thereof, or (b) to any abatement, suspension, deferment or
reduction of any rental payments due hereunder or any other sums payable under
this Lease, regardless or whether such rights shall arise from any present or
future constitution, statute or rule of law.
2
<PAGE> 3
ARTICLE II
RENT AND SECURITY
SECTION 2.01 AMOUNT OF MINIMUM RENT: Tenant shall pay a rent pursuant to
the following schedule, plus applicable sales or similar use or excise tax:
LEASE YEARS ANNUAL RENT MONTHLY INSTALLMENT
----------- ----------- -------------------
1 $430,500.00 $35,875.00
The Annual Rent (and, consequently, the Monthly Installments thereof) for
each of Lease Year's two (2) through ten (10), inclusive, shall be increased by
multiplying the Annual Rent for the immediately preceding Lease Year by 1.03 or
by applying the Annual Rent CPI adjustment as follows to the immediately
preceding Lease Year, whichever results in the greater Annual Rent from Lease
Year to Lease Year:
Annually, the rent shall be adjusted (if such adjustment results in rent
greater than the immediately preceding Lease Year's rent multiplied by 1.03) in
accordance with the Consumer Price Indexes for all Urban Consumers, U.S. City
Average, All Items (unadjusted) (1982 - 1984 = 100) using the table entitled,
"All Urban Consumers", published by the U.S. Department of Labor, Bureau of
Labor Statistics, and first so published in 1988, and commonly referred to as
the Consumer Price Index (CPI). The first calendar month of the first Lease Year
of the original term shall be deemed the "Base Month" for the purposes hereof.
The monthly rent (and, consequently, the Annual Rent) for each Lease Year
of this Lease subsequent to the first Lease Year of this Lease shall be adjusted
and the same shall be computed by multiplying the rent for the "Base Month" by a
fraction, the numerator of which is the said CPI for the last month of the
preceding year of this Lease and the denominator of which is the said CPI for
the "Base Month". If the publication of said CPI is discontinued, then the
parties shall, in good faith, agree on a suitable substitute.
The adjustment resulting in the greater rent annually shall be the
adjustment which applies, so that the adjustment may alternate from Lease Year
to Lease Year depending on which yields the greater rent to Landlord for any
given Lease Year.
The Annual Rent shall be paid in monthly installments in lawful money of
the United States in advance on the first day of each month during the term (and
if necessary, prorated for any fractions of a month). Rent and additional rent
shall be payable without demand, prior notice, set-off, deduction or abatement
whatsoever.
SECTION 2.02 PAYMENT OF RENT: All rent and additional rent shall be
payable, together with any applicable sales or similar use or excise tax
thereon, to the Landlord, at 200 South Park Road, Suite 200, Hollywood, Florida,
33021, or to such other address as Landlord may hereafter designate by written
notice to Tenant.
SECTION 2.03 LEASE YEAR DEFINED: "Lease Year" as used herein shall mean a
twelve month period commencing on the Commencement Date, plus the initial
partial month, if any, and each twelve month period thereafter, the first Lease
Year commencing on the Commencement Date and each successive Lease Year
commencing on the anniversary of the expiration of the first Lease Year.
3
<PAGE> 4
SECTION 2.04 SECURITY: Tenant, simultaneously with the Commencement Date,
has deposited with Landlord the sum of $35,000.00, the receipt of which is
hereby acknowledged (checks subject to collection), which sum shall be retained
by Landlord as security for the payment of rent by Tenant and for Tenant's
faithful performance of its obligations under this Lease. Landlord, at
Landlord's option, may at any time apply said sum or any part thereof toward the
payment of the rent and any other sum payable by Tenant under this Lease, and/or
toward the performance of each and every of Tenant's covenants under this Lease,
but such covenants and Tenant's liability under this Lease shall thereby be
discharged only pro tanto and Tenant shall remain I liable for any amounts that
such sum shall be insufficient to pay. Landlord may exhaust any or all rights
and remedies against Tenant before resorting to said sum, but nothing herein
contained shall require or be deemed to require Landlord to do so. In the event
this deposit shall not be utilized for any of such purposes, then such deposit
shall be returned by Landlord to Tenant within fifteen (15) days after the
expiration of the term of this Lease or any extension hereof, less an amount, if
any, determined by Landlord to be reasonably necessary for the fulfillment of
Tenant's obligations that survive the term of this Lease, which amount shall be
immediately returned to Tenant upon fulfillment of such obligations. Promptly,
upon demand by Landlord, Tenant shall deposit with Landlord such additional sum
as may be necessary to replace any amounts expended therefrom by Landlord
pursuant to the provisions hereof, so that there shall always be a security
deposit in the sum first set forth above. Landlord may commingle the security
deposit with other funds and shall not be required to pay Tenant any interest on
said security deposit. The security may be in the form of an irrevocable,
unconditional letter of credit pursuant to Section 21.19 of this Lease.
ARTICLE III
EXPENSES PAYABLE BY TENANT
SECTION 3.01 NET INTENT: It is the express understanding and agreement of
Landlord and Tenant that the rent due and payable hereunder shall be absolutely
net to Landlord, so that this Lease shall yield to Landlord the net rent
specified in Section 2.01 above, and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Premises shall be paid by
Tenant (including, but not limited to, real estate taxes assessed against the
Premises, water and sewer use fees, insurance premiums and utility expenses, and
the replacement of capital items), without cost or obligation of any type to
Landlord whatsoever, and Tenant hereby agrees to indemnify, defend, and save
Landlord harmless from and against the same.
SECTION 3.02 TENANT TO PAY IMPOSITIONS: Tenant covenants and agrees to
pay, before any fine, penalty, or cost may be added thereto for the non-payment
thereof: all real estate taxes, assessments (whether general or special), water
and sewer rates and charges, development, impact and concurrency fees, hook-up
and tap-in fees (if any), and all other charges relating to the Premises and all
other charges, general and special, ordinary and extraordinary, unforeseen as
well as foreseen, of any kind and nature whatsoever, which are assessed, levied,
confirmed, imposed, charged, or become a lien upon the Premises during the term
of this Lease (the "Impositions"); provided, however, that if, by law, any such
Impositions may at the option of the payer be paid in installments, Tenant may
exercise the option to pay the same in installments and may pay only such
installments as may become due (or relating to any period) during the term of
this Lease as the same respectively become due and before they become
delinquent; and provided that any Impositions which do not result from Tenant's
use of the Premises, are not otherwise caused by Tenant and relate to a fiscal
period of the taxing authority, a part of which period is included within the
term of this Lease and a part of which is included in a period of time prior to
or after the termination of this Lease, shall be allocated and prorated between
Tenant and Landlord as of the commencement and expiration of the term of this
Lease and shall be paid to Landlord by Tenant within five (5) days after request
therefor. Tenant shall provide to Landlord official receipts or other evidence
satisfactory to Landlord evidencing the payment of all Impositions for which
Tenant is liable pursuant to this Lease.
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SECTION 3.03 TENANT TO PAY ALL UTILITIES. OPERATING COSTS. Without
limiting the generality of the provisions of Section 3.01, Tenant shall pay: all
utility costs as provided in Article V below; all operating costs incurred in
the operation, management, repair, cleaning, and maintenance except for those
certain maintenance expenses that Landlord will pay, as described in Section
6.03 below (collectively, "the Operation") of the Premises, including, without
limitation, all expenses which are incurred in the Operation of all building
systems including, without limitation, the plumbing, electrical, heating,
ventilating, and air-conditioning equipment for the building, wages of all
personnel employed in connection with the Operation of the Premises, taxes on
such wages, amounts paid to independent contractors for services, materials and
supplies used in connection with the Operation of the Premises, fuel expense,
and the costs of landscaping; all capital expenditures of whatever nature made
in connection with the Operation of the Premises; all real estate taxes on the
Premises; and premiums for fire, casualty, liability, and such other insurance
as is described in Article IV, as well as such other insurance as may from time
to time be maintained with respect to the Premises.
SECTION 3.04 CONTESTS:
A. Upon prior written notification and written consent of the Landlord,
Tenant shall have the right to contest the amount or validity, in whole or in
part, of any Imposition imposed by governmental authority by appropriate
proceedings diligently conducted in good faith and according to applicable laws
or regulations, but only after payment of such Imposition unless such payment
would operate as a bar to such contest or interfere materially with the
prosecution thereof, in which event Tenant may postpone or defer payment of such
Imposition or portion thereof in accordance with applicable laws and if:
(i) neither the Premises nor any part thereof would by
reason of such postponement or deferment be in danger of
being forfeited or lost, and
(ii) Tenant shall have deposited with Landlord or the holder
of any mortgage the amount so contested and unpaid,
together with all interest and penalties in connection
therewith and all charges that may or might be assessed
against or become a charge on the Premises or any part
thereof in such proceedings.
Upon the termination of any such proceedings, Tenant shall pay the amount of
such Imposition or part thereof as finally determined in such proceedings, the
payment of which may have been deferred during the prosecution of such
proceedings, together with any costs, fees, interest, penalties or other
liabilities in connection therewith, and upon such payment, Landlord shall,
provided an Event of Default as defined in this Lease shall not have occurred,
return, without interest, any amount deposited with it with respect to such
Imposition as aforesaid. Provided an Event of Default shall not have occurred,
such payment, at Tenant's request, shall be made by Landlord, out of the amount
deposited with it with respect to such Imposition as aforesaid, to the extent
that such amount is sufficient therefor, and the balance due, if any, shall be
paid by Tenant. If, at any time during the continuance of such proceedings,
Landlord shall deem the amount deposited as aforesaid to be insufficient, Tenant
shall, upon demand, make an additional deposit, as aforesaid, of such additional
sum as Landlord reasonably may request, and failure of Tenant to do so shall
constitute an Event of Default hereunder, and the amount theretofore deposited
may be applied by Landlord to the payment, removal and discharge of such
Imposition, and the interest and penalties in connection therewith and any
costs, fees or other liability accruing in any such proceedings, and the
balance, if any, shall be returned to Tenant.
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B. Landlord shall similarly have an absolute right at Landlord's expense
to seek a reduction in the valuation of the Premises assessed for tax purposes
if Tenant has elected not to contest the amount or validity of the Imposition or
the Landlord may elect to jointly participate with Tenant in any proceedings
commenced by Tenant. Landlord shall have the right to prosecute any action or
proceeding commenced by Tenant for a reduction in such assessed valuation or
valuations which shall in whole or in part relate and pertain to any period of
time subsequent to the expiration or termination of this Lease. To the extent to
which any refund payable as a result of any proceeding which Landlord or Tenant
may institute, or payable by reason of compromise or settlement of any
proceeding, may be based upon a payment made by (a) persons including the
Landlord, the Landlord shall collect the same and reimburse itself forthwith for
any expense incurred by Landlord in connection herewith including reasonable
attorneys' fees and disbursements, and the balance of any refund shall be
prorated among the persons causing such payment to be made; or (b) anyone other
than Landlord and shall not relate to a period as to which apportionment thereof
has been made with Landlord, Tenant shall be authorized to collect the same,
subject, however, to Tenant's obligation to reimburse Landlord forthwith for any
expense incurred by Landlord in connection therewith, including reasonable
attorneys' fees and disbursements incurred regarding the proceeding and any
appeal thereof. If Landlord elects not to contest, Landlord shall not be
subjected to any liability for the payment of any costs or expenses in
connection with any such proceedings and Tenant hereby indemnifies and saves
Landlord harmless from any such costs and expenses.
C. Landlord shall not be required to join in any proceedings referred to
in Subsection (A) of this Section 3.04 unless the provisions of any law, rule or
regulation at the time in effect shall require that such proceedings be brought
by and/or in the name of the Landlord or any owner of the Premises, in which
event Landlord shall join in such proceedings or permit the same to be brought
in its name and stead. Upon the reasonable request of Tenant, Landlord shall
sign such application and execute such instruments and give such assistance in
connection with such applications or proceedings as shall be reasonably required
by Tenant and which are contemplated under this Section 3.04. Landlord shall not
be subjected to any liability for the payment of any costs or expenses in
connection with any such proceedings, and Tenant hereby indemnifies and saves
Landlord harmless from any such costs and expenses. Tenant shall be entitled to
any refund of any Imposition and penalties or interest thereon received by
Landlord which have been paid by Tenant, or which have been paid by Landlord but
previously reimbursed in full by Tenant.
SECTION 3.05 INCOME TAX EXCLUSION: Nothing in this Lease contained shall
require Tenant to pay any franchise, corporate, estate, inheritance, succession,
capital levy, stamp tax or transfer tax of Landlord, or any income, excess
profits or revenue tax or other similar tax, assessment, charge or levy upon the
rent payable by Tenant under this Lease, nor shall any tax, assessment, charge
or levy of the foregoing character be deemed to be included within the
Impositions defined in Section 3.02 hereof; provided, however, that if at any
time during the term of this Lease under the laws of the State of Florida or any
political subdivision thereof a tax or excise on, or measured by, rents is
levied or assessed against Landlord or the rent, as a substitution in whole or
in part for taxes assessed or imposed by said state or any political subdivision
thereof on land and buildings or on land or buildings, the same shall be deemed
to be included within the Impositions defined in Section 3.02 hereof, and Tenant
covenants to pay and discharge such tax or excise on rents in accordance with
the provisions of Section 3.02 hereof in respect of the payment of Impositions.
Notwithstanding anything contained herein to the contrary, sales tax or similar
use or excise tax is the sole obligation of Tenant.
SECTION 3.06 ADDITIONAL RENT: All costs and expenses which Tenant assumes
or agrees to pay pursuant to this Lease shall be treated as additional rent and,
in the event of nonpayment, Landlord shall have all the rights and remedies
herein provided for in the case of nonpayment of rent. If Tenant shall default
in making any payment required to be made by Tenant or shall default in
performing any term, covenant or condition of this Lease on the part of Tenant
to be performed, which shall involve the expenditure of money by Tenant,
Landlord at Landlord's option may, but shall not be obligated to, make such
payment, or, on behalf of Tenant, expend such sum as may be necessary to perform
and fulfill such term, covenant or condition, and any and all sums so expended
by Landlord, with interest thereon at the highest rate allowed by law from the
date of such expenditure, shall be additional rent, and shall be repaid by
Tenant to Landlord, on demand. No such payment or expenditure by Landlord shall
be deemed a waiver of Tenant's default nor shall it affect any other remedy of
Landlord by reason of such default.
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ARTICLE IV
INSURANCE
SECTION 4.01 PROPERTY INSURANCE: Tenant, at its sole cost and expense,
shall keep the Premises and all trade fixtures, machinery, equipment and
personal property located thereon insured for the mutual benefit of Landlord and
Tenant during the term of this Lease against loss or damage by fire and other
risks now or hereafter embraced by a broad form of all risk extended coverage
insurance for fire, hazard, theft, vandalism, malicious mischief and sprinkler
leakage, and such other insurable risks as Landlord may specify from time to
time for no less than an amount equal to their replacement cost, without
deduction for depreciation, which replacement cost shall be determined, at
Tenant's sole cost, at annual intervals by one or more of the insurers or by an
architect, contractor, or appraiser selected by Tenant and approved by Landlord,
in Landlord's sole discretion.
SECTION 4.02 LIABILITY INSURANCE: Tenant, at its sole cost and expense,
but for the mutual benefit of Landlord and Tenant, shall maintain:
(i) Comprehensive personal injury and property damage
liability insurance against claims for personal injury,
death or property damage occurring in, on or about the
Premises or other areas which by law are the
responsibility of the landowner. Such insurance shall
afford minimum protection during the term of this Lease
of not less than Five Million and No/100 Dollars
($5,000,000.00) combined limit (including the Tenant's
excess liability coverage) in respect of personal
injury, death, and property damage; provided, however,
that such amount and type of coverage shall be subject
to Landlord's review every two years for the term of the
Lease and the Extended Term (if any). In the event
Landlord, in its sole discretion, deems the coverage
required under this Section 4.02(i) insufficient after
any such two-year review, Tenant shall increase the
amount or type of coverage required hereby by Landlord;
(ii) Appropriate workmen's compensation insurance, flood
insurance (if the Premises are determined to be within a
flood hazard area) and such other insurance as may be
required by law;
(iii) Appropriate employer's liability insurance in an amount
not less than One Million and No/100 Dollars
($1,000,000.00) with an umbrella clause; provided,
however, that the amount of such coverage shall be
subject to Landlord's review every two years for the
term of this lease and the renewal term (if any). In the
event Landlord, in its sole discretion, deems the
coverage required under this Section 4.02(iii)
insufficient after any such two-year review, Tenant
shall increase the amount or type of coverage required
hereby by Landlord;
(iv) During the entire period of making any improvement or
alteration, owner's contingent or protective liability
insurance covering any claim not covered by or under the
terms of general public liability insurance carried by
Tenant pursuant to this Lease;
(v) Builder's risk insurance with extended coverage for and
during the term of any construction on the Premises; and
(vi) Business interruption insurance in an amount reasonably
determined by Landlord from time to time.
SECTION 4.03 BLANKET POLICIES: Tenant may obtain the insurance required by
this Article IV as part of a total package or blanket policy insuring properties
other than the Premises, provided that such insurance gives Landlord no less
protection than that which would be given by separate policies. The above
insurance requirements shall not preclude Tenant from having reasonable
deductibles in insurance coverage provided Tenant shall indemnify Landlord
against any loss resulting from such deductibles. A separate certificate shall
be available showing acceptable coverage for the subject Premises containing the
issuer's covenant not to cancel the coverage as to the Premises, reduce the
total amount thereof, or increase the deductible sum without 30 days' prior
written notice to Landlord.
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SECTION 4.04 GENERAL INSURANCE PROVISIONS:
A. All insurance shall be effected under valid and enforceable policies in
reasonable form and substance, and issued by insurers licensed to do business in
the State of Florida whose capital assets are sufficient to write the insurance
under Florida law without re-insurance and who have a Best's rating of A or
better. Upon the execution of this Lease, and thereafter not less than thirty
(30) days prior to the expiration dates of the expiring policies theretofore
furnished pursuant to this Article IV, certificates of all policies (or the
original or duplicate original policies evidencing such insurance, bearing
evidence of the payment of premiums or accompanied by other evidence of
insurance and payment of premiums satisfactory to Landlord) shall be delivered
by Tenant to Landlord. All such policies shall name Landlord, Landlord's
mortgagee(s), and Tenant as the insureds, as their respective interests may
appear. Each such policy shall contain an agreement by the insurer that such
policy shall not be canceled or modified without at least thirty (30) days'
prior written notice to Landlord, and any other person to whom a loss thereunder
may be payable. Each such policy shall contain an agreement that the hold
harmless and indemnification language of this Lease is insured as a contractual
obligation. The monetary limits and types of coverage stated herein shall not be
construed as a limit of Tenant's liability.
B. Rent shall not abate hereunder by reason of any damage to or
destruction of the Premises, and Tenant shall continue to perform and fulfill
all of Tenant's obligations, covenants and agreements hereunder notwithstanding
any such damage or destruction. Any rent insurance proceeds received by Landlord
by reason of such damage or destruction shall be applied by Landlord to the
payment of rent, but this shall not relieve Tenant of its obligation to pay rent
punctually in the event rent insurance proceeds held by Landlord are
insufficient to pay the same, or if for any reason such rent insurance proceeds
are not actually applied by Landlord to the payment of such amounts but are
rather applied to other amounts due and owing by Tenant to Landlord. If and when
Tenant shall complete all demolitions, restoration, repair, replacement and
rebuilding which Tenant is required to carry out hereunder, and if Tenant shall
not at such time be in default under this Lease, then any balance of rent
insurance proceeds then held by Landlord shall be paid over to Tenant.
C. If at any time or times Tenant shall neglect or fail to provide and
keep in force policies of insurance as required under this Lease, or shall fail
or refuse to deliver to and leave with Landlord any of such policies of
insurance, as required by the provisions of this Lease, Landlord may effect such
insurance as the agent of Tenant by taking out a policy or policies by a company
or companies satisfactory to Landlord, running for a period not exceeding three
years under any one policy; and the amount of the premium or premiums paid for
such insurance by Landlord shall be paid by Tenant to Landlord as additional
rent upon demand. Tenant shall be liable for any uninsured loss, and Landlord
shall not be limited in the proof of any damages which Landlord may claim
against Tenant arising out of or by reason of Tenant's failure to provide and
keep in force such policies as aforesaid to the amount of the insurance premium
or premiums not paid or incurred by Tenant which would have been payable upon
such insurance, but also be entitled to recover as damages for such breach, the
uninsured amount of any loss, liability, damage, claims, costs and expenses of
suit, judgments and interest, suffered or incurred by Landlord.
D. From and after the occurrence of any default under this Lease by
Tenant, or the occurrence of any other event which would give Landlord the right
to terminate this Lease, all right, title and interest of Tenant in any
insurance policy or policies provided under the terms of this Lease, including
any premium for and dividends upon such policy or policies, are hereby assigned
by Tenant to Landlord.
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E. Anything in the Lease to the contrary notwithstanding, Landlord and
Tenant hereby waive and release each other of and from any and all rights of
recovery, claims, or causes of action, whether by subrogation or otherwise,
against each other, their agents, officers and employees, for any loss or damage
that may occur to the Premises or to any furniture, equipment, machinery, goods
or supplies (regardless of cause or origin, including negligence of Landlord or
Tenant and their agents, officers and employees), which loss or damage could be
insured or which is not covered by any policy of insurance carried by the other
party. Each party to this Lease agrees immediately to give to each insurance
company, written notice of the terms of the mutual waivers of subrogation
contained in this paragraph, and to have the insurance policies properly
endorsed, if necessary, to prevent the invalidation of the insurance coverage by
reason thereof.
ARTICLE V
UTILITIES
SECTION 5.01 UTILITIES: Tenant shall pay for all water, gas, electricity,
telephone, sewer, heat, steam, fuel, and all other services and utilities of
every kind and nature supplied to the Premises from and after delivery of the
Premises to Tenant pursuant to this Lease. Tenant shall be solely responsible
for the connection, hook-up, and tap-ins to utility lines, and arrangements for
utility service, including without limitation the payment of all impact fees,
deposits, fees and all other charges and costs incurred in connection therewith.
ARTICLE VI
REPAIRS, REPLACEMENT, MAINTENANCE AND ALTERATION
SECTION 6.01 TENANT'S OBLIGATION TO MAINTAIN AND REPAIR: Tenant shall not
cause or permit any waste upon the Premises. Tenant shall, at all times during
the term hereof, and at Tenant's sole cost and expense, keep, maintain and
repair in first class order and condition the Premises and every part thereof,
as required by law, by the terms of insurance policies required pursuant to this
Lease, and/or by Landlord, except as expressly set forth in Section 6.03 below,
and the Tenant shall surrender the Premises at the expiration or earlier
termination of this Lease in such condition. In complying with this Section
6.01, Tenant shall be required, among other things to make all repairs and
replacements that may be necessary to cure any defects whether foreseen or
unforeseen, latent or otherwise, in the roof, walls, floor slab, structural or
non-structural portions of the Premises, or such other defects as to which any
public body having jurisdiction requests such repair or replacement, excluding
those structural matters expressly set forth in section 6.03 below. All repairs
made by Tenant shall be made using materials and workmanship of equal or better
quality than the materials and workmanship used in the construction of such
item.
SECTION 6.02 ALTERATIONS: Tenant shall have the right, from time to time
during the term of this Lease or any extension thereof, at Tenant's sole cost
and expense, to make additions, alterations, and changes (hereinafter singularly
referred to as an "Alteration" and collectively as "Alterations") in or to the
improvements then comprising a part of the Premises, provided there shall not
then exist a default under this Lease, and subject, however, in all cases to the
following:
(1) No Alteration shall be made without Landlord's
approval (which approval Landlord may withhold in its sole
discretion) if such Alteration would (a) impair the structural
soundness of the improvements, (b) materially change the total
volume or height of the improvements, (c) modify in any material
respect the basic character and function of the improvements, (d)
modify the external appearance of the improvements or (e) except
as provided in Section 6.04, cost in excess of $25,000.00
individually or in the aggregate in any 12 month period;
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(2) No Alteration shall be made until all plans and
specifications for any such Alteration have been approved by
Landlord. Landlord shall have thirty (30) days from its receipt of
all such plans and specifications to review the same and to send
its written comments regarding the same to Tenant. Within ten (10)
days after receipt of Landlord's notice of changes (if any),
Tenant shall cause all such changes to be made, which changes
shall be circled and dated, and Tenant shall resubmit the revised
plans and specifications for Landlord's review. Within thirty (30)
days after receipt of the revised plans and specifications,
Landlord shall review and approve or state what changes Landlord
requires to be made. The revisions and resubmission shall continue
until Landlord, in its reasonable discretion, shall have approved
Tenant's plans and specifications. Within ten (10) days after
Landlord has approved of Tenant's preliminary plans and
specifications, Tenant shall deliver to Landlord Tenant's final
plans and specifications for Landlord's review and approval.
Landlord's approval of the final plans and specifications shall be
evidenced by Landlord and Tenant initialing two (2) complete sets
of final plans and specifications (the "Plans"), whereupon one
fully executed set shall be left with the Landlord. Within five
(5) days after demand, Tenant shall pay to Landlord any fees or
expenses incurred by Landlord in connection with Landlord's
submitting such plans and specifications, as it so chooses, to an
architect or engineer selected by Landlord for review or
examination of the plans and specifications, intermittent
inspection of any construction, and/or performance of any
construction;
(3) The approval by Landlord of the plans and
specifications, if given, shall not (i) imply Landlord's approval
of the structural or engineering designs as to quality or fitness
of any material or device used; (ii) imply that the plans and
specifications are in accordance with the law (it being agreed
that such compliance is solely Tenant's responsibility); (iii)
relieve Tenant of the responsibility to construct structurally
sound improvements which are free of defects; (iv) impose any
liability on Landlord to Tenant or any third party; or (v) serve
as a waiver or forfeiture of any right of Landlord;
(4) Upon Landlord's approval of any plans and
specifications and before commencement of construction of any
Alterations, Tenant shall, at Tenant's sole cost and expense:
a. Obtain the necessary permits, consents,
authorizations and licenses from all federal,
state and/or municipal authorities having
jurisdiction over such work. Landlord shall
reasonably cooperate, at no expense to Landlord,
with Tenant including, without limitation,
execution of applications for building permits
and consents thereto;
b. Furnish to Landlord a certificate or certificates
of Workmen's Compensation Insurance covering all
persons who will perform the construction or any
contractor, subcontractor or other person; and
c. Furnish to Landlord original policies of
insurance as set forth below (or certificates
thereof) covering Landlord, Landlord's agent and
such other parties as Landlord shall designate,
as additional insureds, in a company approved by
Landlord, which policies shall be maintained at
all times during the progress of the construction
and until completion thereof, and shall provide
that no termination, cancellation or modification
of such policy shall be effective unless thirty
(30) days prior written notice has been given to
Landlord:
(i) Public Liability Insurance with a
combined single limit of not less than
Five Million and No/100 Dollars
($5,000,000.00) for injuries and damages
to persons and property;
(ii) Builder's Risk Insurance with extended
coverage.
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(5) The general contractor, all sub-contractors, all of
the specifications for any Alterations, and all materials to be
used therein shall be approved by Landlord, in its reasonable
discretion, prior to commencement of construction. Tenant shall
construct any Alterations with diligence and continuity and in a
good and workmanlike manner, and Tenant shall (i) comply with all
laws, ordinances and governmental regulations including all
regulations by any board of fire underwriters in its construction
of said Alterations, (ii) provide Landlord with such security or
assurances as Landlord may reasonably require to guarantee that,
once commenced, sufficient funds will be available to cause
completion of all proposed Alterations, (iii) provide Landlord
with preliminary and as-built surveys reasonably acceptable to
Landlord in all respects, and (iv) indemnify and hold harmless
Landlord from and against all loss, cost or damage suffered by
Landlord, including, without limitation, reasonable attorneys' and
paralegals' fees and disbursements, on account of Tenant's
construction of said Alterations, or any injury to person or
property occasioned thereby;
(6) Tenant shall post a bond in an amount reasonably
acceptable to Landlord for the full performance and payment of the
construction of any Alterations. In addition, Tenant agrees to
indemnify and save Landlord harmless from and against any and all
bills for labor performed and equipment, fixtures and materials
furnished to Tenant and applicable sales taxes thereon and from
and against any and all liens, bills or claims therefor or against
the Premises and from and against all losses, damages, costs,
expenses, suits and claims whatsoever in connection with the
construction of any Alterations. Tenant shall fully pay for the
cost of the construction of any Alterations so that the Premises
shall at all times be free of liens for labor and materials
supplied or claimed to have been supplied. Tenant hereby
acknowledges that it has no right to cause, create, or permit the
establishment of a claim of lien against the Premises. A provision
which expressly prohibits Landlord's liability for any liens filed
against the Premises in connection with Tenant's construction of
any Alterations or other improvements on the Premises, as well as
for any labor, materials or other lien incurred by Tenant, as
provided in Section 713.10 of the Florida Statutes, may be
recorded by Landlord. Tenant shall provide Landlord with all
applicable partial releases of lien executed by contractors,
subcontractors and materialmen contemporaneously with each payment
or draw request under Tenant's construction contracts. Tenant
shall obtain, and shall provide Landlord with, the general
contractor's final contractors affidavit, release, and indemnity
contemporaneously with final payments to be made to the general
contractor and all subcontractors and materialmen; and
(7) All alterations, improvements and additions made by
Tenant pursuant to the plans and specifications shall immediately
become the property of the Landlord and shall remain upon the
Premises at the expiration or earlier termination of this Lease.
SECTION 6.03 TENANT'S FURTHER OBLIGATIONS TO MAINTAIN: In addition to all
of the foregoing, Tenant shall be responsible for the repair and maintenance of
the following structural components of the Premises: (a) the foundation footings
supporting the steel columns and girders; (b) the steel columns and girders; and
(c) the trusses upon which the roof rests. Landlord shall have no obligations
with respect to the maintenance and repair of the Premises.
SECTION 6.04 TENANT'S OBLIGATIONS TO CONSTRUCT: Subject to all of the
applicable terms, conditions and provisions of this Lease, including this
Article VI of this Lease, Tenant covenants and agrees with Landlord that during
the first Lease Year it shall make renovations and improvements to the Premises
in an amount costing Tenant no less than $500,000.00, and that it shall provide
proof thereof to Landlord in the form of paid invoices, lien releases from
contractors, suppliers and materialmen and such other proof as Landlord may
reasonably request. Tenant's failure to make such renovations and improvements
and provide proof thereof to Landlord within the permitted time shall be an
Event of Default under this Lease.
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ARTICLE VII
USE AND ACCEPTANCE OF PREMISES; WAIVER
SECTION 7.01 USE: The Premises shall be used for the manufacture of sports
fishing and other yachts and boats purposes and other purposes directly
incidental thereto only and for no other purpose. Tenant shall not use or keep
or allow the Premises or any portion thereof for (a) any unlawful or immoral
purpose, business, or occupation, (b) in violation of any permit, license,
consent, authorization or certificate of occupancy; (c) permit any article to be
brought thereon which may be dangerous, hazardous, a pollutant, or a nuisance
(whether public or private) or which may void or increase the rate of any
insurance in force. The Premises will be operated in conformance with all
applicable city, county, state and federal ordinances, rules, laws, and
regulations and requirements of insurance underwriters and Tenant shall from
time to time conform the Premises to every applicable city, county, state, and
federal or ordinances, rules, laws and regulations and requirements of insurance
underwriters, at Tenant's sole cost.
SECTION 7.02 INSPECTION: Tenant represents that it has thoroughly
inspected the Premises and is familiar with the condition of every part thereof
including without limitation the subsurface, topography, soil, stabilization and
environmental aspects of the Premises and accepts the same in its present
condition, in an absolutely "AS IS" condition. Landlord shall not be required to
make any alterations, repairs or improvements of any kind whatsoever to prepare
the Premises for Tenant's occupancy.
LANDLORD MAKES NO REPRESENTATIONS WHATSOEVER REGARDING THE PREMISES OR
TENANT'S USE OR OCCUPANCY THEREOF, AND TENANT HEREBY WAIVES, RELEASES, RENOUNCES
AND LANDLORD DISCLAIMS ANY GUARANTEES, AND ANY IMPLIED OR EXPRESSED WARRANTIES
OF MERCHANTABILITY, TENANTABILITY, HABITABILITY FITNESS OR FITNESS FOR A
PARTICULAR PURPOSE (INCLUDING, WITHOUT LIMITATION, ANY CLAIM FOR ANY DIRECT
INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING THEREFROM). LANDLORD HAS NOT MADE,
NOR HAS TENANT RELIED UPON REPRESENTATIONS AS TO THE CONDITION, SAFETY, OR
SECURITY OF THE PREMISES.
SECTION 7.03 WAIVER BY TENANT: Without in any way limiting the generality
of the preceding subsection 7.02, Tenant specifically acknowledges and agrees
that it hereby waives, releases and discharges any claim it has, might have had
or may have against Landlord with respect to the condition of the Premises,
either patent or latent, its ability or inability to maintain certificates of
occupancy or other licenses or governmental approvals for the use or operation
or the Premises, and/or certificates of compliance for the Premises, the actual
or potential income or profits to be derived from the Premises, and the
Impositions and all other expenses now or hereafter payable thereon, and any
other state of facts which exists with respect to the Premises.
ARTICLE VIII
ASSIGNMENT AND SUBLETTING
SECTION 8.01 ASSIGNMENT AND SUBLETTING: Tenant may not sublet the Premises
or assign this Lease or any interest herein without Landlord's prior written
consent, which shall not be unreasonably withheld or delayed. Any attempted
assignment or subletting without such prior written consent shall be void, and
shall constitute an Event of Default under this Lease. No consent by Landlord to
any assignment or subletting shall be deemed or construed to relieve Tenant from
(i) primary liability under this Lease, or (ii) obtaining the express written
consent of Landlord to any further assignment or subletting. All references in
this Lease to a sublease shall be deemed to include all arrangements for
occupancy or other use by any person or entity of all or any part of the
Premises, and all references in this Lease to a subtenant shall include any
occupant or other user of all or any part of the Premises. If Tenant is a
corporation, partnership or other entity, any transfer of a majority or
controlling interest in such corporation, partnership or other entity shall be
deemed to be an assignment of this Lease. In the event of any proposed
assignment, subletting or other transfer for which Landlord's consent is
required hereunder, Tenant shall promptly reimburse Landlord for all costs and
expenses incurred by Landlord in connection with reviewing any proposed
transfer, including, but not limited to, attorneys' fees and costs.
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Notwithstanding the foregoing, in the event of any proposed assignment,
subletting or other transfer for which Landlord's consent is required hereunder,
Landlord shall have the option, in lieu of granting or refusing such consent, to
terminate this Lease by notice given to Tenant within sixty (60) days after
receiving the Tenant's notice requesting Landlord's consent. If Landlord shall
elect such option, this Lease shall terminate as of the date specified by
Landlord in its notice to Tenant (which date shall not be later than ninety (90)
days from Tenant's notice), appropriate adjustment of prepaid charges shall be
made and neither party shall have any further rights hereunder except the right
to enforce obligations theretofore accrued and remaining unperformed.
SECTION 8.02 ATTORNMENT: In the event of a termination of this Lease, any
subtenant of the Premises or assignee of the Lease shall attorn to the owner of
the reversion, unless the owner of the reversion shall, at the owner's option,
elect to dispossess such subtenant or assignee or otherwise terminate its rights
hereunder. Each subtenant or assignee who hereafter takes an interest in the
Premises shall be deemed to have agreed to the provisions of this Section 8.02.
Tenant covenants that each sublease of the Premises or assignment of this Lease
hereafter executed shall contain a clause expressly providing that the subtenant
or assignee thereunder shall attorn to the owner of the reversion, upon request,
in the event of a termination of this Lease, but the absence of such a clause
from any sublease or assignment shall not relieve the subtenant or assignee from
the provisions of this section 8.02.
SECTION 8.03 ACCEPTANCE OF RENT: No acceptance by Landlord of any
performance, rent or additional rent herein provided to be done or paid by
Tenant from any person, firm or corporation other than Tenant, shall discharge
Tenant or any other person, firm or corporation liable for performance of
Tenant's obligations hereunder (except to the extent of the performance and
payments so accepted by Landlord) from liability to pay all of the rent and
additional rent herein provided to be paid by Tenant or from liability to
perform any of the terms, covenants, conditions and agreements set forth in this
Lease.
SECTION 8.04 ASSIGNMENT BY LANDLORD: Landlord (or its successors or
assigns) may sell or otherwise transfer or convey its title to the Premises and
as part thereof assign this Lease, or any interest herein and Tenant shall
attorn to such assignee and from the effective date of such assignment the
assignor of the Lease shall have no further liability or obligation pursuant to
this Lease.
SECTION 8.05 INTEREST IN SUBLEASES: Tenant hereby assigns to Landlord all
of Tenant's right, title and interest, following any Event of Default by Tenant
hereunder, in and to all subleases and/or to collect from any or all subtenants
all rents and other sums payable by them, and to apply the same to the payment
of rent and all other amounts payable by Tenant hereunder, but no exercise by
Landlord of rights under this Section 8.05 shall be deemed a waiver by Landlord
of any other rights hereunder or shall be deemed an acceptance by Landlord of
such subtenant or an acquiescence by Landlord to the occupancy of any part of
the Premises by such subtenant or a release of Tenant from the performance of
any of the obligations of Tenant hereunder.
SECTION 8.06 EXCESS RENT: Intentionally deleted.
ARTICLE IX
DAMAGE OR DESTRUCTION
SECTION 9.01 TENANT'S OBLIGATION TO RESTORE AND REPAIR: In the event that
the Improvements or any portion thereof, shall be damaged or destroyed by fire,
the elements or other casualty, whether such damage or destruction renders the
Premises unfit for the use contemplated hereby or not, this Lease shall continue
in full force and effect, all rent and additional rent due under this Lease
shall continue to be promptly paid by Tenant; and Tenant, at Tenant's sole cost
and expense, and as expeditiously as possible, shall restore, repair and replace
the Improvements and all portions thereof to a condition at least as good as
existed immediately prior to such damage or destruction.
SECTION 9.02 APPLICATION OF INSURANCE PROCEEDS: The building insurance
proceeds under the policies maintained by Tenant shall be applied toward the
cost of all repairs and restoration Tenant is required to make under this
Article IX.
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ARTICLE X
CONDEMNATION
SECTION 10.01 ENTIRE CONDEMNATION:
A. If at any time during the term of this Lease all or substantially all
of the Premises shall be taken in the exercise of the power of eminent domain by
any sovereign, municipality or other public or private authority, then this
Lease shall terminate on the date of vesting of title in such authority and any
prepaid rent shall be apportioned as of said date. Substantially all of the
Premises shall be deemed to have been taken if, in Landlord's judgment, the
remaining portion of the Premises shall not be of sufficient size to permit the
construction and operation of a building thereon on an economically feasible
basis under the provisions of this Lease.
SECTION 10.02 PARTIAL CONDEMNATION: If less than all or substantially all
of the Premises shall be taken in the exercise of the power of eminent domain by
any sovereign, municipality or other public or private domain by any sovereign,
municipality or other public or private authority, then, at Landlord's option,
this Lease shall (i) be terminated and of no further force and effect or (ii)
continue in force and effect and Tenant shall proceed with reasonable diligence
at its own expense to carry out any necessary repairs and restoration so that
the remaining portion of the Premises shall constitute a complete structural
unit or units which can be operated on an economically feasible basis under the
provisions of this Lease. All of such repair and restoration shall be carried
out by Tenant in strict accordance with the restoration provisions of Article XI
of this Lease. The award or awards for any partial taking shall be paid to
Landlord and shall be either (i) retained by Landlord in the event it elects to
terminate the Lease in accordance with the foregoing or (ii) disbursed for the
repair and restoration of the Premises in accordance with Article XI.
SECTION 10.03 AWARDS: The award or awards for any taking of all or
substantially all of the Premises shall be paid to Landlord, provided that
Tenant shall have the right to pursue its own separate award for the value,
immediately prior to such taking, of loss of equipment, loss of business, loss
of its leasehold interest, and moving expenses, to the extent the foregoing does
not reduce any award to be received by Landlord.
SECTION 10.04 TEMPORARY TAKING: If the temporary use of the whole or any
part of the Premises shall be taken at any time during the term of this Lease in
the exercise of the power of eminent domain by any sovereign, municipality or
other authority, the term of this Lease shall not be reduced or affected in any
way and Tenant shall continue to pay in full the rent and additional rent, and
the entire award for such taking shall be paid to Landlord, to be applied and
disposed of as hereinafter provided. Landlord shall credit against the next rent
payment due from Tenant that portion of said award paid for the use and
occupancy of the Premises. That portion of such award which compensates for
physical damage to the Premises occasioned by such taking shall be held by
Landlord, and used to reimburse Tenant for costs of restoration and repair of
the portion of the Premises so damaged. Tenant shall perform all of such
restoration and repair in accordance with the terms of Article XI.
ARTICLE XI
TENANT'S REPAIR AFTER DAMAGE BY CASUALTY OR CONDEMNATION
SECTION 11.01 PROCEEDS AND AWARDS: Whenever Tenant shall be required to
carry out any work of demolition, restoration, repair, replacement or rebuilding
pursuant to this Lease after fire or other casualty loss or a condemnation,
Landlord or a depository designated by Landlord shall be entitled to receive the
applicable insurance proceeds and condemnation award or awards for reimbursement
to the Tenant for the required work, to be disbursed by Landlord in its
reasonable discretion; provided, however, that Landlord shall be entitled to
apply all or any portion of such proceeds to cure Tenant's defaults hereunder
prior to the commencement of such work and Landlord shall be entitled to any
surplus thereof.
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SECTION 11.02 RECONSTRUCTION: Tenant shall obtain Landlord's prior written
approval (not to be unreasonably withheld) of Tenant's plans and budget, and
shall provide Landlord with true and correct certified copies of all legally
required permits and/or other approvals for construction, and, with evidence,
reasonably satisfactory to Landlord, that Tenant has sufficient funds earmarked
for such work to complete the same (the completion of which is hereby expressly
guaranteed by Tenant). All work shall be carried out in accordance with the
terms of Article VI including, without limitation, the terms thereof which
require the work to be performed in a good and workmanlike manner, in compliance
with all applicable laws and ordinances, and shall be completed lien-free and in
compliance with all title, zoning, building, and other applicable restrictions.
If at any time Tenant shall fail or neglect to supply sufficient workmen or
sufficient materials of proper quality, or fail in any other respect to
prosecute such work of demolition, restoration, repair, replacement or
rebuilding with diligence and promptness, then Landlord may give to Tenant
written notice of such failure or neglect, and if such failure or neglect
continues for ten (10) days after such notice, then, if Landlord so requests in
Landlord's sole discretion, Tenant shall assign all construction contracts for
the reconstruction to Landlord, and Landlord, in addition to all other rights
which Landlord may have, may enter upon the Premises, provide labor and/or
materials, cause the performance of any contract and/or do such other acts and
things as Landlord may deem advisable to prosecute such work, in which event
Landlord shall be entitled to reimbursement of its costs and expenses out of any
insurance proceeds, condemnation award or awards and any other monies held by
Landlord for application to the cost of such work, in accordance with the
restoration provisions hereof. All costs and expenses incurred by Landlord in
carrying out such work for which Landlord is not reimbursed out of insurance
proceeds, condemnation award or awards or other monies held by Landlord, shall
be borne by Tenant and shall be payable by Tenant to Landlord as additional rent
upon demand, which demand may be made by Landlord from time to time as such
costs and expenses are incurred, in addition to any or all damages to which
Landlord shall be entitled hereunder.
ARTICLE XII
TENANT'S BREACH AND LANDLORD'S REMEDIES
SECTION 12.01 DEFAULT: During the term of this Lease, any of the following
shall constitute an "Event of Default":
(i) Tenant shall fail to make the payment of any rent and
additional rent as and when the same becomes due; or
(ii) Tenant shall fail in the performance or observance of any of
the other terms, covenants, conditions or agreements of this Lease for thirty
(30) days after written notice' and demand, or if such default shall be of such
a nature that the same cannot practicably be cured within said thirty (30) day
period, and Tenant shall not within said thirty (30) day period commence with
due diligence and dispatch the curing and performance of such defaulted term,
covenant, condition or agreement, and shall thereafter fail or neglect to
prosecute and complete with due diligence and dispatch the curing and
performance of such defaulted term, covenant, condition or agreement through
completion within sixty (60) days; or
(iii) there shall be filed by or against Tenant or any Guarantor
of this Lease a petition in bankruptcy or insolvency proceedings or for
reorganization or for the appointment of a receiver or trustee of all or
substantially all of Tenant's property, unless such petition be filed against
Tenant and if in good faith, Tenant shall promptly thereafter commence and
diligently prosecute and secure the dismissal of such petition within forty-five
(45) days of its filing; or
(iv) if Tenant or any Guarantor of this Lease makes an assignment
for the benefit of creditors;
(v) if Tenant abandons the Premises for a period of fourteen (14)
days or ceases to continuously conduct business at the Premises in a manner and
during such hours as is similar to other similar businesses; or
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(vi) if, twice during any 12-month period during the term hereof,
Tenant shall commit (or omit) any act which would, with the passage of time
beyond any applicable grace periods, have become a default hereunder
(notwithstanding that Tenant may have cured such act or omission within such
grace period).
SECTION 12.02 REMEDIES:
A. In the event of an occurrence of an Event of Default, Landlord, at
Landlord's option, may elect to:
(i) re-enter (as used in the broadest sense and not restricted to
its technical legal meaning) the Premises, without notice, and remove all
persons and property therefrom, either by summary proceedings or by any suitable
action or proceeding at law, or otherwise, without being liable therefor, and
may have, hold and enjoy the Premises; and/or
(ii) terminate this Lease or terminate Tenant's right of
possession without terminating the Lease and Tenant shall thereupon quit and
peacefully surrender the Premises to Landlord, without any payment therefor by
Landlord, and Landlord may re-enter the Premises as provided in subparagraph (i)
above; and/or
(iii) accelerate the rent that is due for the term of the Lease
and all such rent shall be immediately due and payable; and/or
(iv) pursue any other remedy which may be available to Landlord at
law, in equity or hereunder.
B. In case of any such re-entry, termination and/or dispossession by
summary proceedings or otherwise as provided above:
(i) the rent and additional rent shall become due thereupon and be
paid up to the time of such re-entry, dispossession and/or expiration, together
with such expenses, including attorneys' fees, as Landlord shall incur in
connection with such re-entry, termination and/or dispossession by summary
proceedings or otherwise;
(ii) Landlord may relet the Premises or any part thereof, either
in the name of Landlord or otherwise, for a term or terms which may, at
Landlord's option, be equal to or less than or exceed the period which would
otherwise have constituted the balance of the term of this Lease;
(iii) Tenant or Tenant's legal representative also shall pay to
Landlord such reasonable expenses as Landlord may incur in connection with
reletting, such as, without limitation, legal expenses, attorneys' fees,
brokerage commissions and expenses incurred in altering, repairing and putting
the Premises in good order and condition and in preparing the same for reletting
to a new tenant, which expenses shall be paid by Tenant as they are incurred by
Landlord;
(iv) Tenant or Tenant's legal representatives also shall pay to
Landlord the amount by which the rent reserved in this Lease and/or covenanted
to be paid exceeds the net amount, if any, of the rents collected on account of
the lease(s) of the Premises for each month of the period which would otherwise
have constituted the balance of the term of this Lease (excluding unexercised
extension options), which amounts shall be paid in monthly installments by
Tenant on the rent days specified in this Lease, and any suit brought to collect
said amount for any month or months shall not prejudice in any way the rights of
Landlord to collect the deficiency for any subsequent month by a similar action
or proceeding;
(v) at the option of Landlord exercised at any time, Landlord
forthwith shall be entitled to recover from Tenant, in addition to any other
proper claims, but in lieu of and not in addition to any amount which would
thereafter become payable under the preceding subparagraph (iv), a sum equal to
the amount of the rent reserved in this Lease and/or covenanted to be paid for
the remainder of the term of this Lease (excluding unexercised extension
options). Landlord, at Landlord's option, may (at the sole expense of Tenant)
make such alterations and/or decorations in the Premises as Landlord, in
Landlord's sole judgment, considers advisable and necessary for the purpose of
reletting the Premises; and the making of such alterations and/or decorations
shall not operate or be construed to release Tenant from liability hereunder as
aforesaid;
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(vi) No receipts of monies by Landlord from Tenant after any
re-entry or after a termination of this Lease by Landlord shall reinstate,
continue or extend the term of this Lease or affect any notice theretofore given
to Tenant, or operate as a waiver of the right of Landlord to enforce the
payment of rent then due or thereafter falling due, it being agreed that after
the commencement of suit for possession of the Premises or after final order or
judgment for the possession of the Premises, Landlord may demand, receive and
collect any monies due or thereafter falling due without in any manner affecting
such suit, order or judgment, all such monies collected being deemed payments on
account of the use and occupation of the Premises or, at the election of
Landlord, on account of Tenant's liability hereunder. Landlord shall have,
receive and enjoy as Landlord's sole and absolute property, without right or
duty to account therefor to Tenant, any and all sums collected by Landlord as
rent or otherwise upon reletting the Premises after Landlord shall resume
possession thereof as hereinbefore provided, including, without limitation upon
the generality of the foregoing, any amounts by which the sum or sums so
collected shall exceed the continuing liability of Tenant hereunder.
SECTION 12.03 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULTS: Whenever and as
often as Tenant shall fail or neglect to comply with and perform any term,
covenant, condition or agreement to be complied with or performed by Tenant
hereunder, then, upon ten (10) days' prior written notice to Tenant (or upon
shorter notice, or with no notice at all, if necessary to meet an emergency
situation or a governmental or municipal time limitation), Landlord, at
Landlord's option, in addition to all other remedies available to Landlord, may
perform, or cause to be performed, such work, labor, services, acts or things,
and take such other steps, including, but not limited to, entry onto the
Premises, as Landlord may deem advisable, to comply with and perform any such
term, covenant, condition or agreement which is in default, in which event
Tenant shall reimburse Landlord upon demand, and from time to time, for all
costs and expenses, including without limitation attorneys' fees throughout all
trial and appellate proceedings, suffered or incurred by Landlord in so
complying with or performing such term, covenant, condition or agreement. Any
sums of money advanced by Landlord hereunder shall bear interest from the date
of such advance at the highest rate permitted under applicable law. The
commencement of any work or the taking of any other steps or performance of any
other act by Landlord pursuant to the immediately preceding sentence shall not
be deemed to obligate Landlord to complete the curing of any term, covenant,
condition or agreement which is in default.
SECTION 12.04 WAIVER OF RIGHTS OF REDEMPTION: If, at any time hereafter,
Landlord shall obtain possession of the Premises under legal proceedings or
pursuant to the terms and conditions of this Lease or pursuant to present or
future law, because of default by Tenant in observing or performing any term,
covenant, condition or agreement of this Lease, all rights to redemption
provided by any law, statute or ordinances now in force or hereafter enacted
shall be and hereby are waived by Tenant.
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ARTICLE XIII
LIENS, ADVERSE POSSESSION
SECTION 13.01 TENANT TO KEEP PREMISES LIEN FREE: Tenant agrees to keep the
Premises at all times free of mechanic's liens and other liens for labor,
services, or material purchased or procured, directly or indirectly, by or for
Tenant. Tenant, however, shall have the right to contest the validity or amount
of any such lien provided that Tenant is proceeding in good faith, and provided
further that Tenant shall post a bond or other security approved by Landlord or
deposit cash in an interest bearing escrow account maintained by Landlord for
the purpose and in an amount sufficient to discharge the lien, and, upon the
final determination of such contest, shall immediately pay and discharge any
judgment rendered, together with all costs, charges, and interest incidental
thereto, and shall cause the lien thereof to be released from the Premises.
Should the Tenant fail within ten (10) days after notice of the filing of any
such lien to discharge or cause the release of such liens or charges or to
contest the same and post bond or other security as above provided, then the
Landlord, at Landlord's option, may bond any such lien or satisfy such lien by
payment thereof; and, in such event, the cost or amount of any such bond or
payment shall be paid to Landlord by Tenant upon demand, together with interest
thereon, at the highest rate allowed by law from the time Landlord's payment is
made until repayment by Tenant. Tenant shall promptly reimburse Landlord for all
costs and expenses, including, but not limited to, attorneys' and paralegals'
fees and costs, incurred by Landlord in connection with (i) Tenant contesting
the validity or amount of any lien, (ii) Landlord holding any security for the
purpose of discharging any lien and (iii) Landlord bonding or satisfying any
lien by payment thereof.
SECTION 13.02 NOTICE OF NON-RESPONSIBILITY: Upon the commencement of any
work or alteration or repair, Landlord shall be permitted to post on and affix
to the Premises and to record in the Public Records of Dade County, Florida,
notice of non-responsibility therefor in furtherance of F.S. section 713.11.
SECTION 13.03 ADVERSE POSSESSION: Tenant is and shall be in exclusive
control and possession of the Premises, and Tenant shall keep the Premises at
all times free of any right, title or interest which may be acquired by adverse
possession or prescription. Tenant agrees to indemnify, defend, and hold
Landlord harmless from and against all losses, damages, and liabilities which
arise out of or in connection with any claim of adverse possession or easement
by prescription which claim relates to any period during the term of this Lease
or any renewals or extensions thereof.
ARTICLE XIV
ESTOPPEL CERTIFICATE
SECTION 14.01 ESTOPPEL CERTIFICATE: Tenant shall, without charge, at any
time and from time to time hereafter, within ten (10) days after written request
of Landlord, certify by a written instrument duly executed and acknowledged to
Landlord or any mortgagee, lender, purchaser or participant, or proposed
mortgagee, purchaser, lender or participant, as to such information and facts as
Landlord may request, including, without limitation, the term, the amount of
rent, security deposit, the then validity and force and effect of this Lease,
any work to be done thereunder by Tenant, the existence or non-existence of any
default on the part of the Landlord hereunder, and the existence or
non-existence of any offsets, counterclaims or defenses thereto on the part of
Tenant. Tenant hereby appoints Landlord the Tenant's attorney-in-fact to execute
any such estoppel letter for and on behalf of Tenant if Tenant has not executed
such estoppel letter within the ten (10) days after Landlord's request therefor.
ARTICLE XV
NO LIABILITY, INDEMNIFICATION
SECTION 15.01 NO LIABILITY: INDEMNIFICATION: Tenant is and shall be in
exclusive control and possession of the Premises, and Landlord shall not in any
event whatsoever be liable for any injury or damage to any property or to any
person happening on or about the Premises, or for any injury or damage to any
property of any tenant, lessee, business invitee, guest, or licensee or because
of fire, flood, windstorm or for any other reason. Tenant hereby indemnifies and
agrees to hold the Landlord, its officers, directors, agents, employees,
affiliates and subsidiaries harmless from and against any and all claims,
liabilities, loss, damages, costs or expenses whatsoever arising from or growing
out of Tenant's use or occupancy of the Premises, including, without limitation,
attorneys' and paralegals' fees and legal costs throughout all trial and
appellate proceedings, and including, without limitation, any and all accidents,
injuries or deaths to any person on the Premises, damage to any property on the
Premises, and failure of the Tenant to comply with any of the provisions of this
Lease. The provisions of this Article XV shall survive the expiration or earlier
termination of this Lease.
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ARTICLE XVI
TERMINATION AND PRORATIONS
SECTION 16.01 TERMINATION: The Tenant covenants and agrees that at the
termination of this Lease, whether by default, lapse of time or otherwise, the
Tenant shall peaceably and quietly surrender possession and vacate the Premises
immediately, and deliver possession thereof to the Landlord, in as good
condition as they now exist, ordinary wear and tear and normal obsolescence
excepted. Upon such termination, any and all of Tenant's interest in and to the
Premises shall vest in the Landlord, and the Tenant shall, upon demand, at
Tenant's expense, execute and deliver a Quit-Claim Deed (or such other
instrument as Landlord may reasonably request) in favor of the Landlord,
quit-claiming and releasing all Tenant's right, title and interest in and to
said Premises. At the expiration or earlier termination of this Lease, Landlord
shall have good marketable title to the Premises subject only to those
exceptions more particularly described in EXHIBIT B attached hereto and made a
part hereof and those that Landlord has otherwise approved in writing (the
"Permitted Exceptions"). In the event that there are any exceptions to title
other than the Permitted Exceptions, Tenant shall, at its sole cost and expense,
use best efforts to cause the same to be removed, and Tenant shall indemnify,
defend, and hold Landlord harmless from and against all losses, damages, and
liabilities which arise out of or in connection with any such exceptions to
title. Tenant hereby grants to Landlord full and free license to enter upon the
Premises without being deemed in any manner guilty of trespass, eviction or
forcible entry or detainer, and without relinquishing the Landlord's rights to
rent or any other right given to Landlord hereunder or by operation of law.
SECTION 16.02 HOLDOVER: Tenant specifically agrees that, in the event
Tenant retains possession and does not so quit and surrender the Premises to
Landlord, then Tenant shall pay to Landlord (i) all damages that Landlord may
suffer on account of Tenant's failure to so surrender and quit the Premises, and
Tenant will indemnify and save Landlord harmless from and against any and all
claims made by any succeeding or prospective tenant of the Premises against
Landlord on account of delay of Landlord in delivering possession of the
Premises to said succeeding or prospective tenant to the extent that such delay
is occasioned by the failure of Tenant to so quit and surrender said Premises
and (ii) rent and additional rent as prorated for each month or any applicable
portion of a month of such holding over at twice the amount payable for the
month immediately preceding the termination of this Lease, during the time the
Tenant thus remains in possession. The provisions of this Paragraph do not waive
any of the Landlord's rights of re-entry or any other right under the terms of
this Lease, at law, or in equity. If Tenant shall fail to surrender the Premises
as herein provided, no new tenancy shall be created and Tenant shall be guilty
of unlawful detainer. No surrender of this Lease or of the Premises shall be
binding on the Landlord unless acknowledged by Landlord in writing.
SECTION 16.03 PERSONAL PROPERTY: Goods and effects not removed by Tenant
at the termination of this Lease shall be deemed abandoned and Landlord may
dispose, discard, or store the same as Landlord in its sole discretion deems
expedient. Tenant shall reimburse Landlord for all costs of such disposal or
storage upon written demand from Landlord therefor.
SECTION 16.04 PRORATION: Provided that this Lease is not terminated on
account of Tenant's default, all rent and additional rent shall be prorated on
the day of termination of this Lease; and any prepaid amounts due and owing
under said proration to the Tenant shall be repaid by Landlord, and any amounts
unpaid, but prorated to be an obligation of Tenant hereunder, shall be paid by
the Tenant at the termination of this Lease to the Landlord. The provisions of
this Section 16.04 shall survive the expiration or sooner termination of this
Lease.
ARTICLE XVII
NO PARTNERSHIP
SECTION 17.01 NO PARTNERSHIP: Landlord shall in no way be deemed under
this Lease to be a partner, associate, agent, or independent contractor of
Tenant in the conduct of Tenant's business, nor shall Landlord be liable for any
debts incurred by Tenant. Nothing contained in this Lease shall be construed to
confer upon Landlord any interest in Tenant's business. The relationship of the
parties is and shall at all times remain that of Landlord and Tenant.
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ARTICLE XVIII
SUBORDINATION AND ATTORNMENT
SECTION 18.01 SUBORDINATION: Landlord and Tenant agree that this Lease is
and shall be subordinate at all times to all ground and underlying leases and
all mortgages (in any amounts and all advances thereon) which may now or
hereafter affect the Premises or any part thereof, and to all renewals, future
advances, modifications, spreaders, consolidations, replacements, and extensions
thereof. In confirmation of the foregoing, Tenant shall promptly upon request
therefor by Landlord, and without charge therefor, execute such certifications,
subordinations, and/or other documents as Landlord may require, and Tenant
hereby appoints Landlord the Tenant's attorney-in-fact to execute any such
document for and on behalf of Tenant if Tenant has not executed such document
within ten (10) days after Landlord's request therefor. If any mortgagee or
ground lessor requires that this Lease be prior rather than subordinate to any
such mortgage, Tenant shall, promptly upon request therefor by Landlord or such
mortgagee or ground lessor, and without charge therefor, execute a document
effecting and/or acknowledging such priority, which document shall contain, at
the option of such mortgagee or ground lessor, an attornment obligation to the
mortgagee or ground lessor (as new Landlord) in the event of foreclosure, deed
in lieu of foreclosure, or termination of the ground lease, or to any party
acquiring title (or the ground lessor's leasehold position) through such
mortgagee or ground lessor in such event. This Section shall be self-operative
and no further instrument of subordination shall be required.
SECTION 18.02 NOTICE: Upon request of any mortgagee or ground lessor of
record, Tenant shall give prompt written notice in the manner provided in this
Lease of any default of Landlord hereunder, and Tenant shall allow such
mortgagee or ground lessor a reasonable length of time (in any event, not less
than sixty (60) days from the date of such notice) in which to cure any such
default and Tenant shall accept such cure. Any such notice shall be sent to the
Mortgage Loan or Real Estate Department of any such mortgagee or ground lessor
at its home office address or at such other address as such mortgagee or ground
lessor may designate.
SECTION 18.03 ATTORNMENT: Tenant agrees to attorn to any mortgagee, ground
lessor, assignee, or purchaser who shall succeed to Landlord's interest in this
Lease upon request of such mortgagor, lessor, or other party. Tenant shall
attorn to any such successor Landlord and will execute such instruments as may
be necessary or appropriate to evidence such attornment. Upon such attornment,
this Lease shall continue in full force and effect as, or as if it were, a
direct Lease between the successor Landlord and Tenant upon all the terms,
conditions and covenants as are set forth in this Lease and shall be applicable
after such attornment except that the successor Landlord shall not (i) be liable
for any previous act or omission of Landlord under this Lease, (ii) be subject
to any offset, not expressly provided for in this Lease, which shall have
theretofore accrued to Tenant against Landlord and (iii) be bound by any
previous modification of this Lease, not expressly provided for in this Lease,
or by any previous prepayment of more than one month's rent unless such
modification or prepayment shall have been expressly approved in writing by such
Landlord or such holder through or by reason of which the successor Landlord
shall have succeeded to the rights of Landlord under this Lease.
SECTION 18.04 LEASEHOLD MORTGAGE: Notwithstanding anything that may be
contained in this Lease to the contrary, Landlord's fee estate and Landlord's
interest in this Lease shall be superior in all respects to the lien of any
mortgage which may, at any time during the term of this Lease, as the same may
be extended or renewed, encumber this leasehold estate.
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ARTICLE XIX
EXCULPATORY PROVISIONS
SECTION 19.01 EXCULPATORY PROVISIONS: It is expressly understood and
agreed by and between the parties hereto, anything herein to the contrary
notwithstanding, that in case of default hereunder by any Landlord (or default
through, under or by any of its agents or representatives): (a) Tenant shall
look solely to the interests of such Landlord in the Premises; (b) no Landlord
shall have any personal liability to pay any indebtedness accruing hereunder or
to perform any covenant, either express or implied, herein contained; (c) no
personal liability or personal responsibility of any sort is assumed by, nor
shall at any time be asserted or enforceable against, Landlord, on account of
this Lease or on account of any representation, warranty, covenant, undertaking
or agreement of Landlord, if any, contained in this Lease, either express or
implied, or on account of any act or omission of Landlord or its agents or
servants, all such personal liability, if any, being expressly waived and
released by Tenant and by all persons claiming by, through or under Tenant.
ARTICLE XX
ENVIRONMENTAL CONCERNS
SECTION 20.01 TENANT REPRESENTATIONS: The Tenant represents and warrants
that: (a) it will not cause or permit the generation, storage, transportation,
disposal, release or discharge of hazardous materials, hazardous waste,
hazardous substances, solid waste or pollution upon, in, over or under the
Premises and that it will not, to the extent practicable, cause or permit such
materials or pollution to migrate to the Premises from neighboring property; (b)
that the Tenant will not become involved in operations at the Premises or at
other locations owned or operated by the Tenant which would lead to the
imposition on the Tenant of liability under Chapter 403, Florida Statutes, the
Resource Conversation and Recovery Act, 42 U.S.C. section 6901 ET SEQ. ("RCRA"),
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
42 U.S.C. section 9601 ET SEQ. ("CERCLA") or any other federal, state or local
ordinances, laws or regulations regarding environmental matters or hazardous
substances; (c) Tenant will promptly comply with the requirements of Chapter
403, Florida Statutes, RCRA, CERCLA and all federal, state and local laws and
regulations regarding environmental matters or hazardous substances as the same
may each be amended from time to time (including all federal, state and local
laws and regulations regarding underground storage tanks), and all such laws and
regulations relating to asbestos and asbestos-containing materials, PCB's, radon
gas, urea formaldehyde foam insulation, and will notify Landlord promptly in the
event of any release or discharge or a threatened release or discharge of
hazardous materials, hazardous wastes, hazardous substances, solid waste or
pollution upon, in, over or under the Premises as those terms are defined in
Chapter 403, Florida Statutes and any federal, state or local ordinances, laws
or regulations regarding environmental matters or hazardous substances, or the
presence of asbestos or asbestos-containing materials, PCB's, radon gas or urea
formaldehyde foam insulation at the Premises, or of the receipt by Tenant of any
notice from any governmental agency or authority or from any other person or
entity with respect to any alleged such release or presence promptly upon
discovery of such release, or promptly upon receipt of such notice, and will
promptly send Landlord copies of all results of any tests regarding same on the
Premises.
SECTION 20.02 INDEMNITY: Tenant agrees to indemnify, defend and hold the
Landlord harmless from and against any claims, losses, damages, liabilities
(including, without limitation, all foreseeable and unforeseeable consequential
damages), penalties, fines, charges, interest, judgments, including without
limitation attorneys' and paralegals' fees and disbursements through all
administrative, trial and appellate proceedings and any clean-up costs, incurred
by the Landlord arising out of or in connection with any handling, storage,
transportation or disposal of hazardous substances, or any spill, discharge,
release, escape or cleanup of hazardous substances ("Hazardous Discharge") or
failure to comply with any governmental law, rule or regulation, by the Tenant
or any other user or operator of the Premises. For the purposes of this
indemnity, any acts or omissions by Tenant or by its employees, agents,
contractors or others acting for or on behalf of Tenant (whether or not they are
negligent or intentional) shall be strictly attributable to Tenant. The
foregoing indemnity shall survive the expiration or earlier termination of this
Lease.
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SECTION 20.03 ENVIRONMENTAL AUDITS:
A. Upon Landlord's good faith determination that all or any part of any of
the Premises have been used or may in the future be used for the handling,
storage, transportation or disposal of hazardous substances and such use may, in
the determination of the Landlord, (i) result in the issuance of a complaint,
order, citation or notice by any governmental or regulatory authority,
commission, bureau or agency or public regulatory body against or affecting the
Tenant or all or any part of the Premises, (ii) result in the imposition of
liability on the party of any person or entity to take any actions with respect
to such use, including, without limitation, any liability to clean up any
Hazardous Discharge, or (iii) otherwise adversely affect the Landlord's interest
in the Premises, the Tenant shall, upon request of the Landlord, provide to the
Landlord, at the Tenant's expense, a report from a reputable environmental
consultant, approved by Landlord, with respect to such Premises and the nature
and effect of the use of any hazardous substances thereon, which report shall be
provided to the Landlord not later than ninety (90) days following the request
therefor, or such earlier date upon which the report is actually available from
the environmental consultant. If the Tenant shall fail or refuse to engage an
environmental consultant acceptable to the Landlord to provide such a report
within twenty (20) days following the request therefor by the Landlord, the
Landlord may, but shall not be obligated to, obtain such a report from an
environmental consultant of the Landlord's choice, at the Tenant's cost, which
cost Tenant shall pay as additional rent to Landlord promptly upon demand
therefor.
B. The Landlord shall have the right at any time to (a) require Tenant to
undertake and submit to Landlord a periodic environmental audit from a reputable
environmental company approved by Landlord, which audit shall cover Tenant's
compliance with this Article and (b) to bring their agents, which shall include
environmental consultants, on the Premises to conduct environmental studies and
tests. Based upon such studies and tests, the Landlord, if it reasonably
determines that the Tenant is not in compliance with any federal, state or local
environmental laws, rules or regulations which apply to the Premises or to any
users or operators of the Premises, may require the Tenant to promptly correct
or rectify, at the Tenant's expense, any failure to comply with such federal,
state, or local environmental laws, rules, or regulations.
SECTION 20.04 ENVIRONMENTAL NOTICES: Tenant hereby agrees to provide to
the Landlord, promptly upon becoming available, copies of all notices, reports,
correspondence and filings made by, or received from, any governmental or
regulatory authority or insurance company, and such other information as the
Landlord may from time to time reasonably request with respect to the use of all
or any part of any of the Premises for the handling, storage, transportation, or
disposal of hazardous substances. Tenant shall give immediate notice to Landlord
of the occurrence of any Hazardous Discharge.
SECTION 20.05 ENVIRONMENTAL DIRECTIVES; LIENS: If all or any part of the
Premises contains any Environmental Defect or Defects (defined as a condition or
conditions which would require or direct cleanup under any governmental or
regulatory laws, rules or regulations having jurisdiction) during the term of
this Lease or any renewals or extensions thereof, the Tenant agrees as follows:
(i) In the event that the U.S. Environmental Protection Agency, or
any other federal, state or local government agency (collectively, a "Regulatory
Agency") shall serve the Tenant with any requests or directives for
environmental clean-ups of all or any portion of the Premises, including any
requirements or directives to remove, or arrange for the removal of any
substances, hazardous or otherwise, from any of the Premises, the Tenant agrees
that Tenant shall automatically be in default under this Lease without notice
from Landlord in the event that the Tenant shall not accomplish or cause to be
accomplished one of the following:
a) complete compliance with the request or directive
within sixty (60) days from the date of such
request or directive, or within such shorter
period described therein, to the satisfaction of
the applicable Regulatory Agency; or
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b) if the nature of the Environmental Defect is such
that it cannot be cured within the period
described in clause (a) above, compliance with
the request or directive must have been commenced
within the period provided therein to the
satisfaction of the applicable Regulatory Agency;
provided that the Tenant shall thereafter
continue to diligently pursue compliance with
such request or directive to the satisfaction of
the applicable Regulatory Agency.
(ii) In the event there shall be filed a lien against any of the
Premises by any Regulatory Agency, the Tenant agrees that it shall either cause
said lien to be removed from the Premises or provide a bond satisfactory to
Landlord and any mortgagee of Landlord, insuring to the Landlord's lender a
continuing first lien status on the Premises, within ten (10) days from the date
that the lien is placed against the Premises or within any shorter period of
time required by the Landlord in the event that the Regulatory Agency commences
steps to cause the sale of the Premises pursuant to the lien. In the event that
the Tenant shall not accomplish the foregoing within the required period of
time, the Tenant agrees that Tenant shall automatically be in default under this
Lease without notice from Landlord.
SECTION 20.06 STORAGE TANKS: Tenant shall not install any storage tanks on
the Premises without Landlord's prior written consent, which consent may be
granted or withheld in Landlord's sole discretion. In the event that any storage
tanks are installed, maintained, repaired, or replaced on the Premises, the
Tenant agrees to comply with any and all federal, state or local environmental
laws, rules or regulations which apply to the use of storage tanks. In addition,
the Tenant agrees to install monitoring wells around any underground storage
tanks that may be installed on the Premises and to regularly monitor such wells
to ensure that no leakage has occurred or is occurring into the surrounding
surface or ground water. All such storage tanks on the Premises shall be the
then current state of the art in design and material.
ARTICLE XXI
GENERAL COVENANTS
SECTION 21.01 CONSTRUCTION: Whenever the context of any provision shall
require it, the singular number shall be held to include the plural number and
vice versa; and the use of any gender shall include any other or all genders.
The Article and section headings in this Lease are for convenience only and do
not constitute a part of the provisions hereof. This Lease binds, applies to and
inures to the benefit of, as the case may require, the heirs, personal
representatives, successors and assigns of Landlord and the heirs, personal
representatives, successors and permitted assigns of Tenant.
SECTION 21.02 MODIFICATION: No waiver, change, modification or discharge,
in whole or in part, of any provision hereof shall be deemed to have been made
by either party unless such waiver, change, modification or discharge be in
writing signed by such party.
SECTION 21.03 ACCEPTANCE OF RENT: No payment by Tenant or receipt by
Landlord of a lesser amount than the rent herein stipulated shall be deemed to
be other than on account of the stipulated rent, nor shall any endorsement or
statement on any check nor any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this Lease provided.
SECTION 21.04 LANDLORD'S RIGHT OF ENTRY: Landlord and Landlord's
authorized agents and employees shall have the right from time to time, at
Landlord's option, upon twenty-four (24) hours notice (or upon less or no notice
in the case of an emergency), to enter and pass through the Premises during
business hours to examine the same, to insure compliance with this Lease, to
cure any default by Tenant under this Lease pursuant to Section 12.03, and to
show them to prospective purchasers, fee mortgagees and others, but this shall
not obligate Landlord to make any such entry or examination.
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SECTION 21.05 NOTICES: Any notice, report, demand or other instrument
authorized or required to be given or furnished to either party under this Lease
shall be sent to such party at the address of such party set forth below by
registered or certified mail, return receipt requested, or by overnight delivery
service, postage paid and shall be deemed given on the earliest to occur of (i)
receipt thereof, or (ii) the third day after deposit in the United States Postal
service with proper postage affixed or such other delivery services, or (iii)
the day following the delivery of such overnight delivery service. The addresses
of the parties are as follows:
FOR THE TENANT: Revenge Marine, Inc.
7711 South Jamestown Avenue
Tulsa, Oklahoma 74136
ATTENTION: Mr. Bill Robinson
With copies to: Frederick Slicker, Esq.
8908 South Yale Avenue
Suite 410
Tulsa, Oklahoma 74137-3545
FOR THE LANDLORD: c/o Michael Swerdlow Companies, Inc.
200 South Park Road
Suite 200
Hollywood, Florida 33021
ATTENTION: Mr. Michael Swerdlow
With copies to: Theodore R. Stotzer, Esq.
Michael Swerdlow Companies, Inc.
200 South Park Road
Suite 200
Hollywood, Florida 33021
Either party may change the address to which any such notice, report, demand or
other instrument is to be mailed, by furnishing written notice of such change to
the other party.
SECTION 21.06 ENTIRE AGREEMENT: This Lease constitutes the entire
agreement between the parties hereto. Except as set forth herein, there are no
promises, representations, or understandings between the parties of any kind or
nature whatsoever.
SECTION 21.07 NO BROKER: Each party represents to the other that it has
had no dealings with any broker in connection with this Lease, and agrees to
hold the other harmless from and against any and all claims, liabilities and/or
damages for brokerage commission claimed by any broker with whom it has dealt
with respect to this Lease or the negotiation thereof.
SECTION 21.08 COUNTERPARTS: This instrument may be executed in any number
of counterparts, each of which shall be deemed an original for all purposes and
all of which shall be one and the same document.
SECTION 21.09 WAIVER: The failure of the Landlord to insist in any one or
more instances upon the strict performance of any one or more of the covenants,
terms and agreements of this Lease, shall not be construed as a waiver of such
covenants, terms or agreements, but the same shall continue in full force and
effect, and no waiver by the Landlord of any of the provisions hereof shall in
any event be deemed to have been made (by acceptance of rent or otherwise)
unless the same be expressed in writing, signed by the Landlord, and all
remedies provided for by the terms of this Lease shall be cumulative.
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SECTION 21.10 SEVERABILITY: If any provision or portion of this Lease is
declared or found by any court of competent jurisdiction to be unenforceable or
null and void, such provision or portions thereof shall be deemed stricken and
severed from this Lease, and the remaining provisions and portions thereof shall
continue in full force and effect. If a portion is so stricken, it is the
intention of the parties that the court give such provision its nearest valid
and legal meaning.
SECTION 21.11 LEGAL FEES: In the event of any litigation between the
parties under this Lease, the prevailing party in such litigation shall be
entitled to receive reasonable attorneys' and paralegals' fees, (including all
levels of appeal), and all reasonable costs and expenses of any and all such
proceedings from the non-prevailing party.
SECTION 21.12 TRIPLE NET LEASE: This is a triple net lease and Landlord
shall not be required to provide or pay for any services or do any act or thing
with respect to the Premises or the appurtenances thereto, except as may be
specifically provided herein, and the rent shall be paid to Landlord without any
claim on the part of Tenant for diminution, setoff or abatement, and nothing
shall suspend, abate or reduce any rent to be paid hereunder, except as
otherwise specifically provided in this Lease.
SECTION 21.13 LANDLORD'S LIEN: Landlord shall have and Tenant hereby
grants Landlord a security interest in any furnishings, equipment, fixtures,
inventory, accounts receivable, and other personal property of any kind
belonging to Tenant, or the equity of Tenant therein, on the Premises or
elsewhere. The security interest is granted for the purpose of securing the
payment of rent and additional rent and for the purpose of securing the
performance of all other obligations of Tenant hereunder. Upon Tenant's default
or breach of any covenants of this Lease, Landlord shall have all remedies
available under applicable law, including, but not limited to, the right to take
possession of the above mentioned property and dispose of it by public or
private sale in a commercially reasonable manner.
SECTION 21.14 PAYMENTS OF MONEY; INTEREST: In each instance when Tenant
shall be obligated to make any payment of any sum of money whatsoever hereunder,
interest shall accrue thereon and be payable hereunder at the highest rate
permitted by law, computed from the date such payment first became due
hereunder.
SECTION 21.15 GOVERNING LAW; NEGOTIATED AGREEMENT: This Lease shall be
construed and governed in accordance with the laws of the State of Florida
without application of the conflict of law principles. All of the parties to
this Lease have participated fully in the negotiation and preparation hereof
and, accordingly, this Lease shall not be more strictly construed against any
one of the parties hereto.
SECTION 21.16 TENANT'S AUTHORITY TO EXECUTE LEASE: Tenant represents and
warrants that this Lease has been duly authorized, executed and delivered by and
on behalf of Tenant and constitutes the valid and binding agreement of Tenant in
accordance with the terms hereof, and Tenant shall deliver to Landlord or its
agent, concurrently with the delivery of this Lease, executed by Tenant,
certified resolutions of the board of directors (and shareholders, if required)
authorizing Tenant's execution and delivery of this Lease and the performance of
Tenant's obligations hereunder. Upon the full execution of this Lease and
annually during the term of this Lease, Tenant shall deliver to Landlord
Tenant's annual reports and audited financial statements.
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SECTION 21.17 WAIVER OF JURY TRIAL AND COUNTERCLAIM: THE PARTIES TO THIS
LEASE, INTENDING TO BIND THEMSELVES AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED ASSIGNS HEREBY, DO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT WHICH EACH HAS OR MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LEGAL
ACTION, PROCEEDING, SUIT, LITIGATION, CLAIM, OR COUNTERCLAIM WHICH (A) IS BASED
UPON THIS LEASE OR ANY PROVISION HEREOF, (B) ARISES OUT OF, UNDER, OR IN
CONNECTION WITH THIS LEASE OR ANY OTHER DOCUMENT, INSTRUMENT, OR AGREEMENT
MENTIONED HEREIN OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR (C)
ARISES OUT OF, IN CONNECTION WITH, OR IS BASED UPON ANY CONDUCT, COURSE OF
CONDUCT, COURSE OP DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OP
EITHER PARTY RESPECTING ANY MATTER ADDRESSED OR CONTEMPLATED IN THIS LEASE. THIS
WAIVER IS INTENDED TO BE APPLICABLE THROUGHOUT THE PERIOD OF TIME DURING WHICH
THIS LEASE WAS NEGOTIATED, TO THE PRESENT TIME, AND AT ALL TIMES IN THE FUTURE
UNTIL ALL APPLICABLE STATUTES OF LIMITATION RESPECTING THE TYPES OF LEGAL
ACTIONS AND CLAIMS COVERED HEREBY SHALL HAVE RUN, NOTWITHSTANDING THE EXPIRATION
OR EARLIER TERMINATION OF THIS LEASE. BOTH PARTIES MUTUALLY ACKNOWLEDGE AND
AGREE THAT THIS WAIVER OF RIGHT TO TRIAL BY JURY FORMS AN INTEGRAL PART OF THE
CONSIDERATION FOR THEIR ENTERING INTO THIS LEASE AND THAT THIS PROVISION
CONSTITUTES A MATERIAL INDUCEMENT TO EACH PARTY FOR ITS EXECUTION AND DELIVERY
OF THE COUNTERPARTS HEREOF. IF LANDLORD COMMENCES ANY SUMMARY PROCEEDING AGAINST
TENANT, TENANT WILL NOT INTERPOSE ANY COUNTERCLAIM WHATSOEVER AND WILL NOT SEEK
TO CONSOLIDATE SUCH PROCEEDING WITH ANY OTHER ACTION WHICH HAY HAVE BEEN OR WILL
BE BROUGHT IN ANY OTHER COURT BY TENANT. EACH PARTY DOES HEREBY EXPRESSLY
ACKNOWLEDGE HAVING RECEIVED ADVICE OF COUNSEL RESPECTING THE LEGAL CONSEQUENCES
OF THIS WAIVER OF RIGHT TO TRIAL BY JURY AND WAIVER OF COUNTERCLAIM. EACH PARTY
HAS INITIALED THIS WAIVER PROVISION FOR THE PURPOSE OF EXPRESSING ITS
UNDERSTANDING AND AGREEMENT TO ALL OF THE FOREGOING PROVISIONS.
Landlord: Tenant:
---------------- ---------------
SECTION 21.18 SIGN: Tenant shall not, without the prior written consent of
Landlord (which consent shall not be unreasonably withheld) install any exterior
signs on the Premises or any interior signs which can be seen from the exterior
of the Premises. In the event that any signs are installed on the Premises, same
shall be in compliance with all applicable laws, rules and regulations. Tenant,
at Tenant's sole cost and expense, shall obtain all permits and licenses
required in connection with any sign and shall be fully responsible for the
installation thereof. Tenant hereby indemnifies and holds Landlord harmless from
and against any and all losses, costs, damages, expenses, suits, demands,
claims, inquiries, or deaths occasioned by the installation, maintenance or
removal of any signs.
SECTION 21.19 LETTER OF CREDIT: Upon the execution of this Lease, instead
of the cash security deposit provided for in Section 2.04 of this Lease, Tenant
may provide Landlord with a clean, irrevocable, unconditional, transferable
letter of credit in Landlord's favor issued by a bank acceptable to Landlord in
the amount of $35,000.00 (the "Letter of Credit"), which Letter of Credit shall
otherwise be in form and substance acceptable to Landlord and which shall
collateralize Tenant's obligations hereunder and serve as the security deposit
under Section 2.04 of this Lease.
SECTION 21.20 GUARANTY OF LEASE: Upon the execution of this Lease, WILLIAM
ROBINSON and JAMES GARDNER shall execute a Guaranty in form and substance as
appears on EXHIBIT C attached hereto and made a part hereof.
SECTION 21.21 SURVIVAL: Any liability of Tenant for the payment of any
money under this Lease, including, but limited to, the payment of any money
resulting from any indemnities of Landlord by Tenant pursuant to the terms of
this Lease shall survive the expiration or earlier termination of this Lease.
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ARTICLE XXII
OPTION TO EXTEND
SECTION 22.01 OPTION TO EXTEND: Tenant shall have the option, to be
exercised as hereinafter set forth, to extend the term of this Lease for an
additional five (5) year period, to follow consecutively after the original term
of this Lease (hereinafter referred to as the "Extended Term"), upon the
condition that, on the last date on which Tenant is entitled to exercise such
option and on the last day of the term of this Lease, this Lease is in full
force and effect and Tenant is not in default hereunder. Tenant shall exercise
its option by giving written notice of its election to extend the term of this
Lease to Landlord not less than one (1) year prior to the expiration of the term
of this Lease but in no event earlier than two (2) years prior to the expiration
of the term of this Lease. Upon such exercise, the term of this Lease shall be
automatically extended for the Extended Term without the requirement of any
further instrument, upon all of the same terms, provisions and conditions set
forth in this Lease, except that the net rent payable during the Extended Term
of this Lease shall be equal to the greater of (i) the rent calculated and
determined by applying the rent adjustments and increases set forth in Section
2.01 of this Lease as if the Lease Years of the Extended Term were part of the
initial term (e.g., the rent for the first Lease Year of the Extended Term shall
be the greater of 1.03 times the rent for the last year of the original term and
the Annual Rent CPI adjustment applied to such last year of the original term);
and (ii) the then market rate per square foot for the Premises (the "Market
Rate"), which Market Rate shall be adjusted and increased during each Lease Year
of the Extended Term by applying the rent adjustments and increases provided for
in Section 2.01 of this Lease. As used in this Lease, Market Rate shall be
determined by Landlord. Landlord shall, no later than nine (9) months prior to
the expiration of the original term of this Lease, advise Tenant of its
determination of Market Rate for the first Lease Year of the Extended Term if it
determines that same is greater than the rent would be applying the adjustments
and increases thereto as set forth in Section 2.01 of this Lease and (i) above.
If Landlord does not advise Tenant of the Market Rent, then rent during the
Extended Term shall be determined and calculated under (i) hereinabove. If
Tenant disagrees with Landlord's determination of Market Rate, Tenant shall so
notify Landlord in writing no later than fifteen (15) days following receipt of
Landlord's advice of Market Rate. If Landlord and Tenant cannot agree on the
Market Rate as above described within thirty (30) days after Tenant's notice of
disagreement, then each party shall, within fifteen (15) days following the
30-day workout period, select an independent MAI appraiser, each having at least
five (5) years of experience in the appraisal of commercial real estate in Dade
County, Florida, with reasonable experience in the appraisal of warehouse
buildings in the City of Miami, Florida, to make a determination of the Market
Rate. Both MAl appraisers chosen by Landlord and Tenant shall then agree upon a
third MAl appraiser, and each of the three appraisers shall submit their
appraisals to Landlord and Tenant no later than thirty (30) days prior to the
expiration of the original term of this Lease. The Market Rate shall be the
average of the determination of the three appraisals, provided, however, if the
difference in Market Rate of any appraisal is less than five (5%) percent of the
average of the other two appraisals, then the Market Rate shall be the average
of the two closest appraisals. Each party shall pay the fees and costs of the
appraiser it has selected and both parties shall split the fees and costs of the
third appraiser equally. Notwithstanding anything contained in this Section
22.01 to the contrary, in no event shall the Market Rate be less than Annual
Rent would be if calculated and determined under (i) hereinabove. During the
Extended Term, the Market Rate (if applicable) shall be increased each year, on
the anniversary date, by multiplying the rent for the immediately preceding
Lease Year by 1.03 or by the application of the Section 2.01 CPI adjustment to
the immediately preceding Lease Year, whichever results in the greater rent.
In the event that the aforesaid option to extend is duly exercised, all
references contained in this Lease to the term of this Lease, whether by number
of years or number of months, shall be construed to refer to the original term
of this Lease, as extended as aforesaid, whether or not specific reference
thereto is made in this Lease.
ARTICLE XXIII
OPTION TO PURCHASE
SECTION 23.01 OPTION TO PURCHASE: Provided this Lease is in full force and
effect and Tenant is not in default hereunder, Landlord, for consideration paid,
hereby grants to Tenant the option to purchase the Premises for a period up to
the expiration date of the third Lease Year of the original term of this Lease,
upon and subject to the following terms and conditions:
(a) Tenant may not assign its option to purchase the Premises
pursuant to this Article XXIII without the prior written consent of Landlord,
which consent may be withheld in Landlord's sole discretion.
27
<PAGE> 28
(b) To exercise the option, Tenant shall give written notice to
Landlord of Tenant's election to purchase the Premises, provided that such
written notice shall be given not less than six (6) months prior to the
expiration of the third Lease Year of the original term of this Lease. Such
written notice shall be accompanied by payment to Landlord of a deposit of Two
Hundred Fifty Thousand and No/100 Dollars ($250,000.00). The giving of such
notice and payment of such deposit shall obligate Landlord to sell and the
Tenant to buy the Premises on the terms and conditions set forth in this Section
23.01. The closing of the purchase and sale of the Premises shall occur on the
date which is sixty (60) days after the giving of such notice by Tenant of its
exercise of the option to purchase the Premises and the making of the deposit in
connection therewith (the "Closing Date") at 11:00 a.m., at the offices of
Landlord's attorney or the title agent, as selected by Landlord, provided that
such closing shall be in Dade or Broward County, Florida. At closing the deed
shall be delivered and the transaction consummated, unless the parties shall
otherwise agree in writing.
(c) The purchase price for the Premises shall be Three Million Two
Hundred Fifty-Nine Thousand Five Hundred and No/100 Dollars ($3,259,500.00) if
the transaction closes during the first Lease Year of the original term, which
purchase price shall be increased by $536.00 per day to and including the day of
closing if the sale and purchase closes during the second Lease Year of the
original term, and which purchase price shall be increased by $568.00 per day to
and including the day of closing if closed prior to the expiration of the third
Lease Year of the original term, and shall be payable as follows: $250,000.00
shall have been paid by Tenant as a deposit upon exercise of this option as
aforesaid; and the balance of the purchase price shall be paid on the Closing
Date, by wire transfer funds pursuant to written instructions from Landlord, as
Seller.
(d) If Tenant shall have exercised the option as provided above,
the Premises shall be conveyed by a good and sufficient Special Warranty Deed
and said deed shall convey fee simple title thereto, free and clear from all
encumbrances except for: (i) provisions of existing building, subdivision and
zoning laws and all governmental resolutions, ordinances, laws and actions; (ii)
the Permitted Exceptions as set forth in Exhibit "B"; (iii) other matters of
record which do not unreasonably and materially interfere with Tenant's use of
the Premises; (iv) the provisions of this Lease and any lien, encumbrance,
sublease or other matter affecting the Premises that was created, directly, or
indirectly, by Tenant during its occupancy and use of the Premises under the
Lease, or by any person claiming by, through or under Tenant; and (v) any matter
that would be disclosed by a current and accurate survey of the Premises.
(e) It is agreed that prior to exercising this option, Tenant
shall cause an examination to be made of the record title to the Premises and
shall obtain a title insurance commitment from a nationally recognized title
insurance company (such as Ticor Title Insurance Company, Lawyers Title
Insurance Corporation or Commonwealth Land Title Insurance Company) covering the
Premises. Accompanying Tenant's notice of exercise of the option, Tenant shall
furnish Landlord with a copy of such title insurance commitment and shall give
notice to Landlord of any title exceptions other than the Permitted Exceptions
and other matters set forth in section 23.01(d). Except for any objections
claimed by Tenant in such notice, the Premises shall be considered satisfactory
and in compliance with the provisions of this option. If Tenant gives such
notice and it indicates that Tenant has any objections to title to the Premises,
Landlord shall use reasonable efforts to remove or cure such objections within
sixty (60) days after such notice (unless any such objection is of such a nature
that it cannot be removed or cured within sixty (60) days, in which event such
sixty-day period shall be extended by a reasonable period not to exceed an
additional sixty (60) days). If within such period Landlord causes an ALTA
owner's title insurance policy (specimen or otherwise) to be issued without
exception for such objections, or obtains affirmative coverage for same, Tenant
shall be precluded from making any such objection. The parties hereto
acknowledge and agree that, wherever under the terms of this Section 23.01 the
Landlord is obligated, or has agreed, to use reasonable efforts to remove any
defects in title, to deliver possession as provided herein, or to make the
Premises conform to the provisions hereof, "reasonable efforts" shall be deemed
to mean only those efforts costing the Landlord not more than $10,000.00 in the
aggregate to undertake (but excluding the payment of any mortgages encumbering
the Premises from Landlord to its mortgage lenders, which Landlord agrees to pay
at closing from the closing proceeds). In the event Landlord is unable to cure
any title defects as provided above within the applicable time period, Tenant
may, either (a) purchase the Premises without any reduction in the purchase
price or (b) elect not to exercise its rights to purchase the Premises,
whereupon the $250,000.00 deposit shall be returned to Tenant and the parties
hereto shall be relieved of all further obligations under this Article XXIII.
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<PAGE> 29
(f) If Tenant shall have exercised this option, but for any reason
fails to fulfill its obligation to purchase the Premises, the $250,000.00
deposited by Tenant upon exercise of this option may be retained by Landlord as
liquidated damages as Landlord's sole and exclusive remedy, at law or in equity,
for such failure by Tenant to purchase the Premises. In addition to the rights
of Landlord set forth in the preceding sentence, in the event that the Tenant
shall have exercised this option to purchase, but defaults under its obligations
hereunder, such default shall constitute an Event of Default under this Lease,
and Landlord shall be entitled to exercise its rights as set forth in section
12.02.
(g) Nothing in this section 23.01, nor Tenant's exercise, nor
failure to exercise, any of Tenant's rights under this option shall in any way
affect any of the rights and obligations of the Tenant or the Landlord under
this Lease, or otherwise operate so as to (i) merge the Lease with any legal or
equitable interest that the Tenant may acquire with respect to the Premises by
virtue of this option, (ii) cause the Tenant to become a vendee-in-possession,
or (iii) otherwise terminate the lessor-lessee relationship of the Landlord and
the Tenant under the Lease. To the extent that the Tenant does, by operation of
law or otherwise, become a vendee-in-possession by virtue of this option, the
Tenant hereby expressly agrees, as such vendee-in-possession, nevertheless to be
bound by all of the obligations of the Tenant under the Lease, including,
without limitation, the obligation to pay the rent and other amounts payable
under the Lease.
(h) The Landlord and Tenant agree that only the income from the
Premises shall be prorated as of 11:59 P.M. of the day immediately preceding the
Closing Date and that Tenant as Buyer shall be responsible for all of the
expenses of the Premises for the periods prior and subsequent to the Closing
Date.
(i) The Premises shall be conveyed and accepted in their AS-IS,
WHERE-IS condition, without representation or warranty whatsoever with respect
thereto, and subject to all of the disclaimers, provisions, terms and conditions
of Section 7.02 of this Lease.
(j) Landlord as Seller shall pay State documentary stamp taxes due
on the deed of conveyance and the cost of recording any title corrective
instruments for which it is responsible. All other expenses of the sale and
purchase, including but not limited to title insurance, survey (if any), other
recording costs, including the cost of recording the Special Warranty Deed, and
third-party financing charges and costs (provided, however, that Tenant's
obligations shall not be contingent upon its ability to obtain financing), shall
be paid by Buyer. The parties shall, however, pay their own respective
attorneys' fees and costs in connection with the closing.
(k) All risk of loss, damage and destruction to the Premises prior
to closing shall be borne by Tenant, as Buyer.
(l) Until the closing, all of the terms, provisions and conditions
of the Lease shall remain in full force and effect and shall be applicable to
Tenant, as the tenant hereunder, and to Landlord, as the landlord hereunder.
(m) In addition to the Special Warranty Deed for the conveyance of
the Premises, Landlord as seller shall prepare and deliver the closing
statement, a FIRPTA certificate, 1099S (if required by law) and a quit-claim
assignment with assumption for all operating and other permits for the Premises
and for this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
TENANT:
Signed, sealed and delivered REVENGE MARINE, INC., a Nevada corporation
in the presence of:
By:
- ---------------------------- ---------------------------------------
Its:
29
<PAGE> 30
- -------------------------------
LANDLORD:
MIAMI RIVER PARTNERS, LTD., a Florida
limited partnership
BY: MIAMI RIVER PARTNERS, INC., a Florida
corporation, its general partner
- ------------------------------- By:
----------------------------------------
Its:
30
<PAGE> 31
EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
31
<PAGE> 32
EXHIBIT B
PERMITTED EXCEPTIONS
1) All of those matters set forth in Section 23.01(d) of this Lease and
Option to Purchase.
2) Any matters which would be disclosed by an accurate and current survey of
the Premises.
3) Taxes and assessments for all years prior to and subsequent to this Lease
(and prior to and after closing of the sale and purchase in the event of
an exercise of and closing pursuant to the Option to Purchase in Article
23).
4) All of those matters set forth in the copy of Commonwealth Land Title
Insurance Company Commitment for Title Insurance No. 864-559816 attached
hereto and as a part of this Exhibit B.
32
<PAGE> 33
TABLE OF CONTENTS
ARTICLE I DEMISE AND TERM
Section 1.01 Demise and Acceptance Generally...................... 1
Section 1.02 Premises............................................. 1
Section 1.03 Commencement and Duration of Lease................... 1
ARTICLE II RENT AND SECURITY
Section 2.01 Amount of Minimum Rent............................... 3
Section 2.02 Payment of Rent...................................... 3
Section 2.03 Lease Year Defined................................... 3
Section 2.04 Security............................................. 4
ARTICLE III EXPENSES PAYABLE BY TENANT
Section 3.01 Net Intent........................................... 4
Section 3.02 Tenant to Pay Impositions............................ 4
Section 3.03 Tenant to Pay All Utilities, Operating
Costs, Etc......................................... 5
Section 3.04 Contests............................................. 5
Section 3.05 Income Tax Exclusion................................. 6
Section 3.06 Additional Rent...................................... 6
ARTICLE IV INSURANCE
Section 4.01 Property Insurance................................... 7
Section 4.02 Liability Insurance.................................. 7
Section 4.03 Blanket Policies..................................... 7
Section 4.04 General Insurance Provisions......................... 8
ARTICLE V UTILITIES
Section 5.Ol Utilities............................................ 9
ARTICLE VI REPAIRS, REPLACEMENT, MAINTENANCE
AND ALTERATION
Section 6.01 Tenant's Obligation to Maintain
and Repair......................................... 9
Section 6.02 Alterations.......................................... 9
Section 6.03 Tenant's Further Obligation to Maintain.............. 11
Section 6.04 Tenant's Obligations to Construct.................... 11
ARTICLE VII USE AND ACCEPTANCE OF PREMISES; WAIVER
Section 7.01 Use.................................................. 12
Section 7.02 Inspection........................................... 12
Section 7.03 Waiver by Tenant..................................... 12
ARTICLE VIII ASSIGNMENT AND SUBLETTING
Section 8.01 Assignment and Subletting............................ 12
Section 8.02 Attornment........................................... 13
Section 8.03 Acceptance of Rent................................... 13
Section 8.04 Assignment by Landlord............................... 13
Section 8.05 Interest in Subleases................................ 13
Section 8.06 Excess Rent.......................................... 13
ARTICLE IX DAMAGE OR DESTRUCTION
Section 9.01 Tenant's Obligation to Restore
and Repair......................................... 13
Section 9.02 Application of Insurance Proceeds.................... 13
<PAGE> 34
ARTICLE X CONDEMNATION
Section 10.01 Entire Condemnation.................................. 14
Section 10.02 Partial Condemnation................................. 14
Section 10.03 Awards............................................... 14
Section 10.04 Temporary Taking..................................... 14
ARTICLE XI TENANT'S REPAIR AFTER DAMAGE BY
CASUALTY OR CONDEMNATION
Section 11.01 Proceeds and Awards.................................. 14
Section 11.02 Reconstruction....................................... 15
ARTICLE XII TENANT'S BREACH AND LANDLORD'S REMEDIES
Section 12.01 Default.............................................. 15
Section 12.02 Remedies............................................. 16
Section 12.03 Landlord's Right to Cure Tenant's
Defaults........................................... 17
Section 12.04 Waiver of Rights of Redemption....................... 17
ARTICLE XIII LIENS; ADVERSE POSSESSION
Section 13.01 Tenant to Keep Premises Lien Free.................... 18
Section 13.02 Notice of Non-Responsibility......................... 18
Section 13.03 Adverse Possession................................... 18
ARTICLE XIV EST0PPEL CERTIFICATE
Section 14.01 Estoppel Certificate................................. 18
ARTICLE XV NO LIABILITY; INDEMNIFICATION
Section 15.01 No Liability; Indemnification........................ 18
ARTICLE XVI TERMINATION AND PRORATIONS
Section 16.01 Termination.......................................... 19
Section 16.02 Holdover............................................. 19
Section 16.03 Personal Property.................................... 19
Section 16.04 Proration............................................ 19
ARTICLE XVII NO PARTNERSHIP
Section 17.01 No Partnership....................................... 19
ARTICLE XVIII SUBORDINATION AND ATTORNMENT
Section 18.01 Subordination........................................ 20
Section 18.02 Notice............................................... 20
Section 18.03 Attornment........................................... 20
Section 18.04 Leasehold Mortgage................................... 20
ARTICLE XIX EXCULPATORY PROVISIONS
Section 19.01 Exculpatory Provisions............................... 21
ARTICLE XX ENVIRONMENTAL CONCERNS
Section 20.01 Tenant Representations............................... 21
Section 20.02 Indemnity............................................ 21
Section 20.03 Environmental Audits................................. 22
Section 20.04 Environmental Notices................................ 22
Section 20.05 Environmental Directives; Liens...................... 22
Section 20.06 Storage Tanks........................................ 23
<PAGE> 35
ARTICLE XXI GENERAL COVENANTS
Section 21.01 Construction......................................... 23
section 21.02 Modification......................................... 23
Section 21.03 Acceptance of Rent................................... 23
Section 21.04 Landlord's Right of Entry............................ 23
Section 21.05 Notices.............................................. 24
Section 21.06 Entire Agreement..................................... 24
Section 21.07 No Broker............................................ 24
Section 21.08 Counterparts......................................... 24
Section 21.09 Waiver............................................... 24
Section 21.10 Severability......................................... 25
Section 21.11 Legal Fees........................................... 25
Section 21.12 Triple Net Lease..................................... 25
Section 21.13 Landlord's Lien...................................... 25
Section 21.14 Payments of Money; Interest.......................... 25
Section 21.15 Governing Law; Negotiated Agreement.................. 25
Section 21.16 Tenant's Authority to Execute Lease.................. 25
Section 21.17 Waiver of Jury Trial and Counterclaim................ 26
Section 21.18 Signs................................................ 26
Section 21.19 Letter of Credit..................................... 26
Section 21.20 Guaranty of Lease.................................... 26
Section 21.21 Survival............................................. 26
ARTICLE XXII OPTION TO EXTEND
Section 22.01 Option to Extend..................................... 27
ARTICLE XXIII OPTION TO PURCHASE
Section 23.01 Option to Purchase................................... 27
EXHIBITS
Exhibit A - Legal Description of the Premises
Exhibit B - Permitted Exceptions
Exhibit C - Guaranty
<PAGE> 36
LEASE AGREEMENT
FOR
(See this Lease and Exhibit A
hereto for description of the Premises)
BETWEEN
REVENGE MARINE, INC.,
A NEVADA CORPORATION,
as Tenant,
AND
MIAMI RIVER PARTNERS, LTD., A FLORIDA LIMITED PARTNERSHIP,
SUCCESSORS AND ASSIGNS,
as Landlord
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT made and entered as of this 10th day of
July, 1998, between REVENGE MARINE, INC., a Nevada corporation, as Tenant, and
MIAMI RIVER PARTNERS, LTD., a Florida limited partnership, as Landlord.
RECITALS:
WHEREAS, Landlord and Tenant made and entered into that certain Lease
Agreement dated as of May ___, 1998 (the "Lease"), for the Premises therein
described; and
WHEREAS, the parties desire to amend the Lease as hereinafter described.
NOW, THEREFORE, for $10.00 and other good and valuable considerations
herein described, the parties hereto hereby agree that the Lease is modified as
follows:
1. Effective on the Commencement Date, ARTICLE II, RENT AND SECURITY,
SECTION 2.01, AMOUNT OF MINIMUM RENT, is changed to provide that the Annual Rent
for Lease Year number one (1) is increased from $430,500.00 to $448,000.00 and
the Monthly Installments are increased from $35,875.00 to $37,333.34. All
references in the lease to Annual Rent, Monthly Installments thereof, and
adjustments and increases thereto for all Lease Years subsequent to the first
Lease Year, shall be based upon the Annual Rent and Monthly Installment thereof
(as appropriate) as herein modified and increased.
After the word "inclusive" in the second line of the first full
grammatical paragraph of SECTION 2.01, shall be added "(and during each Lease
Year of the Extended Term, if applicable)".
2. ARTICLE II, SECTION 2.02, PAYMENT OF RENT, is modified to provide that
rent, additional rent, sales tax, use and excise tax thereon, shall be paid to
Landlord and sent to the attention of BankAtlantic Development Corporation,
having an office at 1350 N.E. 56th Street, Ft. Lauderdale, Florida 33334. Sales
tax on rent and additional rent shall accompany payment of such rent and
additional rent.
3. ARTICLE II, SECTION 2.04, SECURITY, shall be modified to provide that
notwithstanding anything to the contrary therein, Landlord, as the purchaser of
the Premises, shall be entitled to retain as the security deposit under Section
2.04 of the Lease, the $35,000.00 of the $50,000.00 originally intended to be
refunded to Tenant at the sale and purchase closing pursuant to paragraph four
(4) of that certain Assignment and Assumption of Purchase and Sale Agreement
and Escrow Agreement dated on or about May 1, 1998 ("Assignment"), between
Tenant, as Assignor therein, and Landlord, as Assignee therein. Tenant/Assignor
hereby authorizes Landlord/Assignee to retain such $35,000.00 described in the
Assignment as the security deposit under Section 2.04 of the Lease.
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<PAGE> 2
Consistent with the foregoing, SECTION 21.19, LETTER OF CREDIT, is hereby
deleted from the Lease and is of no force or effect, AB INITIO.
4. ARTICLE III, EXPENSES PAYABLE BY TENANT, SECTION 3.01, NET INTENT,
shall be amended to add to the end thereof the following language: "Included in
the costs, expenses and obligations relating to the Premises and the Lease and
which shall be paid by Tenant shall be payment to Landlord of an amount equal
to two percent (2%) of the Annual Rent due hereunder as reimbursement to
Landlord for the management fees paid by Landlord in connection with the
administration of this Lease. Said amount shall be paid in equal monthly
installments, with the monthly installments for the first Lease Year being
$746.66. Tenant shall also reimburse Landlord for any insurance premiums
Landlord pays for liability, property and loss of rents insurance which may be
required, in addition to insurance provided by Tenant, by Landlord's mortgage
lender on the Premises. Such reimbursement shall be made promptly after receipt
by Tenant of a billing therefor from Landlord".
5. SECTION 3.02, TENANT TO PAY IMPOSITIONS, is modified to provide that
real estate taxes shall be paid by Tenant to Landlord in equal monthly
installments during the Lease Term, notwithstanding the other provisions of
this Section. Based on real estate taxes for the year 1997, monthly
installments of real estate taxes starting with the Commencement Date shall be
$5,727.00, prorated for the portion of the month in which the Lease Term
commences and the month in which the Lease Term (or Extended Term, if
applicable), expires. On or before the beginning of each calendar year of the
Lease Term starting with the second calendar year, Landlord shall submit to
Tenant a statement of the estimated monthly installments of real estate taxes
for such calendar year, and Tenant shall pay same to Landlord monthly, together
with the payment of Monthly Installments of Annual Rent, sales tax, the
management fee reimbursement under Section 3.01 and other Additional Rent or
sums due Landlord under the Lease. The estimated monthly installments for real
estate taxes may be changed from time to time by Landlord based upon the prior
calendar year's actual real estate taxes and/or Landlord's good faith estimate
of the current calendar year's real estate taxes. If the total of the monthly
installments for real estate taxes for the calendar year in which they are due
is less than needed to pay the taxes, then Tenant shall pay the difference
needed to pay the real estate taxes in full in a lump sum to Landlord promptly
upon receipt of a billing therefor. Any overpayment of real estate taxes by
Tenant shall be credited towards the real estate tax monthly installment next
coming due in the ensuing calendar year. Tenant expressly agrees that Landlord
may apply the security deposit or any portion thereof in satisfaction of any
Additional Rent, including but not limited to real estate tax monthly
installments, if same is not paid when due; any portion of the security deposit
so applied shall be promptly restored by Tenant to replenish such security
deposit to the full amount. Landlord hereby agrees to pay the real estate taxes
from the total payment therefor received from Tenant, but Landlord shall not be
obligated to pay the same from any of its own funds.
6. ARTICLE IV, INSURANCE, SECTION 4.04, GENERAL INSURANCE PROVISIONS,
PARAGRAPH E, is hereby amended to delete Landlord's waiver and release
contained therein.
2
<PAGE> 3
7. ARTICLE VI, REPAIRS, REPLACEMENT MAINTENANCE AND ALTERATION, SECTION
6.04, TENANT'S OBLIGATIONS TO CONSTRUCT, is amended to provide that before
Tenant commences the renovations and improvements required thereunder, Tenant
shall obtain builder's risk insurance therefor and, in compliance with Article
IV, which names Landlord and Landlord's mortgagee as additional insureds and
loss payees thereunder, and that Tenant shall provide to Landlord an original
Certificate of Insurance evidencing same.
8. ARTICLE X, CONDEMNATION, SECTION 10.2, PARTIAL CONDEMNATION,
SUBSECTION (ii) thereof is amended to provide that only that portion of the
award that relates to the taking of improvements, and not that portion relating
to the taking of the land upon which improvements have been constructed, shall
be disbursed for repair and restoration.
9. ARTICLE XIX, EXCULPATORY PROVISIONS, SECTION 19.01, is amended to
provide that Landlord's partners shall be included as parties exculpated
thereunder and after the word "Landlord" in Subsections (b) and (c) of this
Section 19.01, the words "and its partners" shall be deemed added.
10. ARTICLE XX, ENVIRONMENTAL CONCERNS, SECTION 20.02, ENVIRONMENTAL
AUDITS, is amended to provide that Landlord shall have the right to have
environmental audits conducted on and of the Premises on an annual basis, or
more frequently in the event Landlord has reasonable cause to believe the
Premises may be contaminated or is in danger of becoming contaminated by
hazardous substances, the cost of which audits shall be borne by Tenant and
paid to Landlord promptly upon receipt of a statement therefor.
11. SECTION 20.06, STORAGE TANKS, is amended to provide that Tenant
acknowledges that the Approval of Alternative Procedures ("Approval") which
allowed the two (2) underground storage tanks ("UST's") located on the Premises
(together with associated equipment) to remain without being closed, expired in
January, 1998, and that according to Florida law, unless the Approval is
formally extended, the UST's must be timely closed. A copy of the Approval and
a July 30, 1997, Inspection Report concerning this matter have been provided to
Tenant.
Tenant agrees that under this Section 20.06, it shall be solely
responsible at its sole cost and expense for assuring that the UST's comply
with all applicable laws, rules and regulations, and are either timely closed
in accordance therewith or if to be reactivated and used then are put back into
service according to all such applicable laws, rules and regulations (including
installation of all equipment upgrades as required by law). In furtherance of
the foregoing, the Tenant agrees that it shall strictly perform under all
provisions of the Lease concerning any work that must be done to achieve
compliance of the UST's with all applicable laws, rules and regulations,
including but not limited to submitting to Landlord, for its approval all plans
and specification for such work and the contractors to perform any such work
and the obtaining of all permits for such work.
12. ARTICLE XXII, OPTION TO EXTEND, SECTION 22.01 is hereby amended to
make it clear that the Annual Rent during the first year of the Extended Term,
whether calculated and determined under Subsections (i) or (ii) thereof, shall
be deemed the base rent for purposes of adjustment and
3
<PAGE> 4
increases thereto under Section 2.01 of the Lease for the remaining years of
the Extended Term.
13. ARTICLE XXIII, OPTION TO PURCHASE, SECTION 22.01, SECTION (c), is
amended to change the purchase price during the first year of the Lease Term
from $3,259,500.00 to $3,392,000.00 and the per day increase that would apply
thereto during the second Lease from $536.00 to $558.00 and the per day
increase that would apply thereto during the third Lease Year from $568.00 to
$591.00 (by way of example and clarification, the purchase price at a closing
anytime during the first Lease Year shall be $3,392,000.00 and if the closing
were to occur on the last day of the second Lease Year the purchase price would
be $3,595,520.00 and if the closing were to occur on the last day of the third
Lease Year the purchase price would be $3,811,251.00 (the foregoing amounts
having been rounded).
14. SECTION 23.01, SUBSECTION (d), is amended to provide that the
Permitted Exceptions, Exhibit "B", shall be the Exhibit "B" attached hereto,
which shall replace that Exhibit "B" attached to the Lease.
15. Except as expressly modified herein, the Lease shall remain unchanged
and in full force and effect and same is hereby ratified and confirmed. Tenant
hereby represents and warrants to Landlord and to its mortgage lender on the
Premises that it is in full compliance with all of the Lease terms, provisions
and conditions and is not in default under any of the same.
IN WITNESS WHEREOF, the undersigned have hereunto set their respective
hands and seals as of the date first hereinabove written.
Signed, sealed and delivered Tenant:
in the presence of: REVENGE MARINE, INC.
By: /s/ William Robinson
- ---------------------------------- --------------------------------
William Robinson, Vice President
- ----------------------------------
Landlord:
MIAMI RIVER PARTNERS, LTD.
BY: MIAMI RIVER PARTNERS, INC.
By:
- ---------------------------------- --------------------------------
Its President
- ----------------------------------
4
<PAGE> 1
EXHIBIT 10.3
STOCK EXCHANGE AGREEMENT
THIS AGREEMENT is made this 29th day of May, 1998, by and between
Revenge Marine Inc., a Nevada corporation ("Revenge") and Consolidated Marine
Inc., a Florida corporation ("CMI").
WITNESSETH:
WHEREAS, the total authorized capital stock of CMI consists of 50,000
shares of common stock, par value $0.01 per share, of which 50,000 shares are
issued and outstanding (the "CMI Shares"); and
WHEREAS, Revenge desires to acquire all of the issued and outstanding
capital stock of CMI, or 50,000 shares of Common Stock ("CMI Shares") for such
number of shares of common stock of Revenge ("Revenge Shares") as shall be equal
to $1,000,000 at the average bid price five (5) days prior to the date of
closing; and
WHEREAS, in reliance on and subject to the terms and conditions,
representations, warranties, covenants and agreements herein contained, CMI
desires to sell the CMI Shares to Revenge, and Revenge desires to purchase the
CMI Shares in a stock for stock exchange.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and value consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE.
Section 1.1 AGREEMENT TO PURCHASE AND EXCHANGE. In reliance on and
subject to the terms, conditions, representations, warranties, covenants and
agreements herein contained, CMI shall assign, transfer and convey unto Revenge,
and Revenge shall purchase all of the CMI Shares in a tax free reorganization.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the CMI
Shares (the "Purchase Price") shall be such number of Revenge Shares as shall be
equal in value to $1,000,000, at the average bid price five (5) days prior to
the date of closing.
Section 1.3 CLOSING. The closing of the transaction contemplated in
this Agreement (the "Closing") shall take place at the offices of John Holt
Smith of Inman Steinberg Nye & Stone, 1925 Century Park East, Suite 1600,
Los Angeles, California 90067, on May 21, 1998, or at such other date, time or
place as shall be mutually acceptable to the parties (the "Closing Date").
Section 1.4 TRANSACTIONS AND DOCUMENTS AT AND AFTER CLOSING.
(a) At the Closing, CMI shall deliver to Revenge certificates
representing 50,000 shares of CMI, duly endorsed for transfer.
(b) At the Closing, Revenge shall deliver to CMI the 636,942
Revenge Shares common stock representing the Purchase Price for the CMI Shares,
calculated as set forth hereinabove, and bearing an appropriate legend
restricting transfer except as permitted under Rule 144 of the Securities Act of
1933, as amended.
(c) From time to time and at any time, at Revenge's request,
whether on or after the Closing Date, and without further consideration, CMI
shall, at its own expense except as otherwise provided in this Agreement,
execute and deliver such further documents and instruments of conveyance
<PAGE> 2
and transfer and shall take such further actions as may be necessary or
convenient, in the reasonable opinion of Revenge, to transfer and convey to
Revenge, all of its right, title and interest in and to the CMI Shares, free and
clear of any lien or adverse claim.
(d) From time to time and at any time, at CMI's request, whether on or
after the Closing Date, and without further consideration, Revenge shall, at its
own expense except as otherwise provided in this Agreement, execute and deliver
such further documents and instruments of conveyance and transfer and shall take
such further actions as may be necessary or convenient in the reasonable opinion
of CMI, to transfer and convey to CMI, all of its right, title and interest in
and to the Revenge Shares free and clear of any lien or adverse claim.
2. ADDITIONAL AGREEMENTS.
Section 2.1 REVENGE'S ACCESS AND INSPECTION. CMI has allowed and shall
allow Revenge and its authorized representatives full access during normal
business hours from and after the date hereof and prior to the Closing Date to
all of CMI's properties, books, contracts, commitments and records for the
purpose of making such investigation as Revenge may desire, and CMI shall
furnish Revenge such information concerning CMI's affairs as Revenge may
request. CMI has caused and shall cause CMI's personnel to assist Revenge in
making such investigation and shall cause the counsel, accountants, engineers
and other non-employee representatives of CMI to be reasonably available to
Revenge for such purposes.
Section 2.2 CMI'S ACCESS AND INSPECTION. Revenge shall allow CMI and its
authorized representatives access during normal business hours from and after
the date hereof and prior to the Closing Date to such of Revenge's properties,
books, contracts, commitments and records as CMI may reasonably request for the
purpose of determining the financial condition of Revenge. Revenge shall cause
Revenge's personnel to assist CMI in making such investigation and shall cause
the counsel, accountants, engineers and other non-employee representatives of
Revenge to be reasonably available to CMI for such purposes.
Section 2.3 COOPERATION. The parties shall cooperate fully with each other
and with their representatives, counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and will use their best efforts to consummate the transactions
contemplated hereby and fulfill their obligations hereunder.
Section 2.4 EXPENSES. All of the expenses incurred by Revenge in
connection with the authorization, preparation, execution and performance of
this Agreement by Revenge, including without limitation all fees and expenses of
agents, representatives, counsel and accountants for Revenge, shall be paid by
Revenge. All expenses incurred by CMI in connection with the authorization,
preparation, execution and performance of this Agreement, including without
limitation all fees and expenses of agents, representatives, counsel and
accountants, shall be paid by CMI.
Section 2.5 BROKERS. Each party hereto jointly and severally represents
and warrants that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated herein and each party shall
indemnify the other and save it harmless from any claim or demand for commission
or other compensation by any broker, finder or similar agent claiming to have
been employed by or on behalf of such party.
Section 2.6 EMPLOYMENT AGREEMENT. Pursuant to resolution of the Board of
Directors of Revenge on May 8, 1998, (i) Revenge will enter into non-exclusive
employment agreements with James Gardiner and designated employees with the
duties and obligations set forth therein, all as set forth in Schedule 2.6
attached hereto.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF CMI.
CMI represents, covenants and warrants to Revenge as follows:
Section 3.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. CMI is a corporation
duly organized, validly existing and in good standing under the laws of Florida
and has the corporate power and authority to own, operate and lease its
respective properties, to carry on its business as now being conducted, and to
enter into this Agreement and to carry out the transactions contemplated hereby.
CMI is duly qualified to do business and is in good standing in each
jurisdiction where the failure to qualify would have a material adverse affect
on it. CMI has delivered to Revenge or its counsel true and correct copies of
the articles of incorporation and by-laws of CMI, together with any amendments
thereto.
Section 3.2 SHARES OF STOCK. All issued and outstanding shares of capital
stock of CMI have been duly authorized and validly issued and are fully paid and
nonassessable. There is no subscription, option, warrant, call, right, contract,
commitment, understanding or arrangement relating to the issuance, sale or
transfer by CMI of any shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Section 3.3 AUTHORITY. CMI has the full right and authority to enter into
and fully perform this Agreement and all other agreements and documents to be
delivered to Revenge in connection herewith. All actions required to be taken by
CMI to authorize the execution, delivery and performance of this Agreement and
all other agreements and documents to be delivered in connection herewith have
been or will by the Closing Date be properly taken. This Agreement constitutes
the valid and binding obligation of CMI. Neither the execution and delivery of
this Agreement and all other ageements and documents executed in connection
herewith nor the consummation of the transactions contemplated hereby nor the
performance of this Agreement and all other agreements and documents executed in
connection herewith will (1) conflict with or result in a breach of any
provision of the certificate of incorporation or by-laws of CMI, (2) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance or the payment of
money required by, or result in the creation of any lien, security interest,
charge or encumbrance upon any of CMI's properties under any of the terms,
conditions or provisions of any loan agreement, note, bond, mortgage, indenture,
lease, agreement or other instrument or commitment to which CMI is a party, or
by which CMI or its properties may be bound or affected or (3) violate any
order, writ, injunction, decree, judgment, or ruling of any court or
governmental authority specifically applicable to CMI or any of its properties.
Section 3.4 NO VIOLATION. Except as set forth on Schedule 3.4, to the best
knowledge of CMI, CMI has complied with all rules, regulations, codes and laws
affecting its business and operations and is not in default under, or in
violation of, any provision of any federal, state or local rule, regulation,
code or law nor has CMI been given notice of any such default or violation.
Section 3.5 LICENSES AND RIGHTS. CMI possesses all franchises, easements,
licenses, permits and other authorizations from governmental or regulatory
authorities and from all other persons or entities that are necessary to permit
it to engage in its business as presently conducted in and at all locations and
places where it is presently operating. Such franchises, licenses, permits and
other authorizations are set forth on Schedule 3.5.
Section 3.6 CONSENTS. Except as set forth on Schedule 3.6 hereto, no
approval or consent of any person, firm or other entity or body is required to
be obtained by CMI for the authorization of this Agreement or the consummation
by CMI of the transactions contemplated hereby.
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<PAGE> 4
Section 3.7 NO DEFAULTS. Except as set forth on Schedule 3.7, to the best
knowledge of CMI, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of CMI under the terms of any
indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 3.17, to which CMI is a party or to which its assets are subject, or by
which it is otherwise bound, and no such default or event exists or is alleged
to exist with respect to the performance of any obligation of any other party
thereto.
Section 3.8 FINANCIAL STATEMENTS. Revenge has been or will be furnished
with the proforma financial statements (the "Financial Statements"). The
Financial Statements were prepared in accordance with generally accepted
accounting principles and present fairly and accurately the information set
forth therein.
Section 3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.9 hereto, since April 30, 1998, CMI has actively conducted its business in
the ordinary and regular course. Since that date, there has not been any
material adverse change in the condition (financial or otherwise), results of
operations, assets, liabilities, properties, business or prospects of CMI nor
is any event threatened which would cause such an adverse change, nor has there
occurred any event or governmental regulation or order restricting the business
of CMI.
Section 3.10 FACILITIES AND EQUIPMENT. The personal property owned or
leased by CMI at its facility for the operation of, or used in, its business is
in its possession or under its control and is adequate for the operation of
such business as presently conducted.
Section 3.11 TITLE TO ASSETS. Except as set forth on Schedule 3.11 or in
the Financial Statements, CMI has good, valid and marketable title to all of
its real property and leasehold estates and good and valid title to all of its
other assets (tangible and intangible), including, but not limited to, all
leasehold improvements and equipment and all other properties and assets
reflected or required to be reflected in the Financial Statements and all
properties and assets purchased or leased by it since the dates of such
Financial Statements (except for properties and assets so reflected or required
to be reflected which have been sold or otherwise disposed of in the ordinary
course of business), subject to no liens, pledges, encumbrances, mortgages,
security interests, charges or other similar restrictions of any nature
whatsoever. Except as set forth on Schedule 3.11, CMI enjoys peaceful and quiet
possession of its properties and assets pursuant to or by all of the deeds,
bills of sale, leases, licenses and other agreements under which it is
operating its business.
Section 3.12 ABSENCE OF UNDISCLOSED LIABILITIES. CMI does not have any
material liabilities or obligations, either accrued or unaccrued, fixed or
contingent, which have not been reflected in the Financial Statements or set
forth on Schedule 3.12 hereof.
Section 3.13 LITIGATION. Schedule 3.13 hereof sets forth a list of all
administrative or judicial proceedings to which CMI is a party. Except as set
forth on Schedule 3.13, there is no action, suit, claim, demand, arbitration or
other proceeding, administrative or judicial, pending or, to the best knowledge
of CMI, threatened against or relating to CMI which, if adversely determined or
resolved, would materially and adversely affect the financial condition,
results of operations, business or prospects of CMI.
Section 3.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 3.14(a), CMI does not own, or operate
under, any patent, trademark or service mark or any applications therefor. All
trade names (including those whose use is limited to one or more states of the
United States) owned or used by CMI are listed on Schedule 3.14 hereof and, to
the extent indicated therein, have been duly registered with the states of
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<PAGE> 5
the United States or the corresponding offices of other countries. Except as set
forth on Schedule 3.14, CMI is the sole and exclusive owner of, or has the sole
and exclusive power with respect to, or has the sole and exclusive right to use,
the trade names specified on Schedule 3.14.
(b) Except as set forth on Schedule 3.14(b) hereof, CMI has not ever
been charged with infringement or violation of any adversely held trademark,
trade name or copyright.
(c) Except as set forth on Schedules 3.14(a) and 3.14(b), there no
claims or demands of any other person, firm or corporation pertaining to the
trade names, copyright registrations or pending copyright registration
applications, as the case may be, listed on such schedules, and no proceedings
have been instituted which challenge the right of CMI in respect thereof.
Section 3.15 EMPLOYEE BENEFITS.
(a) Schedule 3.15 hereof contains a list of (i) each pension,
profit sharing, bonus, deferred compensation, or other retirement plan or
arrangement for the benefit of any employee or group of employees of CMI or any
independent contractors or group of independent contractor of CMI, (ii) each
medical, health, disability, insurance or other plan or arrangement of CMI, and
(iii) each employee stock option plan or other plan providing for the purchase
of shares of capital stock of CMI. All of such plans and arrangements of CMI are
referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated In accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by CMI (and each
funding medium which may be attendant thereto) are in compliance with applicable
law and all reporting and disclosure requirements under applicable laws and
regulations, and have been administered and operated in accordance with their
respective provisions and applicable law. There are no actions, suits or claims
(other than routine claims for benefits) pending with respect to the employee
benefit plans.
(d) CMI has filed, published and disseminated all reports, documents,
statements and communications which are required to be filed, published or
disseminated under applicable law and the rules and regulations promulgated
thereunder relating to, and have timely made all modifications and amendments
to, the employee benefit plans.
Section 3,16 TAXES AND TAX RETURNS. CMI has duly filed all income,
franchises and other tax returns and reports required to be filed by it and has
duly paid or made provisions for the payment of all taxes (including any
interest or penalties) which are due and payable pursuant to such returns. CMI
has withheld proper and accurate amounts from their employees' compensation in
subtantial compliance with all withholding and similar provisions of applicable
law. There are and will hereafter be no tax deficiencies (including penalties
and interest) of any kind assessed against CMI with respect to any period ending
on or before the Closing Date.
Section 3.17 CONTRACTS. CMI has heretofore furnished to Revenge or its
counsel true and complete copies of each document, and a written description of
each oral contact, set forth on Schedule 3.17 hereof. Schedule 3.17 is a true
and complete list of all contracts, understandings, commitments, arrangements
and agreements of the following types, including all amendments thereto to which
CMI is a party:
(a) Contracts relating to equipment purchases, or series of similar
equipment purchases from the same supplier, involving an expenditure of, or if
in a series, expenditures in the aggregate of, more than twenty-five thousand
dollars ($25,000);
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<PAGE> 6
(b) Bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or stock purchase
plans or similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any
lenders or guarantees of undertakings to answer for the debts or defaults of
another, or any contracts encumbering title to any properties, involving in each
case, or if in a series involving the same lender, guarantor or property, as the
case may be, In the aggregate, at least twenty-five thousand dollars ($25,000);
(d) contracts for the acquisition or disposition of a business or
substantially all of the property, assets or capital stock or other securities
of a business or company under which there are continuing or unperformed
obligations on the part of any of the parties hereto, which contracts in each
case involve at least twenty-five thousand dollars ($25,000);
(e) Conditional sales contracts, leases of personal property or
contracts for the purchase or sale of real or personal property, involving in
each case at least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts, involving in each case, or
with respect to any individual in the aggregate, at least twenty-five thousand
dollars ($25,000);
(g) Contracts for the furnishing of services or products to or by CMI,
involving an expenditure in each case of at least twenty-five thousand dollars
($25,000);
(h) Royalty or licensing contracts or contracts requiring simliar
payments to unrelated parties individually, or with respect to any unrelated
party in the aggregate, involving or which reasonably may in the future involve
an amount in excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between CMI and any of its employees; and
(j) All agreements, contracts and commitments not listed on any other
schedule hereto which individually involve the payment of twenty-five thousand
dollars ($25,000) or more.
Except as set forth on Schedule 3.17, all such contracts,
understandings, commitments, arrangements and agreements are in full force and
effect.
Section 3.18 COLLECTIVE BARGAINING AGREEMENTS. Schedule 3.18 hereof is
a list of all collective bargaining agreements with any labor organization to
which CMI is a party. The relations of CMI with its employees are good and there
are no impending labor difficulties.
Section 3.19 INSURANCE. CMI is insured by insurers unaffiliated with
CMI or CMI with respect to its properties and the conduct of its business in
such amounts and against such risks as are generally and prudently maintained
for comparable businesses and consistent with its past practice
Section 3.20 REAL PROPERTY.
(a) Schedule 3.20 hereof sets forth a true and complete list of (i) all
real property owned by CMI and (ii) all real property leases to which CMI is a
party. CMI has heretofore furnished to Revenge or its counsel true and complete
copies of each written contract and a written description of each oral contract
relating to the list set forth on Schedule 3.20.
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<PAGE> 7
(b) With respect to the leases described on Schedule 3.20, except as
setforth on Schedule 3.20;
(i) "All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
(ii) The rental set forth in each such lease is the actual rental
being paid, and there are no separate agreements or understandings with respect
to the same not set forth in Schedule 3.20;
(iii) The lessee under each such lease has the full right to
exercise any renewal option contained therein and upon due exercise will be
entitled to enjoy the use of the premises for the full term of such renewal
option;
(iv) Upon performance by the lessee of the terms of each such
lease, the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
(v) Except as set forth on Schedule 3.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed in whole or in part, by any of the lessors.
Section 3.21 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by CMI under this Agreement or in any certificate, schedule or
other document furnished to be furnished to Revenge or its counsel pursuant
hereto, or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of fact
contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF REVENGE.
Revenge represents, covenants and warrants to CMI as follows:
Section 4.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. Revenge is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and has the corporate power and authority to own, operate and lease
its respective properties, to carry on its business as now being conducted, and
to enter into this Agreement and to carry out the transactions contemplated
hereby. Revenge is duly qualified to do business and is in good standing in each
jurisdiction were the failure to qualify would have a material adverse affect on
it. Revenge has delivered to CMI or its counsel true and correct copies of the
articles of incorporation and by-laws of Revenge, together with any amendments
thereto.
Section 4.2 SHARES OF STOCK. Revenge has authorized 50,000,000 shares of
common stock of which there are presently issued and outstanding 4,600,000
shares of common stock. None of the 5,000,000 shares of preferred stock is
issued and outstanding. All issued and outstanding shares of capital stock of
Revenge have been duly authorized and validly issued and are fully paid and
nonassessable. There is no subscription, option, warrant, call, right, contract
commitment, understanding or arrangement relating to the issuance, sale or
transfer by Revenge of any shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument. There
is on file with the NASD a current, accurate and complete 15-c-2(11) for Revenge
and Revenge is currently trading on the Bulletin Board under the Symbol "BOAT."
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<PAGE> 8
Section 4.3 - AUTHORITY. Revenge has the full right and authority to enter into
and fully perform this Agreement and all other agreements and documents to be
delivered to CMI in connection herewith. All actions required to be taken by
Revenge to authorize the execution, delivery and performance of this Agreement
and all other agreements and documents to be delivered in connection herewith
have been or will by the Closing Date be properly taken. This Agreement
constitutes the valid and binding obligation of Revenge. Neither the execution
and delivery of this Agreement and all other agreements and documents executed
in connection herewith nor the consummation of the transactions contemplated
hereby nor the performance of this Agreement and all other agreements and
documents executed in connection herewith will (1) conflict with or result in a
breach of any provision of the certificate of incorporation or by-laws of
Revenge, (2) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
right of termination or cancellation of, or accelerate the performance or the
payment of money required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of Revenge's properties under any of
the terms, conditions or provisions of any loan agreement, note, bond, mortgage,
indenture, lease, agreement or other instrument or commitment to which Revenge
is a party, or by which Revenge or its properties may be bound or affected or
(3) violate any order,' writ, injunction, decree, judgment, or ruling of any
court or governmental authority specifically applicable to Revenge or any of its
properties.
Section 4.4 NO VIOLATION. Except as set forth on Schedule 4.4, to the best
knowledge of Revenge, Revenge has complied with all rules, regulations, codes
and laws affecting its business and operations and is not in default under, or
in violation of, any provision of any federal state or local rule, regulation,
code or law nor has Revenge been given notice of any such default or violation.
Section 4.5 LICENSES AND RIGHTS. Revenge possesses all franchises,
easements, licenses, permits and other authorizations from governmental or
regulatory authorities and from all other persons or entities that are necessary
to permit it to engage in its business as presently conducted in and at all
locations and places where it is presently operating. Such franchises, licenses,
permits and other authorizations are set forth on Schedule 4.5.
Section 4.6 CONSENTS. Except as set forth on Schedule 4.8 hereto, no
approval or consent of any person, firm or other entity or body is required to
be obtained by Revenge for the authorization of this Agreement or the
consummation by Revenge of the transactions contemplated hereby.
Section 4.7 NO DEFAULTS. Except as set forth on Schedule 4.7, to the best
knowledge of Revenge, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of Revenge under the terms of
any indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 4.17, to which Revenge is a party or to which its assets are subject,
or by which it is otherwise bound, and no such default or event exists or is
alleged to exist with respect to the performance of any obligation of any other
party thereto.
Section 4.8 FINANCIAL STATEMENTS. CMI has been or will be furnished with
statement of liabilities of Revenge for the period ended April 30, 1998, and its
statements of earnings for the fiscal year then ended (the "Financial
Statements") as set forth on Schedule 4.8 attached hereto. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods and as of their date
of issuance were or will be true, correct and complete all material respects and
present fairly and accurately the information set forth therein.
Section 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
4.9 hereto, since January 1, 1996, Revenge has actively conducted its business
in the ordinary and regular course. Since that date, there has not been any
material adverse change in the condition (financial or otherwise),
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results of operations, assets, liabilities, properties, business or prospects of
Revenge nor is any event threatened which would cause such an adverse change,
nor has there occurred any event or governmental regulation or order restricting
the business of Revenge.
Section 4.10 FACILITIES AND EQUIPMENT. The personal property owned or
leased by Revenge at its facility for the operation of, or used in, its business
is in its possession or under its control and is adequate for the operation of
such business as presently conducted.
Section 4.11 TITLE TO ASSETS. Except as set forth on Schedule 4.11 or
in the Financial Statements, Revenge has good, valid and marketable title to all
of its real property and leasehold estates and good and valid title to all of
its other assets (tangible and intangible), including, but not limited to, all
leasehold improvements and equipment and all other properties and assets
reflected or required to be reflected in the Financial Statements and all
properties and assets purchased or leased by it since the dates of such
Financial Statements (except for properties and assets so reflected or required
to be reflected which have been sold or otherwise disposed of in the ordinary
course of business), subject to no liens, pledges, encumbrances, mortgages,
security interests, charges or other similar restrictions of any nature
whatsoever. Except as set forth on Schedule 4.11, Revenge enjoys peaceful and
quiet possession of its properties and assets pursuant to or by all of the
deeds, bills of sale, leases, licenses and other agreements under which it is
operating its business.
Section 4.12 ABSENCE OF UNDISCLOSED LIABILITIES. Revenge does not have
any material liabilities or obligations, either accrued or unaccrued, fixed or
contingent, which have not been reflected in the Financial Statements or set
forth on Schedule 4.12 hereof, or which exceed in the aggregate $25,000.
Section 4.13 LITIGATION. Schedule 4.13 hereof sets forth a list of all
administrative or judicial proceedings to which Revenge is a party. Except as
set forth on Schedule 4.13, there is no action, suit, claim, demand, arbitration
or other proceeding, administrative or judicial, pending or, to the best
knowledge of Revenge, threatened against or relating to Revenge which, if
adversely determined or resolved, would materially and adversely affect the
financial condition, results of operations, business or prospects of Revenge.
Section 4.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 4.14(a), Revenge does not own, or
operate under, any patent, trademark or service mark or any applications
therefor. All trade names (including those whose use is limited to one or more
states of the United States) owned or used by Revenge are listed on Schedule
4.14 hereof and, to the extent indicated therein, have been duly registered with
the states of the United States or the corresponding offices of other countries.
Except as set forth on Schedule 4.14, Revenge is the sole and exclusive owner
of, or has the sole and exclusive power with respect to, or has the sole and
exclusive right to use, the trade names specified on Schedule 4.14.
(b) Except as set forth on Schedule 4.14(b) hereof, Revenge has not
ever been charged with infringement or violation of any adversely held
trademark, trade name or copyright.
(c) Except as set forth on Schedules 4.14(a) and 4.14(b), there are no
claims or demands of any other person, firm or corporation pertaining to the
trade names, copyright registrations or pending copyright registration
applications, as the case may be, listed on such schedules, and no proceedings
have been instituted which challenge the right of Revenge in respect thereof.
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Section 4.15 EMPLOYEE BENEFITS.
(a) Schedule 4.15 hereof contains a list of (i) each pension, profit
sharing, bonus, deferred compensation, or other retirement plan or arrangement
for the benefit of any employee or group of employees of Revenge or any
independent contractors or group of independent contractor of Revenge, (ii) each
medical, health, disability, insurance or other plan or arrangement of Revenge,
and (iii) each employee stock option plan or other plan providing for the
purchase of shares of capital stock of Revenge. All of such plans and
arrangements of Revenge are referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated in accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by Revenge (and each
funding medium which may be attendant thereto) are in compliance with applicable
law and all reporting and disclosure requirements under applicable laws and
regulations, and have been administered and operated in accordance with their
respective provisions and applicable law. There are no actions, suits or claims
(other than routine claims for benefits) pending with respect to the employee
benefit plans.
(d) Revenge has filed, published and disseminated all reports,
documents, statements and communications which are required to be filed,
published or disseminated under applicable law and the rules and regulations
promulgated thereunder relating to, and have timely made all modifications and
amendments to, the employee benefit plans.
Section 4.16 TAXES AND TAX RETURNS. Revenge has duly filed all income,
franchise and other tax returns and reports required to be filed by it and has
duly paid or made provision for the payment of all taxes (including any interest
or penalties) which are due and payable pursuant to such returns. Revenge has
withheld proper and accurate amounts from their employees' compensation in
substantial compliance with all withholding and similar provisions of applicable
law. There are and will hereafter be no tax deficiencies (including penalties
and interest) of any kind assessed against Revenge with respect to any period
ending on or before the Closing Date.
Section 4.17 CONTRACTS. Revenge has heretofore furnished to CMI or its
counsel true and complete copies of each document, and a written description of
each oral contact, set forth on Schedule 4.17 hereof. Schedule 4.17 is a true
and complete list of all contracts, understandings, commitments, arrangements
and agreements of the following types, including all amendments thereto to which
Revenge is a party:
(a) Contracts relating to equipment purchases, or series of similar
equipment purchases from the same supplier, involving an expenditure of, or if
in a series, expenditures in the aggregate of, more than $25,000;
(b) Bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or stock purchase
plans or similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any
lenders or guarantees of undertakings to answer for the debts or defaults of
another, or any contracts encumbering title to any properties, involving in each
case, or if in a series involving the same lender, guarantor or property, as the
case may be, in the aggregate, at least $25,000;
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(d) Contracts for the acquisition or disposition of a business or
substantially all of the property, assets or capital stock or other securities
of a business or company under which there are continuing or unperformed
obligations on the part of any of the parties hereto, which contracts in each
case involve at least $25,000;
(e) Conditional sales contracts, leases of personal property or
contracts for the purchase or sale of real or personal property, involving in
each case at least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts, involving in each case, or with
respect to any individual in the aggregate, at least twenty-five thousand
dollars ($25,000);
(g) Contracts for the furnishing of services or products to or by
Revenge, involving an expenditure in each case of at least twenty-five thousand
dollars ($25,000);
(h) Royalty or licensing contracts or contracts requiring similar
payments to unrelated parties individually, or with respect to any unrelated
party in the aggregate, involving or which reasonably may in the future involve
an amount in excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between Revenge and any of its employees;
and
(j) All agreements, contracts and commitments not listed on any other
schedule hereto which individually involve the payment of twenty-five thousand
dollars ($25,000) or more.
Except as set forth on Schedule 4.17, all such contracts,
understandings, commitments, arrangements and agreements are in full force and
effect.
Section 4.18 COLLECTIVE BARGAINING AGREEMENTS Schedule 4.18 hereof is a
list of all collective bargaining agreements with any labor organization to
which Revenge is a party. The relations of Revenge with its employees are good
and there are no impending labor difficulties.
Section 4.19 INSURANCE. Revenge is insured by insurers unaffiliated with
Revenge or Revenge with respect to its properties and the conduct of its
business in such amounts and against such risks as are generally and prudently
maintained for comparable businesses and consistent with its past practice.
Section 4.20 REAL PROPERTY.
(a) Schedule 4.20 hereof sets forth a true and complete list of (i) all
real property owned by Revenge and (ii) all real property leases to which
Revenge is a party. Revenge has heretofore furnished to CMI or its counsel true
and complete copies of each written contract and a written description of each
oral contract relating to the list set forth on Schedule 4.20.
(b) With respect to the leases described on Schedule 4.20, except as
set forth on Schedule 4.20:
(i) All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
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(ii) The rental set forth in each such lease is the actual
rental being paid, and there are no separate agreements or understandings with
respect to the same not set forth in Schedule 4.20;
(iii) The lessee under each such lease has the full right to
exercise any renewal option contained therein and upon due exercise will be
entitled to enjoy the use of the premises for the full term of such renewal
option;
(iv) Upon performance by the lessee of the terms of each such
lease, the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
(v) Except as set forth on Schedule 4.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed, in whole or in part, by any of the lessors.
Section 4.20 MATERIAL MISSTATEMENTS OR OMISSIONS. No
representations or warranties made by Revenge under this Agreement or in any
certificate, schedule or other document furnished or to be furnished to CMI or
its counsel pursuant hereto, or in connection with the transactions contemplated
by this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements of fact contained therein not misleading.
5. COVENANTS AND TRANSACTIONS PRIOR TO CLOSING
Section 5.1 CONDUCT AND TRANSACTIONS OF CMI PRIOR TO THE CLOSING. Between
the date of this Agreement and the Closing, the executive officers and board of
directors of CMI shall retain full control of the management and business
thereof. In order to assure protection and preservation of CMI's business as
well as CMI's performance of its obligations under and related to this
Agreement, CMI agrees that from the date of this Agreement up to and including
the Closing;
(a) CMI shall give Revenge, its counsel, accountants, appraisers
and other representatives or experts retained by Revenge full access on
reasonable notice to all the premises and books, records and personnel of CMI
during normal business hours and cause CMI to furnish to Revenge such financial
and operating data and other information with respect to the business and
properties of CMI as Revenge may from time to time reasonably request. In the
event of termination of this Agreement for any reason, Revenge will return all
documents, work papers and other materials obtained from CMI or CMI and will not
further disclose to third parties any confidential information obtained by it
pursuant hereto.
(b) CMI shall use all reasonable efforts to (i) preserve intact
the present business organization and personnel of CMI, (ii) preserve the
present goodwill and advantageous relationships of CMI with all persons having
business dealings with CMI, and (iii) preserve and maintain in force all
licenses, certificates, leases, contracts, permits, registrations, franchises,
confidential trade names and copyrights, and applications for any of same,
bonds and other similar rights of CMI. Except as otherwise provided in this
Agreement, CMI shall refrain from entering into any new employment or consulting
agreements with any of its present officers, management personnel or
consultants, or any other employment or consulting agreement with any other
person, not terminable by CMI on less than thirty (30) days' notice. CMI shall
maintain in force all property, casualty, crime, life, directors, officers and
other forms of insurance and bonds which it presently carries and, except with
the written consent of Revenge, no cancellation or assignment of existing
insurance coverage will be effected by CMI.
(c) Revenge shall operate its business only in the usual, regular
and ordinary course and manner, and, except with the written consent of Revenge,
shall refrain from (i) selling or agreeing to
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sell any capital stock, or (ii) except in the ordinary course of business,
encumbering or mortgaging any property or assets or terminating or modifying
any lease or incurring any obligation (contingent or otherwise).
(d) CMI or CMI shall not discuss or negotiate with any third
party a possible sale of all or any part of the capital shares or assets of CMI,
nor provide any information to any third party with respect thereto, other than
such Information which is provided in the ordinary course of the business
operation of CMI to third parties, provided CMI has no reason to believe that
such information may be utilized to evaluate a possible sale of the capital
shares or assets of CMI.
(e) CMI will exert its best efforts to fulfill in a timely manner
all objectives and conditions to permit consummation of the transactions as
contemplated by this Agreement and execute and deliver to Revenge any and all
documents necessary, in the reasonable opinion of its counsel, to consummate the
transactions contemplated by this Agreement.
(f) Revenge acknowledges that prior to the Closing CMI will
transfer to Consolidated Yacht Corporation all cash held by CMI and such cash
will remain an asset of Consolidated Yacht Corporation.
Section 5.2 CONDUCT BY REVENGE PRIOR TO CLOSING. Between the date
of this Agreement and the Closing Date, Revenge shall use its best efforts to
fulfill in a timely manner all objectives and conditions to permit consummation
of the transactions as contemplated by this Agreement and execute and deliver to
CMI any and all documents necessary, in the reasonable opinion of its counsel,
to consummate the transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF REVENGE
The obligations of Revenge under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing:
Section 6.1 REPRESENTATIONS OF CMI. The representations and
warranties of CMI set forth in this Agreement shall be true and complete in all
material respects on and as of the Closing to the same extent and with the same
force and effect as if made on such date, except as expressly provided to the
contrary in this Agreement.
Section 6.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 6.3 PERFORMANCE BY CMI. CMI shall have duly performed all
obligations, covenants and agreements undertaken by them herein and complied
with all terms and conditions applicable to them hereunder to be performed and
complied with prior to the Closing.
Section 6.4 DOCUMENTS TO BE DELIVERED TO REVENGE. Revenge shall have
received:
(a) A certificate, dated as of the Closing and executed by CMI
certifying as to the fulfillment of the matters contained in Sections 6.1, 6.2
and 6.3;
(b) True and complete copy of the certificates of incorporation
of CMI, certified by the Secretary of State of Florida, and of the by-laws of
CMI, together with all amendments thereto, certified by the Secretary of CMI;
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(c) Good standing certificate for CMI, certified by the Secretary
of State of Florida;
(d) Certificates representing 50,000 of the CMI Shares, duly
endorsed for transfer, and CMI shall have received the Revenge Shares, duly
endorsed for transfer. All such shares shall be subject to Rule 144 legend.
(e) The Employment Agreement duly executed by James Gardiner, in
the form of Schedule 2.6 hereof.
Section 6.5 SUITS. No suit, action or other proceeding shall be threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement or which is likely to materially and adversely
affect the financial condition, results of operations, business or prospects of
CMI.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF CMI
The obligations of CMI under this Agreement are, at its option, subject to
satisfaction of the following conditions at or prior to the initial Closing:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Revenge set forth in this Agreement shall be true and complete in
all material respects on and as of the Closing to the same extent and with the
same force and effect as if made on such date, except as affected by the
transactions contemplated by this Agreement.
Section 7.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 7.3 PERFORMANCE BY REVENGE. Revenge shall have duly performed all
obligations, covenants and agreements undertaken by it herein and complied with
all the terms and conditions applicable to them hereunder to be performed or
complied with prior to the Closing.
Section 7.4 DOCUMENTS TO BE DELIVERED TO CMI. CMI shall have received:
(a) certificate dated as of the Closing, and executed by an
officer of Revenge, certifying as to the fulfillment of the matters contained in
Sections 7.1, 7.2 and 7.3;
(b) Certificates representing the Revenge Shares, duly endorsed
for transfer, and Revenge shall have received 50,000 of the CMI Shares, duly
endorsed for transfer.
(c) True and complete copies of the certificate of incorporation
of Revenge, certified by the Secretary of State of Nevada, and of the by-laws of
Revenge, together with all amendments thereto, certified by the Secretary of
Revenge;
(d) Good standing certificate for Revenge, certified by the
Secretary of State of the domicile of each entity; and
(e) True and correct copies of Minutes of the Board of Directors
authorizing the officers and the Company to consummate the transaction.
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Section 7.5 SUITS. No suit, action or other proceeding shall be threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
the closing of the transactions contemplated by this Agreement, or any
investigation made by or on behalf of CMI or Revenge, the representations
and warranties of CMI or Revenge contained in this Agreement or in any
certificate, schedule, chart, list, letter, compilation or other document
delivered pursuant hereto, shall survive the Closing for a period of one (1)
year; provided, however, that as to any breach of, or misstatement in, any such
representation or warranty as to which one party has given notice to the other
on or prior to the expiration of such one (1) year period, the same shall
continue to survive beyond said period, but only as to the matters contained in
such notice.
Section 8.2 CMI's INDEMNIFICATION. CMI covenants and agrees to indemnify
and save harmless Revenge and its directors, officers, employees and agents from
any and all costs, expenses, losses, damages and liabilities incurred or
suffered directly or directly by any of them (including reasonable legal fees
and costs) proximately resulting from or attributable to the breach of, or
misstatement in, any one or more of the representations or warranties of CMI
made in or pursuant to this Agreement.
Section 8.3 REVENGE'S INDEMNIFICATION. Revenge covenants and agrees to
indemnify and save harmless CMI and its directors, officers, employees and
agents from any and all costs, expenses, losses, damages and liabilities
incurred or suffered by any of them (including reasonable legal fees and costs)
proximately resulting from or attributable to the breach of, or misstatement in,
any one or more of the representations or warranties of Revenge made in or
pursuant to this Agreement.
Section 8.4 DEFENSE AGAINST ASSERTED CLAIMS. If any claim or assertion of
liability is made or asserted by a third party against a party indemnified
pursuant to this Article 8 ("Indemnified Party") based on any liability or
absence of right which, if established, would constitute a matter for which the
Indemnified Party would be entitled to indemnification by another party hereto
("the Indemnifying Party") the Indemnified Party shall with reasonable
promptness give to the Indemnifying Party written notice of the claim or
asserting of liability and request the Indemnifying Party to defend the same.
Failure to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party might have to the
Indemnified Party unless such failure materially prejudices the Indemnifying
Party's position. The Indemnifying Party shall have the right to defend against
such liability or assertion, in which event the Indemnifying Party shall give
written notice to the Indemnified Party of the acceptance of defense of such
claim and the identity of counsel selected by the Indemnifying Party with
respect to such matters. The Indemnified Party shall be entitled to participate
with the Indemnifying Party in such defense and also shall be entitled at its
option to employ separate counsel for such defense at the expense of the
Indemnified Party. In the event the Indemnifying Party does not accept the
defense of the matter as provided above or in the event that the Indemnifying
Party or its counsel fails to use reasonable care in maintaining such defense,
the Indemnified Party shall have the full right at its option to defend against
the liability or assertion and to employ counsel for such defense at the expense
of the Indemnifying Party. All parties hereto will cooperate with each other in
the defense of any such action and the relevant records of each shall be
available to the others with respect to such defense.
9. POST-CLOSING MATTERS
9.1 PERFORMANCE PONDS. CMI shall maintain in force at its expense, until
their maturity or expiration in accordance with their terms, all performance
bonds issued by CMI prior to the Closing Date.
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10. ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
The rights under this Agreement shall not be assignable nor the duties
delegable by any party without the written consent of all parties hereto having
been obtained thereto. Nothing contained in this Agreement, express or implied,
is intended to confer upon any person or entity, other than the parties hereto,
and their successors in interest, any rights or remedies under or by reason of
this Agreement unless so stated expressly to the Contrary. All covenants,
agreements, representations and warranties of the parties contained herein shall
be binding upon and inure to the benefit of Revenge and CMI and their respective
successors and permitted assigns.
11. ABANDONMENT
In the event the transactions contemplated hereby are terminated or
abandoned by mutual agreement of the parties hereto, there shall be no
liability on the part of any of the parties by reason of such termination or
abandonment.
12. NOTICES
All notices, requests, demands and other communications hereunder shall be
writing and shall, be deemed to have been duly given when personally delivered
or deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, addressed to the parties at the following
addresses (or at such other address as shall be given in writing by any party to
the other) as follows:
To Revenge: Mr. William C. Robinson
8908 South Yale Avenue
Tulsa, Oklahoma 74137
Telephone: 918.493.2069
Facsimile: 918.493.6234
With a copy to: John Holt Smith, Esq.
Inman Steinberg Nye & Stone
1925 Century Park East #1600
Los Angeles, California 90067
Telephone: 310.274.7111
Facsimile: 310.274.8889
To CMI: Mr. James Gardiner
775-B Taylor Lane
Dania, Florida 33004
Telephone: 954.927.4467
Facsimile: 954.927.9498
13. REMEDIES NOT EXCLUSIVE
No remedy conferred by any of the provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every remedy given hereunder or now or
hereafter existing, at law or in equity by statute or otherwise. The election of
any one or more remedies by Revenge or CMI shall not constitute a waiver of the
right to pursue other available remedies.
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14. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
15. CAPTIONS AND SECTION HEADINGS
Captions and section headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing it.
16. WAIVERS
Any failure by any of the parties hereto to comply with all of the
obligations, agreements or conditions set forth herein may be waived by the
other party or parties, provided, however that any such waiver shall not be
deemed a waiver of any other obligation, agreement or condition contained
herein.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties. There
are not and shall not be any verbal statements, representations, warranties,
undertakings or agreements between the parties, and this Agreement may not be
amended or modified in any respect except by a written instrument signed by the
parties hereto.
18. APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of Oklahoma.
* * *
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
REVENGE MARINE INC.
By /s/ Desai V. Robinson
-----------------------------------------
Desai V. Robinson, President
CONSOLIDATED MARINE INC.
By /s/ James Gardiner
-----------------------------------------
James Gardiner, President
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EXHIBIT 10.4
STOCK EXCHANGE AGREEMENT
THIS AGREEMENT is made this 29th day of May, 1998, by and between
Revenge Marine Inc., a Nevada corporation ("Revenge") and Egret Boat Company
Inc., a Florida corporation ("EBC").
WITNESSETH:
WHEREAS, the total authorized capital stock of EBC consists of 1,000
shares of common stock, par value $0.01 per share, of which 1,000 shares are
issued and outstanding (the "EBC Shares"); and
WHEREAS, Revenge desires to acquire all of the issued and outstanding
capital stock of EBC, or 1,000 shares of Common Stock ("EBC Shares") for such
number of shares of common stock of Revenge ("Revenge Shares") as shall be equal
to $1,500,000 at the average bid price five (5) days prior to the date of
closing; and
WHEREAS, in reliance on and subject to the terms and conditions,
representations, warranties, covenants and agreements herein contained, EBC
desires to sell the EBC Shares to Revenge, and Revenge desires to purchase the
EBC Shares in a stock for stock exchange.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and value consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE.
Section 1.1 AGREEMENT TO PURCHASE AND EXCHANGE. In reliance on and
subject to the terms, conditions, representations, warranties, covenants and
agreements herein contained, EBC shall assign, transfer and convey unto Revenge,
and Revenge shall purchase all of the EBC Shares in a tax free reorganization.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the EBC
Shares (the "Purchase Price") shall be such number of Revenge Shares as shall be
equal in value to $1,500,000, at the average bid price five (5) days prior to
the date of closing.
Section 1.3 CLOSING. The closing of the transaction contemplated in
this Agreement (the "Closing") shall take place at the offices of John Holt
Smith of Inman Steinberg Nye & Stone, 1925 Century Park East, Suite 1600,
Los Angeles, California 90067, on May 21, 1998, or at such other date, time or
place as shall be mutually acceptable to the parties (the "Closing Date").
Section 1.4 TRANSACTIONS AND DOCUMENTS AT AND AFTER CLOSING.
(a) At the Closing, EBC shall deliver to Revenge certificates
representing 1,000 shares of EBC, duly endorsed for transfer.
(b) At the Closing, Revenge shall deliver to EBC the 955,414
Revenge Shares common stock representing the Purchase Price for the EBC Shares,
calculated as set forth hereinabove, and bearing an appropriate legend
restricting transfer except as permitted under Rule 144 of the Securities Act of
1933, as amended.
(c) From time to time and at any time, at Revenge's request,
whether on or after the Closing Date, and without further consideration, EBC
shall, at its own expense except as otherwise provided in this Agreement,
execute and deliver such further documents and instruments of conveyance
<PAGE> 2
and transfer and shall take such further actions as may be necessary or
convenient, in the reasonable opinion of Revenge, to transfer and convey to
Revenge, all of its right, title and interest in and to the EBC Shares, free and
clear of any lien or adverse claim.
(d) From time to time and at any time, at EBC's request, whether on or
after the Closing Date, and without further consideration, Revenge shall, at its
own expense except as otherwise provided in this Agreement, execute and deliver
such further documents and instruments of conveyance and transfer and shall take
such further actions as may be necessary or convenient in the reasonable opinion
of EBC, to transfer and convey to EBC, all of its right, title and interest in
and to the Revenge Shares free and clear of any lien or adverse claim.
2. ADDITIONAL AGREEMENTS.
Section 2.1 REVENGE'S ACCESS AND INSPECTION. EBC has allowed and shall
allow Revenge and its authorized representatives full access during normal
business hours from and after the date hereof and prior to the Closing Date to
all of EBC's properties, books, contracts, commitments and records for the
purpose of making such investigation as Revenge may desire, and EBC shall
furnish Revenge such information concerning EBC's affairs as Revenge may
request. EBC has caused and shall cause EBC's personnel to assist Revenge in
making such investigation and shall cause the counsel, accountants, engineers
and other non-employee representatives of EBC to be reasonably available to
Revenge for such purposes.
Section 2.2 EBC'S ACCESS AND INSPECTION. Revenge shall allow EBC and its
authorized representatives access during normal business hours from and after
the date hereof and prior to the Closing Date to such of Revenge's properties,
books, contracts, commitments and records as EBC may reasonably request for the
purpose of determining the financial condition of Revenge. Revenge shall cause
Revenge's personnel to assist EBC in making such investigation and shall cause
the counsel, accountants, engineers and other non-employee representatives of
Revenge to be reasonably available to EBC for such purposes.
Section 2.3 COOPERATION. The parties shall cooperate fully with each other
and with their representatives, counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and will use their best efforts to consummate the transactions
contemplated hereby and fulfill their obligations hereunder.
Section 2.4 EXPENSES. All of the expenses incurred by Revenge in
connection with the authorization, preparation, execution and performance of
this Agreement by Revenge, including without limitation all fees and expenses of
agents, representatives, counsel and accountants for Revenge, shall be paid by
Revenge. All expenses incurred by EBC in connection with the authorization,
preparation, execution and performance of this Agreement, including without
limitation all fees and expenses of agents, representatives, counsel and
accountants, shall be paid by EBC.
Section 2.5 BROKERS. Each party hereto jointly and severally represents
and warrants that no broker or finder has acted on its behalf in connection with
this Agreement or the transactions contemplated herein and each party shall
indemnify the other and save it harmless from any claim or demand for commission
or other compensation by any broker, finder or similar agent claiming to have
been employed by or on behalf of such party.
Section 2.6 EMPLOYMENT AGREEMENT. Pursuant to resolution of the Board of
Directors of Revenge on May 8, 1998, (i) Revenge will enter into non-exclusive
employment agreements with Scott Flanders, Lynn Sullinger and Val Jenkins and
will appoint Scott Flanders President of EBC, with the duties and obligations
set forth therein, all as set forth in Schedule 2.6 attached hereto.
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3. REPRESENTATIONS AND WARRANTIES OF EBC.
EBC represents, covenants and warrants to Revenge as follows:
Section 3.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. EBC is a corporation
duly organized, validly existing and in good standing under the laws of Florida
and has the corporate power and authority to own, operate and lease its
respective properties, to carry on its business as now being conducted, and to
enter into this Agreement and to carry out the transactions contemplated hereby.
EBC is duly qualified to do business and is in good standing in each
jurisdiction where the failure to qualify would have a material adverse affect
on it. EBC has delivered to Revenge or its counsel true and correct copies of
the articles of incorporation and by-laws of EBC, together with any amendments
thereto.
Section 3.2 SHARES OF STOCK. All issued and outstanding shares of capital
stock of EBC have been duly authorized and validly issued and are fully paid and
nonassessable. There is no subscription, option, warrant, call, right, contract,
commitment, understanding or arrangement relating to the issuance, sale or
transfer by EBC of any shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Section 3.3 AUTHORITY. EBC has the full right and authority to enter into
and fully perform this Agreement and all other agreements and documents to be
delivered to Revenge in connection herewith. All actions required to be taken by
EBC to authorize the execution, delivery and performance of this Agreement and
all other agreements and documents to be delivered in connection herewith have
been or will by the Closing Date be properly taken. This Agreement constitutes
the valid and binding obligation of EBC. Neither the execution and delivery of
this Agreement and all other ageements and documents executed in connection
herewith nor the consummation of the transactions contemplated hereby nor the
performance of this Agreement and all other agreements and documents executed in
connection herewith will (1) conflict with or result in a breach of any
provision of the certificate of incorporation or by-laws of EBC, (2) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance or the payment of
money required by, or result in the creation of any lien, security interest,
charge or encumbrance upon any of EBC's properties under any of the terms,
conditions or provisions of any loan agreement, note, bond, mortgage, indenture,
lease, agreement or other instrument or commitment to which EBC is a party, or
by which EBC or its properties may be bound or affected or (3) violate any
order, writ, injunction, decree, judgment, or ruling of any court or
governmental authority specifically applicable to EBC or any of its properties.
Section 3.4 NO VIOLATION. Except as set forth on Schedule 3.4, to the best
knowledge of EBC, EBC has complied with all rules, regulations, codes and laws
affecting its business and operations and is not in default under, or in
violation of, any provision of any federal, state or local rule, regulation,
code or law nor has EBC been given notice of any such default or violation.
Section 3.5 LICENSES AND RIGHTS. EBC possesses all franchises, easements,
licenses, permits and other authorizations from governmental or regulatory
authorities and from all other persons or entities that are necessary to permit
it to engage in its business as presently conducted in and at all locations and
places where it is presently operating. Such franchises, licenses, permits and
other authorizations are set forth on Schedule 3.5.
Section 3.6 CONSENTS. Except as set forth on Schedule 3.6 hereto, no
approval or consent of any person, firm or other entity or body is required to
be obtained by EBC for the authorization of this Agreement or the consummation
by EBC of the transactions contemplated hereby.
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Section 3.7 NO DEFAULTS. Except as set forth on Schedule 3.7, to the best
knowledge of EBC, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of EBC under the terms of any
indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 3.17, to which EBC is a party or to which its assets are subject, or by
which it is otherwise bound, and no such default or event exists or is alleged
to exist with respect to the performance of any obligation of any other party
thereto.
Section 3.8 FINANCIAL STATEMENTS. Revenge has been or will be furnished
with the proforma financial statements (the "Financial Statements"). The
Financial Statements were prepared in accordance with generally accepted
accounting principles and present fairly and accurately the information set
forth therein.
Section 3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.9 hereto, since April 30, 1998, EBC has actively conducted its business in
the ordinary and regular course. Since that date, there has not been any
material adverse change in the condition (financial or otherwise), results of
operations, assets, liabilities, properties, business or prospects of EBC nor
is any event threatened which would cause such an adverse change, nor has there
occurred any event or governmental regulation or order restricting the business
of EBC.
Section 3.10 FACILITIES AND EQUIPMENT. The personal property owned or
leased by EBC at its facility for the operation of, or used in, its business is
in its possession or under its control and is adequate for the operation of
such business as presently conducted.
Section 3.11 TITLE TO ASSETS. Except as set forth on Schedule 3.11 or in
the Financial Statements, EBC has good, valid and marketable title to all of
its real property and leasehold estates and good and valid title to all of its
other assets (tangible and intangible), including, but not limited to, all
leasehold improvements and equipment and all other properties and assets
reflected or required to be reflected in the Financial Statements and all
properties and assets purchased or leased by it since the dates of such
Financial Statements (except for properties and assets so reflected or required
to be reflected which have been sold or otherwise disposed of in the ordinary
course of business), subject to no liens, pledges, encumbrances, mortgages,
security interests, charges or other similar restrictions of any nature
whatsoever. Except as set forth on Schedule 3.11, EBC enjoys peaceful and quiet
possession of its properties and assets pursuant to or by all of the deeds,
bills of sale, leases, licenses and other agreements under which it is
operating its business.
Section 3.12 ABSENCE OF UNDISCLOSED LIABILITIES. EBC does not have any
material liabilities or obligations, either accrued or unaccrued, fixed or
contingent, which have not been reflected in the Financial Statements or set
forth on Schedule 3.12 hereof.
Section 3.13 LITIGATION. Schedule 3.13 hereof sets forth a list of all
administrative or judicial proceedings to which EBC is a party. Except as set
forth on Schedule 3.13, there is no action, suit, claim, demand, arbitration or
other proceeding, administrative or judicial, pending or, to the best knowledge
of EBC, threatened against or relating to EBC which, if adversely determined or
resolved, would materially and adversely affect the financial condition,
results of operations, business or prospects of EBC.
Section 3.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 3.14(a), EBC does not own, or operate
under, any patent, trademark or service mark or any applications therefor. All
trade names (including those whose use is limited to one or more states of the
United States) owned or used by EBC are listed on Schedule 3.14 hereof and, to
the extent indicated therein, have been duly registered with the states of
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the United States or the corresponding offices of other countries. Except as set
forth on Schedule 3.14, EBC is the sole and exclusive owner of, or has the sole
and exclusive power with respect to, or has the sole and exclusive right to use,
the trade names specified on Schedule 3.14.
(b) Except as set forth on Schedule 3.14(b) hereof, EBC has not ever
been charged with infringement or violation of any adversely held trademark,
trade name or copyright.
(c) Except as set forth on Schedules 3.14(a) and 3.14(b), there no
claims or demands of any other person, firm or corporation pertaining to the
trade names, copyright registrations or pending copyright registration
applications, as the case may be, listed on such schedules, and no proceedings
have been instituted which challenge the right of EBC in respect thereof.
Section 3.15 EMPLOYEE BENEFITS.
(a) Schedule 3.15 hereof contains a list of (i) each pension,
profit sharing, bonus, deferred compensation, or other retirement plan or
arrangement for the benefit of any employee or group of employees of EBC or any
independent contractors or group of independent contractor of EBC, (ii) each
medical, health, disability, insurance or other plan or arrangement of EBC, and
(iii) each employee stock option plan or other plan providing for the purchase
of shares of capital stock of EBC. All of such plans and arrangements of EBC are
referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated In accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by EBC (and each
funding medium which may be attendant thereto) are in compliance with applicable
law and all reporting and disclosure requirements under applicable laws and
regulations, and have been administered and operated in accordance with their
respective provisions and applicable law. There are no actions, suits or claims
(other than routine claims for benefits) pending with respect to the employee
benefit plans.
(d) EBC has filed, published and disseminated all reports, documents,
statements and communications which are required to be filed, published or
disseminated under applicable law and the rules and regulations promulgated
thereunder relating to, and have timely made all modifications and amendments
to, the employee benefit plans.
Section 3,16 TAXES AND TAX RETURNS. EBC has duly filed all income,
franchises and other tax returns and reports required to be filed by it and has
duly paid or made provisions for the payment of all taxes (including any
interest or penalties) which are due and payable pursuant to such returns. EBC
has withheld proper and accurate amounts from their employees' compensation in
subtantial compliance with all withholding and similar provisions of applicable
law. There are and will hereafter be no tax deficiencies (including penalties
and interest) of any kind assessed against EBC with respect to any period ending
on or before the Closing Date.
Section 3.17 CONTRACTS. EBC has heretofore furnished to Revenge or its
counsel true and complete copies of each document, and a written description of
each oral contact, set forth on Schedule 3.17 hereof. Schedule 3.17 is a true
and complete list of all contracts, understandings, commitments, arrangements
and agreements of the following types, including all amendments thereto to which
EBC is a party:
(a) Contracts relating to equipment purchases, or series of similar
equipment purchases from the same supplier, involving an expenditure of, or if
in a series, expenditures in the aggregate of, more than twenty-five thousand
dollars ($25,000);
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(b) Bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or stock purchase
plans or similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any
lenders or guarantees of undertakings to answer for the debts or defaults of
another, or any contracts encumbering title to any properties, involving in each
case, or if in a series involving the same lender, guarantor or property, as the
case may be, In the aggregate, at least twenty-five thousand dollars ($25,000);
(d) contracts for the acquisition or disposition of a business or
substantially all of the property, assets or capital stock or other securities
of a business or company under which there are continuing or unperformed
obligations on the part of any of the parties hereto, which contracts in each
case involve at least twenty-five thousand dollars ($25,000);
(e) Conditional sales contracts, leases of personal property or
contracts for the purchase or sale of real or personal property, involving in
each case at least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts, involving in each case, or
with respect to any individual in the aggregate, at least twenty-five thousand
dollars ($25,000);
(g) Contracts for the furnishing of services or products to or by EBC,
involving an expenditure in each case of at least twenty-five thousand dollars
($25,000);
(h) Royalty or licensing contracts or contracts requiring simliar
payments to unrelated parties individually, or with respect to any unrelated
party in the aggregate, involving or which reasonably may in the future involve
an amount in excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between EBC and any of its employees; and
(j) All agreements, contracts and commitments not listed on any other
schedule hereto which individually involve the payment of twenty-five thousand
dollars ($25,000) or more.
Except as set forth on Schedule 3.17, all such contracts,
understandings, commitments, arrangements and agreements are in full force and
effect.
Section 3.18 COLLECTIVE BARGAINING AGREEMENTS. Schedule 3.18 hereof is
a list of all collective bargaining agreements with any labor organization to
which EBC is a party. The relations of EBC with its employees are good and there
are no impending labor difficulties.
Section 3.19 INSURANCE. EBC is insured by insurers unaffiliated with
EBC or EBC with respect to its properties and the conduct of its business in
such amounts and against such risks as are generally and prudently maintained
for comparable businesses and consistent with its past practice
Section 3.20 REAL PROPERTY.
(a) Schedule 3.20 hereof sets forth a true and complete list of (i) all
real property owned by EBC and (ii) all real property leases to which EBC is a
party. EBC has heretofore furnished to Revenge or its counsel true and complete
copies of each written contract and a written description of each oral contract
relating to the list set forth on Schedule 3.20.
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(b) With respect to the leases described on Schedule 3.20, except as
setforth on Schedule 3.20;
(i) "All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
(ii) The rental set forth in each such lease is the actual rental
being paid, and there are no separate agreements or understandings with respect
to the same not set forth in Schedule 3.20;
(iii) The lessee under each such lease has the full right to
exercise any renewal option contained therein and upon due exercise will be
entitled to enjoy the use of the premises for the full term of such renewal
option;
(iv) Upon performance by the lessee of the terms of each such
lease, the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
(v) Except as set forth on Schedule 3.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed in whole or in part, by any of the lessors.
Section 3.21 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by EBC under this Agreement or in any certificate, schedule or
other document furnished to be furnished to Revenge or its counsel pursuant
hereto, or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of fact
contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF REVENGE.
Revenge represents, covenants and warrants to EBC as follows:
Section 4.1 CORPORATE EXISTENCE/STANDING/AUTHORITY. Revenge is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and has the corporate power and authority to own, operate and lease
its respective properties, to carry on its business as now being conducted, and
to enter into this Agreement and to carry out the transactions contemplated
hereby. Revenge is duly qualified to do business and is in good standing in each
jurisdiction were the failure to qualify would have a material adverse affect on
it. Revenge has delivered to EBC or its counsel true and correct copies of the
articles of incorporation and by-laws of Revenge, together with any amendments
thereto.
Section 4.2 SHARES OF STOCK. Revenge has authorized 50,000,000 shares of
common stock of which there are presently issued and outstanding 4,600,000
shares of common stock. None of the 5,000,000 shares of preferred stock is
issued and outstanding. All issued and outstanding shares of capital stock of
Revenge have been duly authorized and validly issued and are fully paid and
nonassessable. There is no subscription, option, warrant, call, right, contract
commitment, understanding or arrangement relating to the issuance, sale or
transfer by Revenge of any shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument. There
is on file with the NASD a current, accurate and complete 15-c-2(11) for Revenge
and Revenge is currently trading on the Bulletin Board under the Symbol "BOAT."
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Section 4.3 - AUTHORITY. Revenge has the full right and authority to enter into
and fully perform this Agreement and all other agreements and documents to be
delivered to EBC in connection herewith. All actions required to be taken by
Revenge to authorize the execution, delivery and performance of this Agreement
and all other agreements and documents to be delivered in connection herewith
have been or will by the Closing Date be properly taken. This Agreement
constitutes the valid and binding obligation of Revenge. Neither the execution
and delivery of this Agreement and all other agreements and documents executed
in connection herewith nor the consummation of the transactions contemplated
hereby nor the performance of this Agreement and all other agreements and
documents executed in connection herewith will (1) conflict with or result in a
breach of any provision of the certificate of incorporation or by-laws of
Revenge, (2) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
right of termination or cancellation of, or accelerate the performance or the
payment of money required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of Revenge's properties under any of
the terms, conditions or provisions of any loan agreement, note, bond, mortgage,
indenture, lease, agreement or other instrument or commitment to which Revenge
is a party, or by which Revenge or its properties may be bound or affected or
(3) violate any order,' writ, injunction, decree, judgment, or ruling of any
court or governmental authority specifically applicable to Revenge or any of its
properties.
Section 4.4 NO VIOLATION. Except as set forth on Schedule 4.4, to the best
knowledge of Revenge, Revenge has complied with all rules, regulations, codes
and laws affecting its business and operations and is not in default under, or
in violation of, any provision of any federal state or local rule, regulation,
code or law nor has Revenge been given notice of any such default or violation.
Section 4.5 LICENSES AND RIGHTS. Revenge possesses all franchises,
easements, licenses, permits and other authorizations from governmental or
regulatory authorities and from all other persons or entities that are necessary
to permit it to engage in its business as presently conducted in and at all
locations and places where it is presently operating. Such franchises, licenses,
permits and other authorizations are set forth on Schedule 4.5.
Section 4.6 CONSENTS. Except as set forth on Schedule 4.8 hereto, no
approval or consent of any person, firm or other entity or body is required to
be obtained by Revenge for the authorization of this Agreement or the
consummation by Revenge of the transactions contemplated hereby.
Section 4.7 NO DEFAULTS. Except as set forth on Schedule 4.7, to the best
knowledge of Revenge, no default (or event which with the passage of time or the
giving of notice or both would become a default) exists or is alleged to exist
with respect to the performance of any obligation of Revenge under the terms of
any indenture, license, mortgage, deed of trust, lease, note, guaranty or other
contract or instrument, including, but not limited to, any contract set forth on
Schedule 4.17, to which Revenge is a party or to which its assets are subject,
or by which it is otherwise bound, and no such default or event exists or is
alleged to exist with respect to the performance of any obligation of any other
party thereto.
Section 4.8 FINANCIAL STATEMENTS. EBC has been or will be furnished with
statement of liabilities of Revenge for the period ended April 30, 1998, and its
statements of earnings for the fiscal year then ended (the "Financial
Statements") as set forth on Schedule 4.8 attached hereto. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods and as of their date
of issuance were or will be true, correct and complete all material respects and
present fairly and accurately the information set forth therein.
Section 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
4.9 hereto, since January 1, 1996, Revenge has actively conducted its business
in the ordinary and regular course. Since that date, there has not been any
material adverse change in the condition (financial or otherwise),
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<PAGE> 9
results of operations, assets, liabilities, properties, business or prospects of
Revenge nor is any event threatened which would cause such an adverse change,
nor has there occurred any event or governmental regulation or order restricting
the business of Revenge.
Section 4.10 FACILITIES AND EQUIPMENT. The personal property owned or
leased by Revenge at its facility for the operation of, or used in, its business
is in its possession or under its control and is adequate for the operation of
such business as presently conducted.
Section 4.11 TITLE TO ASSETS. Except as set forth on Schedule 4.11 or
in the Financial Statements, Revenge has good, valid and marketable title to all
of its real property and leasehold estates and good and valid title to all of
its other assets (tangible and intangible), including, but not limited to, all
leasehold improvements and equipment and all other properties and assets
reflected or required to be reflected in the Financial Statements and all
properties and assets purchased or leased by it since the dates of such
Financial Statements (except for properties and assets so reflected or required
to be reflected which have been sold or otherwise disposed of in the ordinary
course of business), subject to no liens, pledges, encumbrances, mortgages,
security interests, charges or other similar restrictions of any nature
whatsoever. Except as set forth on Schedule 4.11, Revenge enjoys peaceful and
quiet possession of its properties and assets pursuant to or by all of the
deeds, bills of sale, leases, licenses and other agreements under which it is
operating its business.
Section 4.12 ABSENCE OF UNDISCLOSED LIABILITIES. Revenge does not have
any material liabilities or obligations, either accrued or unaccrued, fixed or
contingent, which have not been reflected in the Financial Statements or set
forth on Schedule 4.12 hereof, or which exceed in the aggregate $25,000.
Section 4.13 LITIGATION. Schedule 4.13 hereof sets forth a list of all
administrative or judicial proceedings to which Revenge is a party. Except as
set forth on Schedule 4.13, there is no action, suit, claim, demand, arbitration
or other proceeding, administrative or judicial, pending or, to the best
knowledge of Revenge, threatened against or relating to Revenge which, if
adversely determined or resolved, would materially and adversely affect the
financial condition, results of operations, business or prospects of Revenge.
Section 4.14 PATENTS AND TRADEMARKS.
(a) Except as set forth on Schedule 4.14(a), Revenge does not own, or
operate under, any patent, trademark or service mark or any applications
therefor. All trade names (including those whose use is limited to one or more
states of the United States) owned or used by Revenge are listed on Schedule
4.14 hereof and, to the extent indicated therein, have been duly registered with
the states of the United States or the corresponding offices of other countries.
Except as set forth on Schedule 4.14, Revenge is the sole and exclusive owner
of, or has the sole and exclusive power with respect to, or has the sole and
exclusive right to use, the trade names specified on Schedule 4.14.
(b) Except as set forth on Schedule 4.14(b) hereof, Revenge has not
ever been charged with infringement or violation of any adversely held
trademark, trade name or copyright.
(c) Except as set forth on Schedules 4.14(a) and 4.14(b), there are no
claims or demands of any other person, firm or corporation pertaining to the
trade names, copyright registrations or pending copyright registration
applications, as the case may be, listed on such schedules, and no proceedings
have been instituted which challenge the right of Revenge in respect thereof.
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Section 4.15 EMPLOYEE BENEFITS.
(a) Schedule 4.15 hereof contains a list of (i) each pension, profit
sharing, bonus, deferred compensation, or other retirement plan or arrangement
for the benefit of any employee or group of employees of Revenge or any
independent contractors or group of independent contractor of Revenge, (ii) each
medical, health, disability, insurance or other plan or arrangement of Revenge,
and (iii) each employee stock option plan or other plan providing for the
purchase of shares of capital stock of Revenge. All of such plans and
arrangements of Revenge are referred to herein as the "employee benefit plans".
(b) The amounts reflected in the Financial Statements as liabilities or
contingent liabilities with respect to employee benefit plans have been
calculated in accordance and compliance with applicable law, including
accounting principles relating thereto.
(c) All of the employee benefit plans maintained by Revenge (and each
funding medium which may be attendant thereto) are in compliance with applicable
law and all reporting and disclosure requirements under applicable laws and
regulations, and have been administered and operated in accordance with their
respective provisions and applicable law. There are no actions, suits or claims
(other than routine claims for benefits) pending with respect to the employee
benefit plans.
(d) Revenge has filed, published and disseminated all reports,
documents, statements and communications which are required to be filed,
published or disseminated under applicable law and the rules and regulations
promulgated thereunder relating to, and have timely made all modifications and
amendments to, the employee benefit plans.
Section 4.16 TAXES AND TAX RETURNS. Revenge has duly filed all income,
franchise and other tax returns and reports required to be filed by it and has
duly paid or made provision for the payment of all taxes (including any interest
or penalties) which are due and payable pursuant to such returns. Revenge has
withheld proper and accurate amounts from their employees' compensation in
substantial compliance with all withholding and similar provisions of applicable
law. There are and will hereafter be no tax deficiencies (including penalties
and interest) of any kind assessed against Revenge with respect to any period
ending on or before the Closing Date.
Section 4.17 CONTRACTS. Revenge has heretofore furnished to EBC or its
counsel true and complete copies of each document, and a written description of
each oral contact, set forth on Schedule 4.17 hereof. Schedule 4.17 is a true
and complete list of all contracts, understandings, commitments, arrangements
and agreements of the following types, including all amendments thereto to which
Revenge is a party:
(a) Contracts relating to equipment purchases, or series of similar
equipment purchases from the same supplier, involving an expenditure of, or if
in a series, expenditures in the aggregate of, more than $25,000;
(b) Bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or stock purchase
plans or similar plans providing employee benefits;
(c) Factoring, loan, note, financing or similar contracts with any
lenders or guarantees of undertakings to answer for the debts or defaults of
another, or any contracts encumbering title to any properties, involving in each
case, or if in a series involving the same lender, guarantor or property, as the
case may be, in the aggregate, at least $25,000;
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<PAGE> 11
(d) Contracts for the acquisition or disposition of a business or
substantially all of the property, assets or capital stock or other securities
of a business or company under which there are continuing or unperformed
obligations on the part of any of the parties hereto, which contracts in each
case involve at least $25,000;
(e) Conditional sales contracts, leases of personal property or
contracts for the purchase or sale of real or personal property, involving in
each case at least twenty-five thousand dollars ($25,000);
(f) Management or consulting contracts, involving in each case, or with
respect to any individual in the aggregate, at least twenty-five thousand
dollars ($25,000);
(g) Contracts for the furnishing of services or products to or by
Revenge, involving an expenditure in each case of at least twenty-five thousand
dollars ($25,000);
(h) Royalty or licensing contracts or contracts requiring similar
payments to unrelated parties individually, or with respect to any unrelated
party in the aggregate, involving or which reasonably may in the future involve
an amount in excess of twenty-five thousand dollars ($25,000) annually;
(i) All employment agreements between Revenge and any of its employees;
and
(j) All agreements, contracts and commitments not listed on any other
schedule hereto which individually involve the payment of twenty-five thousand
dollars ($25,000) or more.
Except as set forth on Schedule 4.17, all such contracts,
understandings, commitments, arrangements and agreements are in full force and
effect.
Section 4.18 COLLECTIVE BARGAINING AGREEMENTS Schedule 4.18 hereof is a
list of all collective bargaining agreements with any labor organization to
which Revenge is a party. The relations of Revenge with its employees are good
and there are no impending labor difficulties.
Section 4.19 INSURANCE. Revenge is insured by insurers unaffiliated with
Revenge or Revenge with respect to its properties and the conduct of its
business in such amounts and against such risks as are generally and prudently
maintained for comparable businesses and consistent with its past practice.
Section 4.20 REAL PROPERTY.
(a) Schedule 4.20 hereof sets forth a true and complete list of (i) all
real property owned by Revenge and (ii) all real property leases to which
Revenge is a party. Revenge has heretofore furnished to EBC or its counsel true
and complete copies of each written contract and a written description of each
oral contract relating to the list set forth on Schedule 4.20.
(b) With respect to the leases described on Schedule 4.20, except as
set forth on Schedule 4.20:
(i) All such leases are in writing and duly executed, and, where
required, witnessed, acknowledged and recorded to make them valid and binding
and in full force and effect for the full term thereof, and none have been
modified;
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(ii) The rental set forth in each such lease is the actual
rental being paid, and there are no separate agreements or understandings with
respect to the same not set forth in Schedule 4.20;
(iii) The lessee under each such lease has the full right to
exercise any renewal option contained therein and upon due exercise will be
entitled to enjoy the use of the premises for the full term of such renewal
option;
(iv) Upon performance by the lessee of the terms of each such
lease, the lessee has the full right to enjoy the use of the premises demised
thereunder for the full term thereof; and
(v) Except as set forth on Schedule 4.20, all security deposits
required by such leases have been made and no forfeiture with respect thereto
claimed, in whole or in part, by any of the lessors.
Section 4.20 MATERIAL MISSTATEMENTS OR OMISSIONS. No
representations or warranties made by Revenge under this Agreement or in any
certificate, schedule or other document furnished or to be furnished to EBC or
its counsel pursuant hereto, or in connection with the transactions contemplated
by this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements of fact contained therein not misleading.
5. COVENANTS AND TRANSACTIONS PRIOR TO CLOSING
Section 5.1 CONDUCT AND TRANSACTIONS OF EBC PRIOR TO THE CLOSING. Between
the date of this Agreement and the Closing, the executive officers and board of
directors of EBC shall retain full control of the management and business
thereof. In order to assure protection and preservation of EBC's business as
well as EBC's performance of its obligations under and related to this
Agreement, EBC agrees that from the date of this Agreement up to and including
the Closing;
(a) EBC shall give Revenge, its counsel, accountants, appraisers
and other representatives or experts retained by Revenge full access on
reasonable notice to all the premises and books, records and personnel of EBC
during normal business hours and cause EBC to furnish to Revenge such financial
and operating data and other information with respect to the business and
properties of EBC as Revenge may from time to time reasonably request. In the
event of termination of this Agreement for any reason, Revenge will return all
documents, work papers and other materials obtained from EBC or EBC and will not
further disclose to third parties any confidential information obtained by it
pursuant hereto.
(b) EBC shall use all reasonable efforts to (i) preserve intact
the present business organization and personnel of EBC, (ii) preserve the
present goodwill and advantageous relationships of EBC with all persons having
business dealings with EBC, and (iii) preserve and maintain in force all
licenses, certificates, leases, contracts, permits, registrations, franchises,
confidential trade names and copyrights, and applications for any of same,
bonds and other similar rights of EBC. Except as otherwise provided in this
Agreement, EBC shall refrain from entering into any new employment or consulting
agreements with any of its present officers, management personnel or
consultants, or any other employment or consulting agreement with any other
person, not terminable by EBC on less than thirty (30) days' notice. EBC shall
maintain in force all property, casualty, crime, life, directors, officers and
other forms of insurance and bonds which it presently carries and, except with
the written consent of Revenge, no cancellation or assignment of existing
insurance coverage will be effected by EBC.
(c) Revenge shall operate its business only in the usual, regular
and ordinary course and manner, and, except with the written consent of Revenge,
shall refrain from (i) selling or agreeing to
12
<PAGE> 13
sell any capital stock, or (ii) except in the ordinary course of business,
encumbering or mortgaging any property or assets or terminating or modifying
any lease or incurring any obligation (contingent or otherwise).
(d) EBC or EBC shall not discuss or negotiate with any third
party a possible sale of all or any part of the capital shares or assets of EBC,
nor provide any information to any third party with respect thereto, other than
such Information which is provided in the ordinary course of the business
operation of EBC to third parties, provided EBC has no reason to believe that
such information may be utilized to evaluate a possible sale of the capital
shares or assets of EBC.
(e) EBC will exert its best efforts to fulfill in a timely manner
all objectives and conditions to permit consummation of the transactions as
contemplated by this Agreement and execute and deliver to Revenge any and all
documents necessary, in the reasonable opinion of its counsel, to consummate the
transactions contemplated by this Agreement.
(f) Revenge acknowledges that prior to the Closing EBC will
transfer to Consolidated Yacht Corporation all cash held by EBC and such cash
will remain an asset of Consolidated Yacht Corporation.
Section 5.2 CONDUCT BY REVENGE PRIOR TO CLOSING. Between the date
of this Agreement and the Closing Date, Revenge shall use its best efforts to
fulfill in a timely manner all objectives and conditions to permit consummation
of the transactions as contemplated by this Agreement and execute and deliver to
EBC any and all documents necessary, in the reasonable opinion of its counsel,
to consummate the transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF REVENGE
The obligations of Revenge under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing:
Section 6.1 REPRESENTATIONS OF EBC. The representations and
warranties of EBC set forth in this Agreement shall be true and complete in all
material respects on and as of the Closing to the same extent and with the same
force and effect as if made on such date, except as expressly provided to the
contrary in this Agreement.
Section 6.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 6.3 PERFORMANCE BY EBC. EBC shall have duly performed all
obligations, covenants and agreements undertaken by them herein and complied
with all terms and conditions applicable to them hereunder to be performed and
complied with prior to the Closing.
Section 6.4 DOCUMENTS TO BE DELIVERED TO REVENGE. Revenge shall have
received:
(a) A certificate, dated as of the Closing and executed by EBC
certifying as to the fulfillment of the matters contained in Sections 6.1, 6.2
and 6.3;
(b) True and complete copy of the certificates of incorporation
of EBC, certified by the Secretary of State of Florida, and of the by-laws of
EBC, together with all amendments thereto, certified by the Secretary of EBC;
13
<PAGE> 14
(c) Good standing certificate for EBC, certified by the Secretary
of State of Florida;
(d) Certificates representing 50,000 of the EBC Shares, duly
endorsed for transfer, and EBC shall have received the Revenge Shares, duly
endorsed for transfer. All such shares shall be subject to Rule 144 legend.
(e) The Employment Agreement duly executed by James Gardiner, in
the form of Schedule 2.6 hereof.
Section 6.5 SUITS. No suit, action or other proceeding shall be threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement or which is likely to materially and adversely
affect the financial condition, results of operations, business or prospects of
EBC.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF EBC
The obligations of EBC under this Agreement are, at its option, subject to
satisfaction of the following conditions at or prior to the initial Closing:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Revenge set forth in this Agreement shall be true and complete in
all material respects on and as of the Closing to the same extent and with the
same force and effect as if made on such date, except as affected by the
transactions contemplated by this Agreement.
Section 7.2 CONSENTS. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies and from all other
commissions, boards, agencies and from any other person, firm or entity whose
approval or consent is necessary to the consummation of the transactions
contemplated by this Agreement.
Section 7.3 PERFORMANCE BY REVENGE. Revenge shall have duly performed all
obligations, covenants and agreements undertaken by it herein and complied with
all the terms and conditions applicable to them hereunder to be performed or
complied with prior to the Closing.
Section 7.4 DOCUMENTS TO BE DELIVERED TO EBC. EBC shall have received:
(a) certificate dated as of the Closing, and executed by an
officer of Revenge, certifying as to the fulfillment of the matters contained in
Sections 7.1, 7.2 and 7.3;
(b) Certificates representing the Revenge Shares, duly endorsed
for transfer, and Revenge shall have received 50,000 of the EBC Shares, duly
endorsed for transfer.
(c) True and complete copies of the certificate of incorporation
of Revenge, certified by the Secretary of State of Nevada, and of the by-laws of
Revenge, together with all amendments thereto, certified by the Secretary of
Revenge;
(d) Good standing certificate for Revenge, certified by the
Secretary of State of the domicile of each entity; and
(e) True and correct copies of Minutes of the Board of Directors
authorizing the officers and the Company to consummate the transaction.
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<PAGE> 15
Section 7.5 SUITS. No suit, action or other proceeding shall be threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
the closing of the transactions contemplated by this Agreement, or any
investigation made by or on behalf of EBC or Revenge, the representations
and warranties of EBC or Revenge contained in this Agreement or in any
certificate, schedule, chart, list, letter, compilation or other document
delivered pursuant hereto, shall survive the Closing for a period of one (1)
year; provided, however, that as to any breach of, or misstatement in, any such
representation or warranty as to which one party has given notice to the other
on or prior to the expiration of such one (1) year period, the same shall
continue to survive beyond said period, but only as to the matters contained in
such notice.
Section 8.2 EBC's INDEMNIFICATION. EBC covenants and agrees to indemnify
and save harmless Revenge and its directors, officers, employees and agents from
any and all costs, expenses, losses, damages and liabilities incurred or
suffered directly or directly by any of them (including reasonable legal fees
and costs) proximately resulting from or attributable to the breach of, or
misstatement in, any one or more of the representations or warranties of EBC
made in or pursuant to this Agreement.
Section 8.3 REVENGE'S INDEMNIFICATION. Revenge covenants and agrees to
indemnify and save harmless EBC and its directors, officers, employees and
agents from any and all costs, expenses, losses, damages and liabilities
incurred or suffered by any of them (including reasonable legal fees and costs)
proximately resulting from or attributable to the breach of, or misstatement in,
any one or more of the representations or warranties of Revenge made in or
pursuant to this Agreement.
Section 8.4 DEFENSE AGAINST ASSERTED CLAIMS. If any claim or assertion of
liability is made or asserted by a third party against a party indemnified
pursuant to this Article 8 ("Indemnified Party") based on any liability or
absence of right which, if established, would constitute a matter for which the
Indemnified Party would be entitled to indemnification by another party hereto
("the Indemnifying Party") the Indemnified Party shall with reasonable
promptness give to the Indemnifying Party written notice of the claim or
asserting of liability and request the Indemnifying Party to defend the same.
Failure to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability which the Indemnifying Party might have to the
Indemnified Party unless such failure materially prejudices the Indemnifying
Party's position. The Indemnifying Party shall have the right to defend against
such liability or assertion, in which event the Indemnifying Party shall give
written notice to the Indemnified Party of the acceptance of defense of such
claim and the identity of counsel selected by the Indemnifying Party with
respect to such matters. The Indemnified Party shall be entitled to participate
with the Indemnifying Party in such defense and also shall be entitled at its
option to employ separate counsel for such defense at the expense of the
Indemnified Party. In the event the Indemnifying Party does not accept the
defense of the matter as provided above or in the event that the Indemnifying
Party or its counsel fails to use reasonable care in maintaining such defense,
the Indemnified Party shall have the full right at its option to defend against
the liability or assertion and to employ counsel for such defense at the expense
of the Indemnifying Party. All parties hereto will cooperate with each other in
the defense of any such action and the relevant records of each shall be
available to the others with respect to such defense.
9. POST-CLOSING MATTERS
9.1 PERFORMANCE PONDS. EBC shall maintain in force at its expense, until
their maturity or expiration in accordance with their terms, all performance
bonds issued by EBC prior to the Closing Date.
15
<PAGE> 16
10. ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
The rights under this Agreement shall not be assignable nor the duties
delegable by any party without the written consent of all parties hereto having
been obtained thereto. Nothing contained in this Agreement, express or implied,
is intended to confer upon any person or entity, other than the parties hereto,
and their successors in interest, any rights or remedies under or by reason of
this Agreement unless so stated expressly to the Contrary. All covenants,
agreements, representations and warranties of the parties contained herein shall
be binding upon and inure to the benefit of Revenge and EBC and their respective
successors and permitted assigns.
11. ABANDONMENT
In the event the transactions contemplated hereby are terminated or
abandoned by mutual agreement of the parties hereto, there shall be no
liability on the part of any of the parties by reason of such termination or
abandonment.
12. NOTICES
All notices, requests, demands and other communications hereunder shall be
writing and shall, be deemed to have been duly given when personally delivered
or deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, addressed to the parties at the following
addresses (or at such other address as shall be given in writing by any party to
the other) as follows:
To Revenge: Mr. William C. Robinson
8908 South Yale Avenue
Tulsa, Oklahoma 74137
Telephone: 918.493.2069
Facsimile: 918.493.6234
With a copy to: John Holt Smith, Esq.
Inman Steinberg Nye & Stone
1925 Century Park East #1600
Los Angeles, California 90067
Telephone: 310.274.7111
Facsimile: 310.274.8889
To EBC: Scott Flanders, President
775-B Taylor Lane
Dania, Florida 33004
Telephone: 954.927.4467
Facsimile: 954.927.9498
13. REMEDIES NOT EXCLUSIVE
No remedy conferred by any of the provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every remedy given hereunder or now or
hereafter existing, at law or in equity by statute or otherwise. The election of
any one or more remedies by Revenge or EBC shall not constitute a waiver of the
right to pursue other available remedies.
16
<PAGE> 17
14. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
15. CAPTIONS AND SECTION HEADINGS
Captions and section headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing it.
16. WAIVERS
Any failure by any of the parties hereto to comply with all of the
obligations, agreements or conditions set forth herein may be waived by the
other party or parties, provided, however that any such waiver shall not be
deemed a waiver of any other obligation, agreement or condition contained
herein.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties. There
are not and shall not be any verbal statements, representations, warranties,
undertakings or agreements between the parties, and this Agreement may not be
amended or modified in any respect except by a written instrument signed by the
parties hereto.
18. APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of Oklahoma.
* * *
17
<PAGE> 18
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
REVENGE MARINE INC.
By /s/ Desai V. Robinson
-----------------------------------------
Desai V. Robinson, President
EGRET BOAT COMPANY
By /s/ Scott Flanders
-----------------------------------------
Scott Flanders, President
18
<PAGE> 1
EXHIBIT 10.5
REVENGE MARINE, INC.
UNSECURED PROMISSORY NOTE
$_________________ Ft. Lauderdale, Florida
July 30, 1998
FOR VALUE RECEIVED, REVENUE MARINE, INC. ("RMI") hereby promises to pay
to the order of CONSOLIDATED YACHT CORPORATION ("Holder") the principal amount
of four Hundred Fifty-eight Thousand One Hundred Sixty-two and 0/100 Dollars
($458,162) plus interest as provided herein.
1. MATURITY. The full outstanding principal balance of this Note and
all accrued but unpaid interest shall be paid on or before the earlier of 5
business days after the closing of an initial public offering by RMI or August
31, 1999.
2. INTEREST RATE. The unpaid principal balance of this Note shall bear
interest at the rate of eight percent (8%) per annum. Upon and during the
continuation of an event of default, the unpaid principal balance of this Note
shall bear interest at the rate of twelve percent (12%) per annum.
3. MAXIMUM INTEREST RATE. Notwithstanding any provision herein, Holder
shall never be entitled to receive, collect or apply as interest on any amount
owned hereunder any amount in excess of the maximum lawful rate of interest
permitted to be charged by any applicable law. In the event Holder shall ever
receive, collect or apply as interest any amount in excess of any amount
permitted to be received under applicable law, all such excess amounts shall be
applied as of the date received to the reduction of the principal amount of
indebtedness hereunder. After payment of the indebtedness in full, all remaining
excess amounts paid shall forthwith be returned within five (5) days to RMI.
4. PERMISSIVE PREPAYMENT. This Note and all indebtedness arising in
connection herewith may be prepaid at any time and from time to time in whole or
in part by RMI without premium, penalty or other charges or fees whatsoever.
5. APPLICATION OF PAYMENTS. All payments against the indebtedness
arising under this Note shall be applied first to costs of collection, second to
accrued but unpaid interest and the balance to unpaid principal.
6. NO COLLATERAL. The indebtedness evidenced by this Note is unsecured.
7. EVENTS OF DEFAULT. At the option of Holder, this Note shall become
immediately due and payable upon the occurrence and during the continuation of
the following events of default:
(a) RMI fails to pay principal or interest within 10 business days
after RMI receives written notice of such payment default;
(b) RMI shall:
<PAGE> 2
(1) Be adjudicated a bankrupt or insolvent, or
(2) Admit in writing its inability to pay RMI's debts
generally as they become due, or
(3) Apply for or consent to the appointment of a receiver,
trustee, or liquidator of RMI or of all or substantially
all of RMI's assets; or
(4) File a voluntary petition in bankruptcy or a petition
or an answer seeking reorganization or an arrangement
with creditors or take advantage of or seek any other
relief under any bankruptcy, reorganiation,
rearrangement, debtor's relief, or other insolvency law
now or herafter existing; or
(5) File an answer admitting the material allegations of, or
consenting to, or failure to answer timely a petition
filed against RMI in any bankruptcy reorganization,
rearrangement, debtor's relief, or other insolvency
proceedings; or
(6) Institute or voluntarily be or become a party to any
other judicial proceedings intended to effect a
discharge of all or substantially all of RMI's debts in
whole or in part, or a postponement of the maturity or
the collection thereof or a suspension of any of the
rights or powers granted hereby; or
(c) An order, judgement, or decree shall be entered by any court of
competent jurisdiction approving a petition seeking reorganization of RMI or
appointing a receiver, trustee, or liquidator of RMI or of all or substantially
all of its assets, and such order, judgment, or decree is not permanently stayed
or reversed within sixty (60) days after entry thereof; or
(d) A petition is filed against RMI seeking reorganization, an
arrangement with creditors, or any other relief under any bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency law now or
hereafter existing, and such petition is not discharged within sixty (60) days
after the filing thereof.
If one or more events of default shall occur and be continuing, after the
expiration of any grace or curative period provided herein, Holder may, at its
option, declare the entire indebtedness arising hereunder due and payable and
may proceed to protect and enforce any and all rights to enforce payment of all
indebtedness arising hereunder at law or in equity. All rights, remedies and
powers conferred upon Holder herein shall be cumulative and not exclusive of any
other rights, remedies or powers. No delay or omission to exercise any right,
remedy or power shall impair any such right, remedy or power or shall be
construed to be a waiver of any event of default or any acquiescence or
forbearance with respect thereto, Any right, remedy or power granted hereunder
of applicable under law or in equity may be exercised from time to time,
independently or concurrently. No waiver of any event of default shall extend
any other subsequent event of default.
-2-
<PAGE> 3
No single or partial exercise of any right, remedy or power shall preclude the
exercise of any other right, remedy or power of the futher exercise thereof.
8. GOVERNING LAW. This Note has been executed and delivered in Ft.
Lauderdale, Florida and shall be governed by and construed in accordance with
the laws of the State of Florida, Holder expressly agrees that the courts of Ft.
Lauderdale, Florida shall have jurisdiction over all proceedings in connection
herewith, and Holder agrees that for purposes of enforcement of Holder's rights
and remedies hereunder, venue and personal jurisdiction are proper in the courts
situated in Ft. Lauderdale, Florida RMI waives any right to a jury trial.
9. SEVERABILITY. In the event any provision of this Note shall be declared
by a court of competent jurisdiction to be unenforceable or invalid for any
reason whatsoever, the remaining provisions of this Note shall not be affected
thereby and all such remaining provisions shall be enforced to the maximum
extent permitted by law.
10. COSTS OF COLLECTION. If this Note or any portion hereof is not paid
when due, after expiration of all curative periods, RMI promises, to pay all
reasonable costs of collection, including but not limited to, all reasonable
attorneys' fees, court costs and reasonable expenses incurred in good faith by
Holder in order to obtain prompt, punctual and proper payment of all amounts of
indebtedness arising hereunder.
11. WAIVER. RMI and all other parties now or hereafter liable for the
payment of the indebtedness arising hereunder, whether as endorser, guarantor,
surety or otherwise, waive demand, presentment, diligence in collecting and
consent to all extensions which from time to time may be granted.
12. BINDING EFFECT. This Note and all the covenants, promises, obligations
and agreements of RMI and all rights, powers, privileges and entitlements of
Holder shall be binding upon and inure to the benefit of their respective
successors, legal representatives, and permitted assigns.
13. CURRENCY AND PLACE OF PAYMENT. All payments of principal and interest
arising in connection with this Note shall be made in lawful currency of the
United States of America and shall be paid to Holder at 775 Taylor Lane, Dania,
Florida 33004 or at such other place as Holder shall instruct RMI in writing.
REVENGE MARINE, INC.
By: /s/ William C. Robinson
----------------------------------
Name William C. Robinson
Title: Vice President
-3-
<PAGE> 4
GENERAL ASSIGNMENT AND
BILL OF SALE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This General Assignment and Bill of Sale executed and delivered
effective this 30 day of July, 1998 by Consolidated Yacht Corporation
("Seller") and Revenge Marine, Inc. ("Buyer").
WHEREAS, Seller has ceased manufacturing and other operations; and
WHEREAS, Seller desires to sell and assign all its tangible equipment,
tools, and other assets described more particularly in Exhibit A hereto
("Assets") to Buyer in accordance with this instrument ("Bill of Sale").
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged:
1. CONVEYANCE AND DELIVERY. By these presents, in exchange for the
Purchase Price as defined below, Seller hereby conveys, grants,
bargains, sells, transfers, sets over, assigns, delivers and
releases unto Buyer and its successors and assigns good and
marketable title to the Assets free and clear of all liens, claims
and encumbrances.
2. PURCHASE PRICE. The Purchase Price is a mutually agreed amount based
upon the appraised value of the Assets. The Purchase Price shall be
paid be delivery by Buyer to Seller of a Note to the form attached
as Exhibit B hereto with the agreed amount filled in.
3. TITLE. Seller represents and warrants that:
(i) Seller has good and marketable title to all the Assets, free
and clear of all liens, claims, charges, encumbrances, mortgages,
options, restrictions, security agreements or any other encumbrance
of any kind, character or description whatsoever, except only the
liabilities; and
(ii) Seller has all requisite power and authority to sell,
transfer, convey and deliver the Assets to Buyer pursuant to this
instrument of conveyance and that by reason of this sale, Seller is
not rendered insolvent; and
(iii) Seller will defend good and marketable title to the Assets so
conveyed against any and all adverse claims whatsoever; and
(iv) The Assets are in good operating condition and are useful and
usable in the business of manufacturing sport fishing and other
speed yachts; and
<PAGE> 5
(v) Seller has informed Buyer of all material facts relating to
the Assets, and no information provided to Buyer contains any untrue
statement of a material fact or omits any statement of fact
necessary to make the information provided true and correct in all
material respects.
4. NO LIABILITIES ASSUMED BY BUYER. Seller acknowledges and agrees
that Buyer is assuming no liabilities or obligations of Seller by
reason of this conveyance or the sale, transfer, conveyance or
delivery of the Assets.
5. CONDITION OF THE ASSETS. The Assets are being sold "as is, where is"
without any representation, warranty, liability or other obligation
on the part of Seller. THIS WARRANTY IS IN LIEU OF AND EXCLUDES
ALL OTHER WARRANTIES, WHETHER EXPRESSED OR IMPLIED, BY OPERATION OF
LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
REPRESENTATION OF MERCHANT ABILITY OR WARRANTY OR FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE WAIVED BY BUYER.
6. FURTHER ASSURANCES, Seller agrees to execute and deliver to Buyer
any and all certificates, instruments, releases and other documents
reasonably requested by Buyer to further assure and provide,
evidence of Buyer purchase of the Assets.
IN WITNESS WHEREOF, this Bill of Sale has been duly executed and
delivered on the 30th day of July, 1998.
CONSOLIDATED YACHTS CORPORATION
By /s/ James Gardner
----------------------------------
James Gardner, President
-2-
<PAGE> 6
Exhibit A
Description of the Assets
The Assets consist of the tangible personal property, the equipment,
the tools and the other items described below and on the attachments hereto:
ACC PAC INVENTORY $ 269,488.75
EQUIPMENT AND TOOLS 112,335.00
W.I.P. PROFITS 76,339.00
------------
$ 458,162.00
<PAGE> 1
EXHIBIT 10.6
SECURITIES SUBSCRIPTION AGREEMENT
THIS SECURITIES SUBSCRIPTION AGREEMENT, dated as of July 13,
1998 ("AGREEMENT"), is executed in reliance upon the exemption from
registration afforded by Rule 504 promulgated under Regulation D by the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended. Capitalized terms used herein and not defined shall have the meanings
given to them in Rule 504 and Regulation D.
This Agreement has been executed by the undersigned buyer
("BUYER") in connection with the private placement of 8% Series B Senior
Subordinated Convertible Redeemable Debentures of Revenge Marine, Inc., a
corporation organized under the laws of Nevada, with its principal executive
offices located at 7711 S. Jamestown Avenue, Tulsa, Oklahoma 74136 (hereinafter
referred to as "SELLER"). Buyer hereby represents and warrants to, and agrees
with Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY SECTION 3(B) OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER (THE "1933
ACT"), AND RULE 504 OF REGULATION D PROMULGATED
THEREUNDER.
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) SUBSCRIPTION. The undersigned Buyer hereby subscribes for
and agrees to purchase the Seller's 8% Series B Subordinated Convertible
Redeemable Debenture substantially in the form of the Debenture attached as
EXHIBIT A hereto and having an aggregate original principal face amount of U.S.
$160,000 (singly, a "DEBENTURE," and collectively, the "DEBENTURES"), at an
aggregate purchase price of 100% of the face amount of such Debentures as set
forth in subsection (b) herein.
(b) PAYMENT. The Purchase Price for the Debenture shall be
one hundred sixty thousand United States Dollars (U.S. $160,000) ("PURCHASE
PRICE"), which shall be payable at closing, pursuant to paragraph c herein, by
securing the payment of the purchase price through an escrow fund ("ESCROW
FUND") which shall be drawn upon in accordance with the terms and conditions of
an Escrow Agreement which is attached hereto and shall be executed
simultaneously with this Agreement ("ESCROW AGREEMENT").
<PAGE> 2
(c) CLOSING. Subject to the satisfaction of the conditions
set forth in Sections 7 and 8 hereof, the Closing of the transactions
contemplated by this Agreement shall take place when (i) Seller delivers the
Debentures to the Escrow Agent, and (ii) Buyer funds the Escrow Fund and Seller
receives evidence of same from the Escrow Agent.
2. Buyer Representations and Covenants;
ACCESS TO INFORMATION.
In connection with the purchase and sale of the Debenture,
Buyer represents and warrants to, and covenants and agrees with Seller as
follows:
(i) Buyer is not, and on the closing date will not
be, an affiliate of Seller;
(ii) Buyer is purchasing the Securities for its own
account and Buyer is qualified to purchase the Securities
under the laws of its jurisdiction of residence, and the
offer and sale of the Securities will not violate the
securities laws or other laws of such jurisdiction;
(iii) All offers and sales of any of the Securities
by Buyer shall be made in compliance with any applicable
securities laws of any applicable jurisdiction and in
accordance with Rule 504, as applicable, of Regulation D or
pursuant to registration of securities under the 1933 Act or
pursuant to an exemption from registration;
(iv) Buyer understands that the Securities are not
registered under the 1933 Act and are being offered and sold
to it in reliance on specific exclusions from the
registration requirements of Federal and State securities
laws, and that Seller is relying upon the truth and accuracy
of the representations, warranties, agreements,
acknowledgements and understandings of Buyer set forth
herein in order to determine the applicability of such
exclusions and the suitability of Buyer and any purchaser
from Buyer to acquire the Securities;
(v) Buyer shall comply with Rule 504 promulgated
under Regulation D;
(vi) Buyer has the full right, power and authority
to enter into this Agreement and to consummate the
transaction contemplated herein. This Agreement has been
duly authorized, validly executed and delivered on behalf of
Buyer and is a valid and binding agreement in accordance
with its terms, subject to general principles of equity and
to bankruptcy or other laws affecting the enforcement of
creditors' rights generally;
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<PAGE> 3
(vii) The execution and delivery of this Agreement
and the consummation of the purchase of the Securities and
the transactions contemplated by this Agreement do not and
will not conflict with or result in a breach by Buyer of any
of the terms or provisions of, or constitute a default under,
the articles of incorporation or by-laws (or similar
constitutive documents) of Buyer or any indenture, mortgage,
deed of trust, or other material agreement or instrument to
which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable
law, rule or regulation of the United States or any State
thereof or any applicable decree, judgment or order of any
Federal or State court, Federal or State regulatory body,
administrative agency or other United States governmental
body having jurisdiction over buyer or any of its properties
or assets;
(viii) All invitations, offers and sales of or in
respect of, any of the Securities, by Buyer and any
distribution by Buyer of any documents relating to any
invitation, offer or sale by it of any of the Securities will
be in compliance with applicable laws and regulations, will
be made in such a manner that no prospectus need be filed and
no other filing need by made by Seller with any regulatory
authority or stock exchange in any country or any political
sub-division of any country, and Buyer will make no
misrepresentations nor omissions of material fact in the
invitation, offer or resale of the Debentures;
(ix) The Buyer (or others for whom it is contracting
hereunder) has been advised to consult its own legal and tax
advisors with respect to applicable resale restrictions and
applicable tax considerations and it (or others for whom it
is contracting hereunder) is solely responsible (and the
Seller is not in any way responsible) for compliance with
applicable resale restrictions and applicable tax
legislation;
(x) Buyer understands that no Federal or State or
foreign government agency has passed on or made any
recommendation or endorsement of the Securities;
(xi) Buyer has had an opportunity to discuss with
the officers of Seller, all matters relating to the
securities, financial condition, operations and prospects of
Seller and any questions raised by Buyer have been answered
to Buyer's satisfaction;
(xii) Buyer acknowledges that the purchase of the
Securities involve a high degree of risk. Buyer has such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of
purchasing the Securities. Buyer understands that the
Securities are not being registered under
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<PAGE> 4
the 1933 Act, and therefore, Buyer must bear the economic
risk of this investment for an indefinite period of time; and
(xiii) Buyer is not a "10-percent Shareholder" (as
defined in Section 871(h)(3)(B) of the U.S. Internal Revenue
Code) of Seller.
3. SELLER REPRESENTATIONS AND COVENANTS.
(a) Seller is a corporation duly organized and validly
existing under the laws of the State of Nevada, and is in good standing under
such laws. The Seller has all requisite corporate power and authority to own,
lease and operate its properties and assets, and to carry on its business as
presently conducted. The Seller is qualified to do business as a foreign
corporation in each jurisdiction in which the ownership of its property or the
nature of its business requires such qualification, except where failure to so
qualify would not have a material adverse effect on the Seller.
(b) There are 50,000,000 shares of Seller's Common Stock,
$0.001 par value per share ("COMMON STOCK"), authorized and 6,900,000 shares as
of June 10, 1998 outstanding. The Common Stock trades on NASDAQ Electronic
Bulletin Board. All issued and outstanding shares of Common Stock have been
authorized and validly issued and are fully paid and assessable.
(c) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to a loss of a material benefit, under,
any provision of the Articles of Incorporation, and any amendments thereto,
By-Laws, Stockholders Agreements and any amendments thereto of the Seller or
any material mortgage, indenture, lease or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law
ordinance, rule or regulation applicable to the Seller, its properties or
assets.
(d) The Seller is not subject to the reporting requirements
of Sections 13 or 15(d) of the Securities and Exchange Act, is not an
investment company or a developmental stage company that either has no specific
business plan or purpose.
(e) There is no fact known to the Seller that has not been
publicly disclosed by the Seller or disclosed in writing to the Buyer which
could reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs, properties or
assets of the Seller, or could reasonably be expected to materially and
adversely affect the ability of the Seller to perform its obligations pursuant
to this Agreement.
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<PAGE> 5
(f) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Seller
is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the debentures or Common Stock, or
the consummation of any other transaction contemplated hereby, except the
filing with the SEC of Form D. A copy of such filed Form D will be sent to the
Escrow Agent.
(g) There is no action, proceeding or investigation pending,
or to the Seller's knowledge, threatened, against the Seller which might
result, either individually or in the aggregate, in any material adverse change
in the business, prospects, conditions, affairs or operations of the Seller.
The Seller is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit proceeding or investigation by the
Seller currently pending or which the Seller intends to initiate. The SEC has
not issued any order suspending trading in the Seller's Common Stock.
(h) There are no other material outstanding debt or equity
securities presently convertible into Common Stock other than the Debentures.
(i) The Seller has not sold any securities within the 12
month period prior to the date the Common Stock was first offered in reliance
on any exemption under Section 3(b) of the 1933 Act or in violation of Section
5(a) of the 1933 Act.
(j) The issuance, sale and delivery of the Debentures have
been duly authorized by all required corporate action on the part of the
Seller, and when issued, sold and delivered in accordance with the terms hereof
and thereof for the consideration expressed herein and therein, will be duly
and validly issued, fully paid and non-assessable. The Common Stock issuable
upon conversion of the Debenture has been duly and validly reserved for
issuance and upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable. There are no
pre-emptive rights of any shareholder of Seller.
(k) This Agreement has been duly authorized, validly executed
and delivered on behalf of Seller and is a valid and binding agreement in
accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally. The Seller has all requisite right, power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. All corporate action on the part of the Seller, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Agreement and the Debentures has been taken. Upon their
issuance to the Buyer and delivery to the Escrow Agent, as defined in and
pursuant to the Escrow Agreement, the Debentures will be validly issued and
nonassessable, and will be free of any liens or encumbrances.
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<PAGE> 6
4. EXEMPTION: RELIANCE ON REPRESENTATIONS. Buyer understands
that the offer and sale of the Securities are not being registered under the
1933 Act. Seller and Buyer are relying on the rules governing offers and sales
made pursuant to Rule 504 promulgated under Regulation D.
5. TRANSFER AGENT INSTRUCTIONS.
(a) DEBENTURES. Upon the conversion of the Debentures, the
Buyer or holder shall give a notice of conversion to the Seller and the Seller
shall instruct its transfer agent to issue one or more Certificates
representing that number of shares of Common Stock into which the Debenture or
Debentures are convertible in accordance with the provisions regarding
conversion set forth in EXHIBIT A. The Seller shall act as Debenture Registrar
and shall maintain an appropriate ledger containing the necessary information
with respect to each Debenture.
(b) Common STOCK TO BE ISSUED WITHOUT RESTRICTIVE LEGEND.
Upon the conversion of any Debenture, Seller shall instruct Seller's transfer
agent to issue Stock Certificates up to the total of the "Conversion Amount"
(as defined in the Debenture) and any "Interest Shares" (as defined in the
Debenture) without restrictive legend in the name of the Buyer (or its nominee)
and in such denominations to be specified at conversion representing the number
of shares of Common Stock issuable upon such conversion, as applicable. The
Common Stock shall be immediately freely transferable on the books and records
of Seller.
6. REGISTRATION. If upon conversion of the Debentures
effected by the Buyer pursuant to the terms of this Agreement or payment of
interest pursuant to the Debenture the Seller fails to issue certificates for
shares of Common Stock issuable upon such conversion ("UNDERLYING SHARES") or
the Interest Shares to the Buyer bearing no restrictive legend for any reason,
then the Seller shall be required, at the request of the Buyer and at the
Seller's expense, to effect the registration of the Underlying Shares and/or
Interest Shares issuable upon conversion of the Debentures and payment of
interest under the Act and relevant Blue Sky laws as promptly as is
practicable. The Seller and the Buyer shall cooperate in good faith in
connection with the furnishings of information required for such registration
and the taking of such other actions as may be legally or commercially
necessary in order to effect such registration. The Seller shall file such a
registration statement within 30 days of Buyer's demand and shall use its good
faith diligent efforts to cause such registration statement to become effective
as soon as practicable thereafter. Such good faith diligent efforts shall
include, but not be limited to, promptly responding to all comments received
from the staff of the SEC, providing Buyer's counsel with a contemporaneous
copy of all written communications from and to the staff of the SEC with
respect to such registration statement and promptly preparing and filing
amendments to such registration statement which are responsive to the comments
received from the staff of the SEC. Once declared effective by the SEC, the
Seller shall cause such registration statement to remain effective until the
earlier of (i) the sale by the Buyer of all Underlying Shares registered or
(ii) 120 days after the effective date of such registration statement. In the
event the Seller undertakes to
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<PAGE> 7
file a Registration Statement on Form S-3 in connection with the Common Stock,
upon the effectiveness of such Registration, Buyer shall have the option to
sell the Common Stock pursuant thereto.
7. DELIVERY INSTRUCTIONS. The Debentures being purchased
hereunder shall be delivered to the Escrow Agent pursuant to the Escrow
Agreement.
8. CONDITIONS TO SELLER'S OBLIGATION TO SELL. Seller's
obligation to sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
executed by Buyer.
(b) All of the representations and warranties of the Buyer
contained in this Agreement shall be true and correct on the Payment Date with
the same force and effect as if made on and as of the Payment Date. The Buyer
shall have performed or complied with all agreements and satisfied all
conditions on its part to be performed, complied with or satisfied at or prior
to the Payment Date.
(c) No order asserting that the transactions contemplated by
this Agreement are subject to the registration requirements of the Act shall
have been issued, and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Seller, be contemplated. No
stop order suspending the sale of the Debentures or Common Stock shall have
been issued, and no proceedings for that purpose shall have been commenced or
shall be pending or, to the knowledge of the Seller, be contemplated.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would prevent the issuance of the Debentures or Common
Stock. No injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction shall have been issued that would prevent
the issuance of the Debentures.
(e) The funding by the Buyer of the Escrow Fund.
9. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE. Buyer's
obligation to purchase the Debentures is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of
this Agreement as evidenced by execution of this Agreement of the duly
authorized officer of Seller.
(b) Delivery of the Debentures to the Escrow Agent.
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<PAGE> 8
10. NO SHAREHOLDER APPROVAL. Seller hereby agrees that from
the Closing Date until the issuance of Common Stock upon the conversion of the
Debentures, Seller will not take any action which would require Seller to seek
shareholder approval of such issuance unless such shareholder approval is
required by law or regulatory body (including but not limited to the NASDAQ
Stock Market, Inc.) as a result of the issuance of the Securities hereunder.
11. MISCELLANEOUS.
(a) This Agreement together with the Debentures and Escrow
Agreement, constitutes the entire agreement between the parties, and neither
party shall be liable or bound to the other in any manner by any warranties,
representations or covenants except as specifically set forth herein. Any
previous agreement among the parties related to the transactions described
herein is superseded hereby. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the restrictive successors and
assigns of the parties hereto. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
(b) Buyer is an independent contractor and is not the agent
of Seller. Buyer is not authorized to bind Seller or to make any representation
or warranties on behalf of Seller.
(c) All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(d) This Agreement shall be construed in accordance with the
laws of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto. Buyer and Seller hereby mutually waive trial by jury and
consent to exclusive jurisdiction and venue in the courts of the State of New
York. At Buyer's election, any dispute between the parties may be arbitrated
rather than litigated in the courts, before the arbitration board of the
National Association of Securities Dealers in New York City and pursuant to its
rules. Upon demand made by the Buyer to the Seller, Seller agrees to submit to
and participate in such arbitration. This Agreement may be executed in
counterparts, and the facsimile transmission of an executed counterpart to this
Agreement shall be effective as an original.
(e) Seller agrees to indemnify and hold Buyer harmless from
any and all claims, damages and liabilities arising from Seller's breach of
its representations and/or covenants set forth herein.
(f) Buyer agrees to indemnify and hold Seller harmless from
any and all claims, damages and liabilities arising from Buyer's breach of its
representations and warranties set forth in this Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of the date first set forth above.
Official Signatory of Seller:
REVENGE MARINE INC.
By:
-----------------------------------
William C. Robinson
Accepted this 13th day of July, 1998 Title: President
Official Signatory of Buyer:
SHOLEM LIEBENTHAL
By:
------------------------------------
Address of Buyer:
2 Hachoma Hashlishit Street,
Jerusalem. E. Israel
Fax No.: 972-2-628-3189
Tel. No.: 972-2-627-7861
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<PAGE> 10
EXHIBIT A
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE
"1933 ACT"), AND RULE 504 OF REGULATION D PROMULGATED
THEREUNDER.
US $160,000
REVENGE MARINE INC.
8% SERIES B SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE JULY _, 1999
THIS DEBENTURE of Revenge Marine, Inc., a corporation duly
organized and existing under the laws of Nevada ("COMPANY"), designated as its
8% Series B Senior Subordinated Convertible Redeemable Debentures Due July __,
1999, in an aggregate principal face amount not exceeding One Hundred Sixty
Thousand Dollars (U.S. $160,000), which Debentures are being purchased at 100%
of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Sholem
Liebenthal the registered holder hereof and his authorized successors and
permitted assigns ("HOLDER"), the aggregate principal face sum not to exceed One
Hundred Sixty Thousand Dollars (U.S. $160,000) on July __, 1999 ("MATURITY
DATE"), and to pay interest on the principal sum outstanding, at the rate of 8%
per annum due and payable monthly commencing August __, 1999 pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("DEBENTURE REGISTER "); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of July
__, 1998 between the Company and Sholem Liebenthal (SUBSCRIPTION AGREEMENT").
The principal of, and interest on, this Debenture are payable at the address
last appearing on the Debenture Register of the Company as designated in writing
by the Holder hereof from time to time. The Company will pay the outstanding
principal due upon this Debenture before or on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this
Debenture by check if paid more than 10 days prior to the Maturity Date or by
wire transfer
<PAGE> 11
and addressed to such Holder at the last address appearing on the Debenture
Register. The forwarding of such check or wire transfer shall constitute payment
of outstanding principal hereunder and shall satisfy and discharge the liability
for principal of this Debenture to the extent of the sum represented by such
check or wire transfer. Interest shall be payable in Common Stock (as defined
below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional
provisions:
1. The Debentures are issuable in denominations of a minimum
of Twenty-Five Thousand Dollars (US$25,000). The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same, but not less
than U.S. $25,000. No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all
payments any amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended ("ACT") and applicable
state securities laws. Prior to due presentment for transfer of this Debenture,
the Company and any agent of the Company may treat the person in whose name
this Debenture is duly registered on the Company's Debenture Register as the
owner hereof for all other purposes, whether or not this Debenture be overdue,
and neither the Company nor any such agent shall be affected or bound by notice
to the contrary. Any Holder of this Debenture, electing to exercise the right
of conversion set forth in Section 4(a) hereof, in addition to the requirements
set forth in Section 4(a), and any prospective transferee of this Debenture,
are also required to give the Company written confirmation that the Debenture
is being converted ("NOTICE OF CONVERSION") in the form annexed hereto as
EXHIBIT I.
4. (a) The Holder of this Debenture is entitled, at its
option, at any time immediately following execution of this Agreement and
delivery of the Debenture hereof, to convert all or any amount over $25,000 of
the principal face amount of this Debenture then outstanding into shares of
Common Stock, $0.001 par value per share, of the Company ("COMMON STOCK"), at
a conversion price for each share of Common Stock equal to the lower of (a) 75%
of the average closing bid price of the Common Stock for the day immediately
preceding the date of receipt by the Company of Notice of Conversion
("CONVERSION SHARES") or (b) 75% of the closing bid price of the Common Stock
on the five (5) days immediately preceding the date of subscription by the
Holder as reported by the National Association of Securities Dealers Electronic
Bulletin Board ("NASDAQ") ("CONVERSION PRICE"). If the number of resultant
Conversion Shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
shall, as soon as practicable, take the necessary steps to seek such approval.
If such approval is not received within 30 days, then Company shall be required
to redeem the Debenture
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<PAGE> 12
pursuant to paragraph 4(c) herein. Such conversion shall be effectuated, as
provided in a certain Escrow Agreement executed simultaneously with this
Debenture, by the Company delivering the Conversion Shares to the Holder within
5 days of receipt by the Company of the Notice Of Conversion. Once the Holder
has received such Conversion Shares, the Escrow Agent shall surrender the
Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by
issuing Common Stock of the Company as follows: Based on the lower of (a) the
average closing bid price of the Common Stock for the day immediately preceding
the date of the monthly interest payment due or (b) the closing bid prices of
the Common Stock for the last 5 consecutive trading days prior to Closing
("MARKET PRICE"), the Company shall issue to the Holder shares of Common Stock
in an amount equal to the total monthly interest accrued and due divided by 75%
of the Market Price ("INTEREST SHARES"). The dollar amount of interest payable
pursuant to this paragraph 4(b) shall be calculated based upon the total amount
of payments actually made by the Holder in connection with the purchase of the
Debentures at the time any interest payment is due. If such payment is made by
check, interest shall accrue beginning 10 days from the date the check is
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement.
(c) At any time after 90 days the Company shall have the
option to pay to the Holder 125% of the principal amount of the Debenture, in
full, to the extent conversion has not occurred pursuant to paragraph 4(a)
herein, or pay upon maturity if the Debenture is not converted. The Company
shall give the Holder 5 days written notice and the Holder during such 5 days
shall have the option to convert the Debenture or any part thereof into shares
of Common Stock at the Conversion Price set forth in paragraph 4(a) of this
Debenture. Any shares issued pursuant to this paragraph 4(c) shall be issued
pursuant to Rule 504 of Regulation D.
(d) The Debenture Holder shall cause its broker to send to
the Company duplicate confirmation receipts for all sales of the Conversion
Shares by the Debenture Holder.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment
for payment, notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent
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<PAGE> 13
to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses,
including reasonable attorneys' fees, which may be incurred by the Holder in
collecting any amount due under this Debenture.
8. If one or more of the following described "Events of
Default" shall occur and continue for 30 days, unless a different time frame is
noted below:
(a) The Company shall default in the payment of
principal or interest on this Debenture; or
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in
any certificate or financial or other written
statements heretofore or hereafter furnished by or
on behalf of the Company in connection with the
execution and delivery of this Debenture or the
Subscription Agreement shall be false or misleading
in any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any
material respect, any other covenant, term,
provision, condition, agreement or obligation of the
Company under this Debenture and such failure shall
continue uncured for a period of thirty (30) days
after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in
writing its inability to pay its debts generally as
they mature; (3) make an assignment for the benefit
of creditors or commence proceedings for its
dissolution; or (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or
business; or
(e) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall
not be discharged within thirty (30) days after such
appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the Company; or
(g) Any money judgment, writ or warrant of attachment,
or similar process, excess of One Hundred Thousand
($100,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its
properties or other assets and
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<PAGE> 14
shall remain unpaid, unvacated, unbonded or unstayed
for a period of fifteen (15) days or in any event
later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or
liquidation proceedings, or other proceedings for
relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against
the Company and, if instituted against the Company;
or
(i) The Company shall have its Common Stock delisted
from the over-the-counter market; or
(j) The Company shall not deliver to the Buyer the
Common Stock pursuant to paragraph 4 herein without
restrictive legend within 3 business days,
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately, and without expiration of any period of grace,
enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
10. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred to in this
Debenture constitute the full and entire understanding and agreement between
the Company and the Holder with respect to the
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<PAGE> 15
subject hereof. Neither this Debenture nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Holder.
12. This Debenture shall be governed by and construed in
accordance with the laws of New York applicable to contracts made and wholly to
be performed within the State of New York and shall be binding upon the
successors and assigns of each party hereto. The Holder and the Company hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue in
the courts of the State of New York. At Holder's election, any dispute between
the parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the National Association of Securities Dealers in New York
City and pursuant to its rules. Upon demand made by the Holder to the Company,
the Company agrees to submit to and participate in such arbitration. This
Agreement may be executed in counterparts, and the facsimile transmission of an
executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by an officer thereunto duly authorized.
Dated:
-----------------------------------
REVENGE MARINE, INC.
By:
------------------------------
William C. Robinson
Title: President
-6-
<PAGE> 16
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $_______
of the above Debenture No. _____ into Shares of Common Stock of Revenge Marine,
Inc. ("COMPANY") according to the conditions set forth in such Debenture, as of
the date written below.
If Shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer and other taxes and
charges payable with respect thereto.
Date of Conversion
-------------------------------------------------
Applicable Conversion Price
----------------------------------------
Signature
-----------------------------------------------------------
[Print Name of Holder and Title of Signer]
Address:
------------------------------------------------------------
SSN or EIN:
---------------------------------------------------------
Shares are to be registered in the following name:
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Tel:
----------------------------
Fax:
----------------------------
SSN or EIN:
---------------------
Shares are to be sent or delivered to the following account:
Account Name:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-7-
<PAGE> 17
ESCROW AGREEMENT
ESCROW AGREEMENT ("ESCROW AGREEMENT") dated as of July 13,
1998 by and among REVENGE MARINE INC., a Nevada corporation, with a principal
place of business at 7711 S. Jamestown Avenue, Tulsa, Oklahoma 74136
("REVENGE"), and SHOLEM LIEBENTHAL, having an address at 2 Hachoma Hashlishit
Street, E. Jerusalem, Israel ("PURCHASER"), and EDWARD H. BURNBAURN, ESQ.,
having a principal place of business at 300 East 42nd Street, New York, New
York 10017 ("ESCROW AGENT").
WHEREAS:
A. Purchaser and Revenge entered into a Securities
Subscription Agreement dated as of July 13, 1998 ("AGREEMENT"), in which, INTER
ALIA, Purchaser agreed to purchase Revenge's 8% Series B Senior Subordinated
Convertible Redeemable Debentures ("DEBENTURES");
B. Pursuant to the Agreement, the Debentures are to be
delivered to the Escrow Agent to hold and administer in accordance with the
terms and conditions of this Escrow Agreement.
NOW THEREFORE, in consideration of the respective premises,
mutual covenants and agreements of the parties hereto, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1 . APPOINTMENT OF ESCROW AGENT. Escrow Agent is hereby
appointed as escrow agent and the Escrow Agent hereby accepts such appointment.
The Escrow Agent shall act in accordance with the instructions set forth in
this Escrow Agreement and any further instructions given to it by written
instrument signed by Revenge and Purchaser.
2. FUNDING OF ESCROW FUND. On the date hereof, the Purchaser
shall transfer to the Escrow Agent the sum of USD$100,000 to be held by Escrow
Agent in a trust account ("ESCROW FUND") and applied in accordance with the
terms and conditions of this Escrow Agreement. Escrow Agent shall provide to
Revenge confirmation that the Escrow Fund has been established in accordance
with this Escrow Agreement.
3. ISSUANCE AND DELIVERY OF THE DEBENTURES TO THE ESCROW
AGENT
On the date hereof, Revenge shall issue in the name of the
Purchaser and deposit with the Escrow Agent the Debenture in the face amount of
$160,000 as provided in the Agreement. If Revenge is not paid the Purchase
Price for the Debenture, as provided in this Escrow Agreement, then the
Debenture, or any portion of the Debenture which is not paid for at the time
when payment is due to be made, shall be canceled by Revenge, and the
<PAGE> 18
Escrow Agent, upon written notice of such cancellation from Revenge, shall
promptly return the Debenture to Revenge. Upon such cancellation and return of
the Debenture, the parties shall have no further obligations or liabilities
each to the other under this Escrow Agreement, the Agreement or the Debenture.
4. CUSTODY AND DISPOSITION OF THE DEBENTURES. The Escrow
Agent shall hold and dispose of the Debentures only in accordance with the
terms of this Escrow Agreement.
5. CONVERSION OF DEBENTURES.
(a) As provided in paragraph 4 of the Debentures, Purchaser
may give Notice of Conversion of the Debentures to Revenge by facsimile to the
number set forth in Section 10 below. Conversion of Debentures may take place
at any time until the Maturity Date of the Debentures, as defined in the
Debentures. As provided in paragraph 4 of the Debentures, within 5 business
days of receipt of the Notice of Conversion, Revenge shall deliver to the
Purchaser, or to an account designated by Purchaser in the Notice of
Conversion, certificates representing the shares of common stock to which the
Purchaser shall be entitled by reason of the conversion ("CERTIFICATES").
Purchaser shall wire funds to make payment to Revenge of the face amount of the
Debentures converted on or before the date of conversion. If Purchaser does not
wire transfer payment to Revenge on or before the date of conversion, then
Revenge shall give written notice to Escrow Agent that it has not received
payment, with a copy of such notice to Purchaser, and Escrow Agent shall wire
transfer to Revenge from the Escrow Fund, the face amount of the Debentures
converted ("NOTICE OF PAYMENT") in accordance with the wire instructions
annexed to this Escrow Agreement as EXHIBIT A. In the event a Payment is made
from the Escrow Fund, Purchaser shall be required to replenish the Escrow Fund
before any additional conversions are done. Notwithstanding anything to the
contrary contained in paragraph 4 of the Debenture, Revenge may demand, in
writing, that the Purchaser pay outstanding principal amounts of the Debenture
("DEMAND") even though Purchaser has not converted all or any amount of the
Debenture into shares of common stock, as provided in subsections (A) and (B)
below. The Demand is a provision for payment of the Debenture only. Conversions
of the Debenture into shares of common stock shall be done in accordance with
paragraph 4 of the Debenture, and may be in an amount which is no less than
$25,000 but not necessarily as much as the Demand. However, (A) a Demand for
the first $100,000 may be given at any time regardless of the closing bid price
for Revenge's publicly traded common stock for the day preceding the Demand;
and (B) a Demand for the remaining $60,000 may only be given as follows: (i)
Demand may be given for the first $30,000 no less than 15 business days from
the last date the first $100,000 is completely converted; and (ii) a Demand may
be given for the final $30,000 no less than 10 business days thereafter,
PROVIDED HOWEVER, (x) the Demands set forth in subsections (B)(i) and (B)(ii)
may only be given if the closing bid price of Revenge's publicly traded common
stock for the day preceding the Demand is more than $1.33; (y) Revenge may
decline to convert the
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<PAGE> 19
remaining portion of unpaid for Debentures into shares of its common stock if
the closing bid price of the common stock for the day preceding the date of
conversion is less than $1.33; and, in any event (z) Revenge must honor any
Notice of Conversion and convert that portion of Debentures which have already
been paid for even if the closing bid price of its common stock for the day
preceding the date of any such conversion is less than $1.33.
On any single business day, Purchaser may sell up to (i)
7,500 Conversion Shares or (ii) Conversion Shares equal to 10% of the total
trading volume of Revenge's common stock at any time during a day when
Revenge's common stock trades, whichever of (i) or (ii) is greater.
(b) If Revenge fails to timely deliver Certificates, as
provided in Section 5(a) above, then Revenge shall pay Purchaser $150 per day
for each day late in delivering Certificates up to and including the 10th late
day, and $500 per day for each day late in delivering the Certificates after
the 10th late day ("LIQUIDATED DAMAGES"). Any Liquidated Damages incurred by
Revenge shall be payable immediately and in cash upon demand in writing by
Purchaser, or its agent, to Revenge. However, such Liquidated Damages may be
deducted from any amounts owed to Revenge by Purchaser pursuant to this
Section 5. Notwithstanding anything contained in the Agreement to the contrary,
including but not limited to the provisions of Section 6 regarding the
registration of restricted Conversion Shares, Purchaser shall be required to
pay the Liquidated Damages set forth in this Section 5(c).
6. BANKRUPTCY. In the event any proceeding under the
Bankruptcy Laws of the United States or any proceedings under any state laws
for the protection of debtors or creditors, are filed, voluntarily or
involuntarily, by or on behalf of Revenge, then the Escrow Agent shall not,
under any circumstances, give Notice of Payment or make a Demand even if
Revenge has delivered Certificates to the Purchaser as provided in this Escrow
Agreement and the Agreement. For purposes of this section 6, Escrow Funds shall
remain the sole property of the Purchaser until actually paid to Revenge by the
Escrow Agent
7. INDEMNIFICATION. Purchaser and Revenge agree, jointly
and severally to indemnify, defend and hold harmless the Escrow Agent from and
against any and all costs (including, without limitation, legal fees and
expenses), liabilities, claims and losses arising out of or in connection with
this Escrow Agreement or any action or failure to act by the Escrow Agent
under this Escrow Agreement, except as provided in paragraph 8 below.
8. CONCERNING THE ESCROW AGENT. To induce the Escrow Agent to
act hereunder, it is further agreed by the undersigned that:
(a) This Escrow Agreement expressly sets forth all the duties
of the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations
-3-
<PAGE> 20
shall on the part of the Escrow Agent shall be read into this Escrow Agreement.
The Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except this Escrow Agreement.
(b) The Escrow Agent shall not be liable for any action or
failure to act in its capacity as Escrow Agent hereunder unless such action or
failure to act shall constitute willful misconduct on the part of the Escrow
Agent, in which case there shall be no indemnification obligations.
(c) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume, unless he has actual
knowledge to the contrary, that any person purporting to give notice or receipt
or advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so.
(d) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in accordance with such advice,
except as provided in paragraph 8(b) above.
(e) The Escrow Agent does not have any interest in the
Debentures, Conversion Shares, Escrow Fund or any other property deposited
hereunder but is serving as escrow holder only and having only possession
thereof, and is not charged with any duty or responsibility to determine the
validity or enforceability of any such documents.
(f) The Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by delivering the Debentures to any successor Escrow
Agent, jointly designated by the other parties hereto in writing, or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be discharged
of and from any and all further obligations arising in connection with this
Escrow Agreement thereafter. The resignation of the Escrow Agent will take
effect on the earlier of (a) the appointment of a successor (including a court
of competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be
to safekeep the Debentures and not make delivery or disposition thereof until
receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final order of a court
of competent jurisdiction.
(g) In the event of any disagreement among the parties
hereto resulting in adverse claims or demands being made in connection with
the Debentures, or in the event that
-4-
<PAGE> 21
the Escrow Agent otherwise determines that the Debentures should be retained,
then the Escrow Agent may retain the Debentures until the Escrow Agent shall
have received (i) a final nonappealable order of a court of competent
jurisdiction directing delivery of the Debentures, or (ii) a written agreement
executed by the other parties hereto directing delivery of the Debentures, in
which case the Escrow Agent shall promptly deliver the Debentures in accordance
with such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party reasonably
satisfactory to the Escrow Agent to the effect that said court order is final
and nonappealable. The Escrow Agent shall act on such court order and legal
opinion without further question.
(h) This Escrow Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors
(including successors by way of merger) and assigns, heirs, administrators and
representatives and shall not be enforceable by or inure to the benefit of any
third party except as provided in paragraph (g) with respect to a resignation
by the Escrow AGENT.
(i) This Escrow Agreement may be modified by a writing signed
by all the parties hereto, and no waiver hereunder shall be effective unless in
a writing signed by the party to be charged.
9. GOVERNING LAW. This Escrow Agreement shall be governed in
all respects by the internal laws of the State of New York. The parties agree
to submit to the jurisdiction and venue of any state or federal court in New
York City having subject matter jurisdiction over the matter. Service may be
made by certified mail, return receipt requested, to the parties at the
addresses set forth in paragraph 10 below, but the parties shall not be
precluded from making service in any other manner permitted by law.
10. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be delivered by hand or
sent by U.S. Express Mail, Fedex or some other reliable overnight courier
service for next day delivery. Each such notice or other communication shall
for all purposes of this Escrow Agreement be treated as effective or having
been given when delivered if delivered personally, or, if sent by overnight
express mail service, 1 day after the same has been deposited with the U.S.
Postal Service, Fedex or the overnight courier. All such notices must also be
sent by facsimile on the same day to the parties as follows:
IF TO REVENGE:
Revenge Marine, Inc.
7711 S. Jamestown Avenue
Tulsa, Oklahoma 74136
Att'n: William C. Robinson, President
Fax: 918-493-6234
-5-
<PAGE> 22
If to Purchaser:
Sholem Liebenthal
2 Hachoma Hashlishit Street
Jerusalem E., Israel
Fax: 011-972-2-628-3189
with a copy to:
Portfolio Investment Strategies Corp.
6 Lake Street, Suite 1800
Monroe, New York 10950
Fax: 914-774-7275
If to Escrow Agent:
Edward H. Burnbaum, Esq.
Lynch Rowin
Novack Burnbaum & Crystal, P.C.
300 East 42nd Street
New York, New York 10017
Fax: 212-986-2907
11. COUNTERPARTS. This Escrow Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
12. FEES OF ESCROW AGENT. In consideration of the performance
of this Escrow Agreement, Seller shall pay the Escrow Agent a fee of $4,500
("FEE"). Such sum may be deducted from any amounts due to be paid Seller by
Purchaser pursuant to the Agreement, Debenture and this Escrow Agreement.
-6-
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this
Escrow Agreement to be duly executed and delivered, as of the day and year
first above written.
REVENGE MARINE. INC.
By:
------------------------------------
William C. Robinson, President
PURCHASER:
By:
------------------------------------
ESCROW AGENT:
EDWARD H. BURNBAUM, ESQ.
By:
-----------------------------------
<PAGE> 1
EXHIBIT 10.7
PURCHASE AGREEMENT
dated as of October 22, 1998
between
REVENGE MARINE, INC.
and
BYC ACQUISITION CORPORATION
<PAGE> 2
INDEX
1. PURCHASE AND SALE........................................................1
2. CLOSING..................................................................1
3. WARRANT..................................................................2
4. FEES.....................................................................5
5. REPRESENTATIONS AND WARRANTIES OF REVENGE................................7
6. REPRESENTATIONS AND WARRANTIES OF BYC....................................9
7. COVENANTS................................................................9
8. LEGEND..................................................................11
9. FEES AND EXPENSES.......................................................12
10. INDEMNIFICATION.........................................................12
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC............................14
12. NOTICES.................................................................14
13. MISCELLANEOUS...........................................................14
SCHEDULES
- ---------
Schedule 1A - BYC Assets
Schedule 1B - Assumed Liabilities
DEFINITIONS
-----------
Agreement....................1 Indemnified Party........................13
Assumed Liabilities..........1 Indemnifying Party.......................13
Blackfin Vessel..............7 NASDAQ....................................9
BYC..........................1 Revenge...................................1
BYC Assets...................1 SEC.......................................3
Common Stock.................1 Sold, leased or otherwise disposed of.....7
Designated Assets............7 Unit Sales Price..........................6
Exchange Act.................8 Warrant...................................1
Exercise Date................7 Warrant Shares............................2
First Sale Date..............7
<PAGE> 3
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") dated October 22, 1998, is
entered into by and between Revenge Marine, Inc., a Delaware corporation
("Revenge"), and BYC Acquisition Corporation, a Delaware corporate ("BYC").
RECITALS
The parties desire to consummate the purchase and sale of substantially
all of the assets of BYC, and the transfer and assumption of certain of the
liabilities of BYC, upon the terms and conditions set forth in this Agreement.
The parties hereto agree as follows:
1. PURCHASE AND SALE. BYC hereby grants, bargains, sells, transfers,
assigns and delivers to Revenge all right, title and interest in and to all of
the assets listed on Schedule 1A (collectively, the "BYC Assets") and all of
its obligations with respect to those liabilities listed on Schedule 1B
(collectively, the "Assumed Liabilities"), and Revenge hereby purchases from BYC
the BYC Assets and agrees to assume, perform and discharge the Assumed
Liabilities. All assets and liabilities of BYC not specifically included as BYC
Assets or BYC Liabilities will remain the property or obligation of BYC, as the
case may be, and Revenge will have no interest therein or obligation therefor.
In consideration of the transfer, assignment and delivery of the BYC Assets and
BYC Liabilities:
(a) Revenge is paying BYC $905,455 in immediately available
funds by wire transfer to BYC's designated account,
which amount represents $1,005,455 less a credit for
the amount paid under the Option Agreement, and
(b) Revenge is issuing to BYC a warrant (the "Warrant") to
purchase up to 545,455 shares (subject to adjustment)
of Revenge's Common Stock, par value $.01 per share
(the "Common Stock"), at an exercise price of $6.44 per
share (subject to adjustment), for which BYC will pay
Revenge the par value of the Warrant Shares, and
(c) Revenge shall pay BYC the fees described in Section 4.
2. CLOSING. Simultaneously with the execution and delivery of this
Agreement:
(a) BYC shall execute and deliver, or caused to be executed and
delivered, a Bill of Sale for the BYC Assets (conveying title thereto free and
clear of all liens, claims or encumbrances of any kind).
(b) Revenge shall make the payment pursuant to Section 1(a), and shall
execute and deliver, or caused to be executed and delivered, the following
documents:
(1) The Warrant specified in Section 1(b).
1
<PAGE> 4
(2) An opinion of counsel reasonably satisfactory to BYC
3. WARRANT. This section describes certain provisions specific to the
Warrant and the shares of Common Stock that BYC may from time to time acquire
upon exercise of the Warrant (the "Warrant Shares"):
(a) DEMAND REGISTRATION. Upon BYC's written request in accordance with
Section 3(c) any time on or after the first anniversary of the first exercise of
the Warrant Shares but before the fourth anniversary of such exercise, Revenge
will use reasonable efforts to register under the Securities Act any Warrant
Shares, as soon as reasonably practicable following such request so as to permit
the sale of such shares. Revenge will be entitled to postpone for a reasonable
period of time, the filing of any registration statement otherwise required to
be prepared and filed by it with respect to such registration if, at the time it
receives such request, Revenge (i) in its reasonable judgment and based on the
advice of counsel, determines that such registration and sale would materially
interfere with any financing, acquisition, corporate reorganization or other
material transaction and promptly gives BYC written notice of such
determination, or (ii) has filed or is about to file a registration statement
relating to Revenge's securities and the managing underwriters of such offering
have advised in writing that the filing of a registration statement would
materially and adversely affect Revenge's offering. If Revenge so postpones a
registration statement filing, then BYC may withdraw the request for
registration by giving Revenge written notice within 30 calendar days after
receipt of the notice of postponement. Revenge will have no further obligation
to register any Warrant Shares under this Section 3(a) after it has filed two
separate registration statements that have become effective pursuant to requests
by BYC under this Section 3(a).
(b) PIGGYBACK REGISTRATION. At any time after an initial public
offering of shares, if Revenge proposes to register under the Securities Act
any of its Common Stock or other securities convertible into Common Stock
relating to an underwritten public sale of such securities, it will at each
such time give written notice to BYC of its intention to do so, together with
reasonable details regarding such proposed registration and sale. Upon BYC's
written request in accordance with Section 3(c) made within 15 days after the
receipt of any such notice, Revenge will use reasonable efforts to include in
such registration the number of Warrant Shares requested by BYC.
Notwithstanding the foregoing, Revenge will not be required to provide BYC
notice of, and BYC will not have any right to have Warrant Shares included in,
(i) a registration of securities solely in connection with any plan for the
acquisition of securities by employees of Revenge or any dividend reinvestment
plan, (ii) a registration on Form S-4 or similar form or (iii) a registration
of securities solely in connection with the acquisition of a business.
Revenge's obligations under this Section 3(b) are subject to the following
conditions:
(1) If at any time after giving written notice of its intention to
register any securities under this Section 3(b) and prior to the
effective date of the registration statement filed in connection
with such registration, Revenge determines for any reason not to
register such securities, Revenge will give BYC written notice of
such determination and, thereupon, will be relieved from its
obligation to proceed with such registration.
2
<PAGE> 5
(2) If the managing underwriter advises Revenge in writing that, in
its opinion, the amount of securities to be offered should be
limited in order to assure a successful offering, the amount of
Warrant Shares to be included in such registration will be
limited and will be allocated among the persons selling such
securities in the following order of priority: (i) first to be
registered will be the securities Revenge proposes to sell, and
(ii) next to be registered will be the Warrant Shares and any
other Common Stock subject to similar piggyback registration
rights granted by Revenge, in proportion, as nearly as
practicable, to the number of Common Stock desired and eligible
to be sold by each holder of such Common Stock.
(c) FORM OF BYC REQUEST. Each BYC request for registration under
Section 3(a) or (b) will (i) specify the number of Warrant Shares intended to be
offered and sold, and (ii) describe the intended method of disposition of such
Warrant Shares.
(d) REGISTRATION EXPENSES. Revenge will pay all registration expenses
in connection with any registration of Warrant Shares under Section 3(a) or (b).
The registration expenses referred to in the preceding sentence include, without
limitation, the fees and expenses of Revenge's counsel and accountants, the fees
and expenses of BYC's counsel (up to $10,000), the costs and expenses incident
to the preparation, printing and filing by Revenge of the registration statement
(including the financial statements included in, and all amendments and exhibits
to, the registration statement), the preliminary prospectus and the final
prospectus and any amendment or supplement to any of the foregoing, the filing
fees of the Securities and Exchange Commission (the "SEC"), the National
Association of Securities Dealers, Inc., and of any state securities or blue sky
authorities, the fees and expenses of counsel in connection with the
qualification of the securities under state securities or blue sky laws, the
costs of printing and copying the various underwriting and blue sky documents,
any fees relating to the listing of the securities on the National Association
of Securities Dealers, Inc. Automated Quotation System or in any other market in
which Revenge's securities are traded, the cost of printing certificates
representing the securities being offered, any fees of the transfer agent, the
cost of preparing and publishing advertisements, including "tombstone"
advertisements, relating to the offering, and the cost of preparing bound
volumes relating to the offering; provided, however, that BYC and Revenge shall
share equally all costs of printing and delivering preliminary and final
prospectuses in connection with any registration of Warrant Shares under Section
3(a). BYC will be solely responsible for any underwriting discounts or
commissions applicable to its securities sold in the offering. Notwithstanding
the foregoing, Revenge and BYC will in good faith discuss BYC sharing a pro rata
portion of the offering expenses in connection with any registration of Warrant
Shares under Section 3(a) or (b) if such sharing is required to effect the
registration of securities in a particular jurisdiction and the managing
underwriter advises Revenge in writing that, in its opinion, the registration of
securities in that jurisdiction is necessary to assure a successful offering.
(e) REGISTRATION PROCEDURES. If and whenever Revenge is required to use
reasonable efforts to effect the registration of any Warrant Shares under the
Securities Act as provided in Sections 3(a) and (b), Revenge will promptly:
3
<PAGE> 6
(1) prepare and file with the SEC a registration statement with
respect to such Warrant Shares and use reasonable efforts to
cause such registration statement to become effective;
(2) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period up to 180 days and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until
such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by BYC as set
forth in such registration statement;
(3) furnish to BYC such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as BYC may reasonably
request in order to facilitate the disposition of the Warrant
Shares by BYC; provided, however, that BYC and Revenge shall
share equally all costs of printing and delivering preliminary
and final prospectuses in connection with any registration of
Warrant Shares under Section 3(a);
(4) use its reasonable efforts to register or qualify such securities
covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as BYC may
reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable BYC to
consummate the disposition in such jurisdictions of the Warrant
Shares owned by BYC, except that Revenge will not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so
qualified, or to consent to general service of process in any
such jurisdiction;
(5) notify BYC at any time when a prospectus relating to its Warrant
Shares is required to be delivered under the Securities Act of
the happening or any event as a result of which the prospectus
included in such registration statement, as then in effect, is
known by Revenge to include an untrue statement of material fact
or to omit to state any material fact required to be stated
therein or necessary to make statements therein not misleading in
the light of the circumstances then existing (provided that the
period during which such a condition may occur shall not be
permitted by the Company to persist for longer than 30 days nor
shall two or mor such periods be permitted by the Company to
persist for an aggregate of longer than 60 days during the term
of such registration), and promptly prepare, file and furnish to
BYC a reasonable number of copies of a supplement to, or an
amendment of, such prospectus as may be necessary so that, as
delivered to the purchasers of such securities, such prospectus
shall not include an untrue
4
<PAGE> 7
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing; and
(6) advise BYC as to the time when such registration statement
becomes effective and as to the issuance by the SEC of any
stop order suspending the effectiveness of such registration
statement or the institution of any proceedings for that
purpose, and use reasonable efforts to prevent the issuance
of any such stop order and to obtain as soon as possible the
lifting thereof, if issued.
BYC will furnish to Revenge such information regarding BYC and the distribution
of the Warrant Shares as Revenge may from time to time reasonably request.
(f) TAG-ALONG RIGHTS. If at any time Revenge proposes to sell
securities representing, or convertible into or exchangeable for, more than 20%
of its then outstanding Common Stock to a third party, other than pursuant to a
registered public offering under the Securities Act or a bona fide business
acquisition, then Revenge will give written notice to BYC. BYC may, upon giving
written notice to Revenge within 20 business days after receipt of Revenge's
notice, participate in such sale at the same price and upon the same terms and
conditions as are applicable to Revenge in such transaction. BYC may sell up to
the lesser of (i) one third of the total number of shares proposed to be sold
by Revenge, or (ii) all of the Warrant Shares. If BYC gives timely notice under
this Section 3(f), then Revenge will require as a condition precedent to
consummating the purchase of shares from Revenge, that the purchaser purchase
the Warrant Shares that BYC is entitled to sell under this Section 3(f), and
Revenge will not complete its sale to the purchaser if the purchaser falls to
satisfy such condition. The purchaser's purchase of the Warrant Shares be on
terms no less favorable than those set forth in Revenge's notice referred to
in the second preceding sentence.
(g) RESTRICTIONS ON BYC'S RIGHTS. Notwithstanding any provision of
this Section 3, BYC shall not have any demand registration rights under Section
3(a) or tag-along rights under Section 3(f) at any time in which BYC could sell
the Warrant Shares it holds under Rule 144 or in another transaction exempt
from registration during the following 180 days.
4. FEES.
(a) Revenge will pay BYC a fee of 2% of the Unit Sales Price for each
Blackfin Vessel sold, leased or otherwise disposed of at any time from the date
of this Agreement to the third anniversary of the First Sale Date. The fee will
be due and payable monthly by wire transfer to BYC's designated account in
United States dollars within 30 days following each month for the Blackfin
Vessels sold, leased or otherwise disposed of during such month. Revenge will
simultaneously with each such payment furnish BYC a written certification
showing the quantity of Blackfin Vessels sold, leased or otherwise disposed of
during the month, as well as year-to-date, together with such other information
as BYC may from time to time reasonably request. The first such certificate
will clearly identify the First Sale Date. Upon payment of the fee under
Section 4(b), Revenge will have no further obligation to BYC for fees
5
<PAGE> 8
under this Section 4(a). Notwithstanding the above, the time for payment of this
fee shall be upon delivery of the Blackfin Vessel to the customer.
(b) If at any time on or before the third anniversary of the First
Sale Date, Revenge sells, leases or otherwise disposes of all or
substantially all of the Designated Assets in one or more transactions before
it has paid BYC at least $900,000 in the aggregate under Section 4(a), then
Revenge will pay BYC a fee equal to (i) $900,000, minus (ii) the aggregate of
all fees actually paid by Revenge under Section 4(a) on or before the date of
such payment. The fee will be due and payable by wire transfer to BYC's
designated account in United States dollars within 10 days following such
sale, lease or other disposition. Revenge will simultaneously with such
payment furnish BYC a written certification showing the calculation of the
amount due under this Section 4(b), together with such other information as
BYC may reasonably request.
(c) Revenge will maintain complete, clear and accurate records in
sufficient detail to enable the fees payable under this Section 4 to be
determined or audited, and Revenge will retain such records, and make them
available for inspection at any time, for a period of four years. BYC may
designate independent certified public accountants reasonably acceptable to
Revenge to audit, on a confidential basis, any fee certificates delivered or
due to BYC pursuant to this Section 4, provided that no more than two such
audits may be conducted during any 12-month period. Revenge will give the
accountants reasonable access to its facilities, as well as the opportunity
to inspect at such facilities all records that are reasonably necessary for
the accountants to determine if the fees have been properly calculated. The
accountants will not disclose any financial information but will only state
that the calculated fees were correct or that Revenge has correctly paid,
overpaid or underpaid the fees. If the accountants determine that Revenge has
underpaid the fees, then Revenge will promptly pay BYC the amount of the
underpayment, together with interest calculated from the date such amount was
originally due at the rate of 12% per annurn or the maximum amount permitted
by applicable law, if lower, by wire transfer to BYC's designated account in
United States dollars. If the accountant determines that Revenge has overpaid
the fees, then Revenge will receive a credit in the amount of such
overpayment on its next quarterly payment. BYC will bear the costs of the
audit unless the accountants determine that Revenge has underpaid the fees by
ten percent or more, in which case Revenge will bear such costs.
(d) For purposes of this Agreement:
(1) "Unit Sales Price" means, with respect to the sale, lease or
other disposition of a Blackfin Vessel, actual invoice price,
f.o.b. factory, after deducting regular trade and quantity
discounts, but before deducting any other items, including but
not limited to freight allowances, cash discounts, and agents'
commissions; or if the Blackfin Vessel is not sold, but is
instead leased or otherwise disposed of, (i) the highest price at
which Revenge is offering to sell a comparable Blackfin Vessel,
or (ii) if Revenge is not currently offering a comparable
Blackfin Vessel for sale, 120% of Revenge's manufacturing costs
related to such vessel, including reasonable allocations for
overhead and other fixed costs.
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<PAGE> 9
(2) A "Blackfin Vessel" means any marine vessel directly or
indirectly manufactured by or on behalf of, or under license
from, Revenge that in any way uses any of the Designated Assets.
(3) "Sale, lease or other disposition" and similar phrases mean any
sale, lease, loan, license or other disposition, regardless of
whether or not title is transferred, but does not, with respect
to any Blackfin Vessel, include any short-term transfer of
possession for purposes of bona fide vessel testing or
demonstration.
(4) "Designated Assets" means (i) the molds included in the BYC
Assets, (ii) the trademarks included in the BYC Assets, and (iii)
any other assets included in the BYC Assets that are identified
in Schedule 1A as "Designated Assets."
(5) The "First Sale Date" means the date on which Revenge first
sells, leases or otherwise disposes of a Blackfin Vessel in a
bona fide third-party transaction.
5. REPRESENTATIONS AND WARRANTIES OF REVENGE. Revenge hereby represents
and warrants to BYC on the date hereof and on each Exercise Date (as defined in
the Warrant) as follows:
(a) Revenge has been duly incorporated and is validly existing in good
standing under the laws of State of Delaware.
(b) The execution, delivery and performance of this Agreement and the
Warrant by Revenge have been duly authorized by all requisite corporate action;
and no further consent or authorization of Revenge, its Board of Directors or
its stockholders is required. This Agreement and the Warrant have been duly
executed and delivered by Revenge and, when duly authorized, executed and
delivered by BYC, will be valid and binding agreements, enforceable against
Revenge in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(c) Revenge has full corporate power and authority necessary to execute
and deliver this Agreement and the Warrant and to perform its obligations
hereunder and thereunder.
(d) No consent, approval, authorization or order of any court,
governmental agency or other body is required for execution and delivery by
Revenge of this Agreement or the Warrant or the performance by Revenge of any of
its obligations hereunder or thereunder, other than, with respect to any
Exercise Date, any consent, approval, authorization or order which is received
on or prior to such date.
(e) Neither the execution and delivery by Revenge of this Agreement or
the Warrant nor the performance by Revenge of any of its obligations hereunder
or thereunder:
(1) violates, conflicts with, results in a breach of, or constitutes
a default (or an event which with the giving of notice or the
lapse of time or both would be reasonably likely to constitute a
default) under (i) the Certificate of Incorporation or by-laws
7
<PAGE> 10
of Revenge or any of its subsidiaries or any Certificate of
Designation relating to any securities of Revenge or any of its
subsidiaries, (ii) any decree, judgment, order, law, treaty,
rule, regulation or determination of which Revenge is aware
(after due inquiry) of any court, governmental agency or body, or
arbitrator having jurisdiction over Revenge or any of its
subsidiaries or any of their respective properties or assets,
(iii) the terms of any bond, debenture, note or any other
evidence of indebtedness, or any agreement, stock option or other
similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which Revenge or any of its subsidiaries is a
party, by which Revenge or any of its subsidiaries is bound, or
to which any of the properties or assets of Revenge or any of its
subsidiaries is subject, (iv) the terms of any "lock-up" or
similar provision of any underwriting or similar agreement to
which Revenge or any of its subsidiaries is a party or (v) any
rules of the National Association of Securities Dealers, Inc.
applicable to Revenge or the transactions contemplated hereby; or
(2) results in the creation or imposition of any lien, charge or
encumbrance upon (i) the Warrant or (ii) any of the properties or
assets of Revenge or any of its subsidiaries.
(f) Revenge has authorized and reserved 545,455 shares of Common Stock
for issuance upon exercise of the Warrants. When issued to BYC against payment
therefor in accordance with the terms of the Warrant, each Warrant Share (i)
will have been duly and validly authorized, duly and validly issued, fully paid
and nonassessable; (ii) will be free and clear of any security interests, liens,
claims or other encumbrances; and (iii) will not have been issued or sold in
violation of any preemptive or other similar rights of the holders of any
securities of Revenge.
(g) There is no pending or, to the best knowledge of Revenge,
threatened action, suit, proceeding or investigation before any court,
governmental agency, self regulatory agency, or body, or arbitrator having
jurisdiction over Revenge or any of its affiliates that would materially
adversely affect Revenge, or the execution or performance of its obligations
under this Agreement or the Warrant.
(h) Revenge has timely filed all filings with the SEC under the
Securities Act or the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), required to be filed by Revenge pursuant to such Acts, and no
such filing, or press release containing information material to the business of
Revenge as a whole, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements, in the
light of the circumstances under which they were made, not misleading.
(i) As of October 15, 1998, the authorized capital stock of Revenge
consisted of 10,000,000 shares of Common Stock of which 2,571,978 shares were
issued and outstanding. All such shares are, and all shares which may be issued
pursuant to stock options, warrants or other convertible rights will be, when
issued and paid for in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof. There are no outstanding options,
warrants, scrip, rights to subscribe to,
8
<PAGE> 11
calls or commitments of any character whatsoever granted or issued by Revenge
and relating to, or securities or rights granted or issued by Revenge and
convertible into, any shares of capital stock of Revenge or any of its
subsidiaries, or arrangements by which Revenge or any of its subsidiaries is or
may become bound to issue additional shares of capital stock of Revenge or any
of its subsidiaries. There are no outstanding debt securities issued by
Revenge. There are no agreements or arrangements under which Revenge or any of
its subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act. Revenge has furnished to BYC true and
correct copies of the Certificate of Incorporation and bylaws, as in effect on
the date hereof.
6. REPRESENTATIONS AND WARRANTIES OF BYC. BYC hereby represents and
warrants to Revenge on the date hereof as follows:
(a) BYC has been duly incorporated and is validly existing in good
standing under the laws of State of Delaware.
(b) The execution, delivery and performance of this Agreement by BYC
have been duly authorized by all requisite corporate action; and no further
consent or authorization of BYC, its Board of Directors or its stockholders is
required. This Agreement has been duly executed and delivered by BYC and, when
duly authorized, executed and delivered by Revenge, will be a valid and binding
agreement, enforceable against BYC in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
(c) BYC is transferring good and marketable title to the BYC Assets,
free and clear of all liens, encumbrances or claims. EXCEPT FOR THE FOREGOING,
BYC IS TRANSFERRING THE BYC ASSETS AS IS WHERE IS AND WITH ALL FAULTS, BYC
HEREBY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES REGARDING THE BYC
ASSETS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
(d) Subject to Section 3, BYC understands that the Warrant and the
Warrant Shares have not been registered under the Securities Act and may not be
re-offered or resold other than pursuant to such registration or an available
exemption therefrom.
(e) BYC is an "accredited investor" as that term is defined in
Regulation D. BYC is acquiring the Warrant for its own account for investment
only and not with a view to, or for resale in connection with, the public sale
or distribution thereof except pursuant to sales registered under the Securities
Act or an exemption from registration statement.
7. COVENANTS. Revenge covenants and agrees with BYC as follows:
(a) Following an initial public offering of Common Stock and for so
long as any portion of the Warrant remains outstanding, Revenge will use
reasonable efforts to (i) maintain the eligibility of the Common Stock for
quotation on NASDAQ National Market ("NASDAQ") or listing on a national or
regional securities exchange (as defined in the Exchange Act) and (ii)
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<PAGE> 12
use reasonable efforts to regain the eligibility of the Common Stock for
quotation on NASDAQ in the event that the Common Stock is delisted by NASDAQ or
national or regional securities exchange.
(b) Revenge will (i) provide BYC with an opportunity to review and
comment on any public disclosure by Revenge of information regarding this
Agreement and the transactions contemplated hereby, (ii) promptly notify BYC if
there is any public disclosure by Revenge of material information regarding
Revenge or its financial condition, prospects or results of operation and (iii)
provide BYC with copies of all registration statements, annual reports,
quarterly reports, proxy materials and other filings with the SEC, NASDAQ and
any national or regional securities exchange on which the Common Stock is
listed.
(c) Revenge will comply with the terms and conditions of the Warrant as
set forth in the Warrant (as duly amended from time to time by the parties
hereto).
(e) For so long as any portion of the Warrant remains outstanding,
Revenge will at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common Stock, for issuance upon
exercise of such Warrant, the maximum number of Warrant Shares then so issuable.
If at any time the number of authorized but unissued shares of Common Stock is
not sufficient to effect the exercise of the Warrant for all the Warrant Shares
issuable thereunder, Revenge shall use reasonable efforts to increase its number
of authorized shares of Common Stock to such number of shares as shall be
sufficient to effect such exercise, including causing its Board of Directors to
call a meeting of stockholders and recommending such increase, and after
obtaining any such approval Revenge shall reserve for issuance to BYC the number
of shares of Common Stock required to effect such exercise.
(f) Revenge will fully, faithfully and timely perform the Assumed
Liabilities in a good and workmanlike manner, and, to the extent such Revenge
engages a third party to perform any of the Assumed Liabilities, will cause such
third party to fully, faithfully and timely perform the Assumed Liabilities in a
good and workmanlike manner.
(g) Revenge will furnish BYC financial statements as follows: (i)
within 30 days after the end of each calendar quarter, financial statements
prepared and certified by management, and (ii) within 90 after the end of each
fiscal year, audited financial statements, prepared by certified public
accountants of national standing. The financial statements provided by Revenge
under this subsection (g) will be prepared in accordance with generally accepted
accounting principles, consistently applied, and will include all balance
sheets, cash flows and earnings statements, and other financial information
which lender may from time to time reasonably request.
(h) From the Closing Date to the first anniversary of the Closing Date,
BYC will be responsible for advancing on behalf of Revenge all sums necessary to
satisfy the Assumed Liabilities. On the first anniversary of the Closing Date,
Revenge will reimburse for all amounts so advanced up to $75,000.
(i) As long as the Warrant or any Warrant Shares are outstanding,
unless DDC otherwise consents in advance in writing:
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<PAGE> 13
(1) Revenge will continue to engage in business of the same general
type as conducted on the Closing Date and do or cause to be done
all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its
business.
(2) Revenge will not enter into any merger, consolidation,
amalgamation or share exchange, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make
any material change in its present method of conducting business.
(3) Revenge will not convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets,
whether now owned or hereafter acquired, other than in the
ordinary course of business.
(4) Revenge will not enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or
the rendering of any service, with any affiliate unless such
transaction is (a) in the ordinary course of Revenge's and such
affiliate's business and (b) upon fair and reasonable terms no
less favorable to Revenge than it would obtain in a comparable
arm's length transaction with a person which is not an affiliate.
(j) Within 180 days after the Closing Date, Revenge will acquire
substantially all of the assets of Revenge Marine, Inc., a Nevada corporation,
pursuant to a purchase, merger, share exchange or similar transaction upon fair
and reasonable terms no less favorable to Revenge than it would obtain in a
comparable arm's length transaction with a person which is not an affiliate.
8. LEGEND. BYC understands that the certificates or other instruments
representing the Warrant and, until such time as the Warrant Shares shall have
been sold pursuant to a registration under the Securities Act as contemplated by
this Agreement, the stock certificates representing the Warrant Shares shall
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of such certificates or other
instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS.
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<PAGE> 14
The legend set forth above shall be removed and Revenge shall issue a
certificate without such legend to any holder of the Warrant Shares if, unless
otherwise required by state securities laws, (i) the same are sold pursuant to
an effective registration statement under the Securities Act, or (ii) in
connection with a sale transaction, such holder provides Revenge with an opinion
of counsel, in form, substance and scope reasonably acceptable to Revenge, to
the effect that a public sale, assignment or transfer thereof maybe lawfully
effected without registration under the Securities Act, or (iii) such holder
provides Revenge with assurances reasonably satisfactory to Revenge that the
same may be publicly sold pursuant to Rule 144 without restriction.
9. FEES AND EXPENSES. Except as otherwise provided in this Agreement or
the Warrant, each party will be bear its own legal fees and expenses incurred
in connection with preparing this Agreement and the related transactions.
Revenge will be responsible for, and will timely pay, all taxes and assessments
relating to the transfer of the BYC Assets and Assumed Liabilities and all
taxes and assessments, from and after the date of this Agreement, relating to
the BYC Assets and Assumed Liabilities, including all sales, use and transfer
taxes.
10. INDEMNIFICATION.
(a) INDEMNIFICATION OF BYC. Revenge hereby agrees to indemnify BYC and
each of its officers, directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20 of the Exchange Act) any
of the foregoing persons against any claim, demand, action, liability, damages,
loss, cost, settlement, disposition or expense (including, without limitation,
reasonable legal fees and reasonable investigation expenses), that it incurs in
connection with:
(1) any material breach of or failure to perform any covenant,
agreement or obligation of Revenge made in this Agreement or the
Warrant;
(2) any material inaccuracy in or material breach of the
representations and warranties of Revenge made in this Agreement
or the Warrant;
(3) any matter arising from or relating to the BYC Assets or the
Assumed Liabilities or the use thereof from and after the date of
this Agreement; provided that the maximum liability of Revenge
for the Assumed Liabilities will not exceed $75,000 in the
aggregate;
(4) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement, prospectus, or any
amendment or supplement thereto, or any related preliminary
prospectus filed by or on behalf of Revenge, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; except to the extent that any such claim, demand,
action, liability, damages, loss, cost, settlement, disposition
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
any such document or amendment or supplement thereto, in reliance
upon and in
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<PAGE> 15
conformity with written information furnished to Revenge by, or
on behalf of, BYC specifically for use therein.
(b) INDEMNIFICATION OF REVENGE. BYC hereby agrees to indemnify Revenge
and each of its officers, directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20 of the Exchange Act) any
of the foregoing persons against any claim, demand, action, liability, damages,
loss, cost, settlement, disposition or expense (including, without limitation,
reasonable legal fees and reasonable investigation expenses), it incurs in
connection with:
(1) any material breach of or failure to perform any covenant,
agreement or obligation of BYC made in this Agreement or the
Warrant;
(2) any material inaccuracy in or material breach of the
representations and warranties of BYC made in this Agreement or
the Warrant;
(3) any matter arising from or relating to the BYC Assets or the
Assumed Liabilities or the use thereof before the date of this
Agreement and any matter arising from or relating to any asset or
liability of BYC that is not part of the BYC Assets or the
Assumed Liabilities;
(4) any liability of BYC not designated as part of the Assumed
Liabilities; and
(5) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement, prospectus, or any
amendment or supplement thereto, or any related preliminary
prospectus filed by or on behalf of Revenge, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, but only to the to the extent that any such claim,
demand, action, liability, damages, loss, cost, settlement,
disposition or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in any such document or amendment or supplement
thereto, in reliance upon and in conformity with written
information furnished to Revenge by, or on behalf of, BYC
specifically for use therein.
(c) CONDUCT OF CLAIMS. Whenever a claim for indemnification arises
under this Section 11, the party seeking indemnification (the "Indemnified
Party") will notify the party from whom such indemnification is sought (the
"Indemnifying Party") in writing of the relevant event or proceeding and the
facts constituting the basis for such claim in reasonable detail. Upon delivery
of such notice, such Indemnified Party will take all reasonable steps to
mitigate any losses, liabilities, costs, charges and expenses relating to any
such event or proceeding. Such Indemnifying Party shall have the right to retain
counsel of its choice in connection with such event or proceeding and to
participate at its own expense in the defense of any such event or proceeding.
An Indemnifying Party will not, without the prior written consent of the
applicable Indemnified Parties (which consent may not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or
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<PAGE> 16
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification could be sought under this
Section 11 unless such settlement, compromise or consent (i) includes an
unconditional release of each Indemnified Party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement constituting an admission of fault, culpability or a failure to act
by or on behalf of any Indemnified Party.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. The respective
representations, warranties, and agreements made herein by or on behalf of the
parties hereto will remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or controlled by or
under common control with, such party and will survive delivery of and payment
for the Warrant and any Warrant Shares.
12. NOTICES. All communications hereunder will be in writing, and will be
delivered by hand, sent by registered mail or transmitted and confirmed by
facsimile
If to Revenge: Revenge Marine, Inc.
775-B Taylor Lane
Dania, Florida 33004
Fax: (954) 927-9498
Attention: Don Mitchell, President
If to BYC: BYC Acquisition Corporation
c/o Detroit Diesel Corporation
13400 Outer Drive, West
Detroit, Michigan 48239-4001
Fax: (313) 592-7323
Attention: Daniel J. McEnroe, Treasurer
13. MISCELLANEOUS.
(a) This Agreement may be executed in one or more counterparts and it
is not necessary that signatures of all parties appear on the same counterpart,
but such counterparts together shall constitute but one and the same agreement.
(b) This Agreement and the Warrant shall inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns and,
with respect to Section 11 hereof, their respective officers, directors,
employees, agents, affiliates and controlling persons, and no other person shall
have any right or obligation hereunder. BYC may not transfer its rights and
obligations under this Agreement or the Warrant without Revenge's prior written
consent, which may not be unreasonably withheld or delayed, except that BYC may
transfer its rights and obligations to Detroit Diesel Corporation (or any of its
affiliates) without such consent. Revenge may not assign its rights or
obligations under this Agreement or the Warrant.
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<PAGE> 17
(c) This Agreement and the Warrant shall be governed by, and construed
in accordance with, the internal laws of the State of Michigan, and each of the
parties hereto hereby submits to the non-exclusive jurisdiction of any Federal
court in the Eastern District of Michigan or appropriate State court in Michigan
and any court hearing any appeal therefrom, over any suit, action or proceeding
against it arising out of or based upon this Agreement and the Warrant. Each of
the parties hereto hereby waives any objection to any such suit, action or
proceeding in such courts whether on the grounds of venue, residence or domicile
or on the ground that such suit, action or proceeding has been brought in an
inconvenient forum.
(d) The provisions of this Agreement and the Warrant are severable, and
if any clause or provision hereof shall be held invalid, illegal or
unenforceable as a whole or in part, such invalidity or unenforceability shall
not in any manner affect any other clause or provision of this Agreement or the
Warrant.
(e) The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
(f) This Agreement and the Warrant constitute the entire agreement and
supersedes all prior agreements and understandings, written or oral, between the
parties hereto with respect to the subject matter of this Agreement and the
Warrant, including the Option Agreement. Neither this Agreement nor the Warrant
is intended to confer upon any person other than the parties hereto any rights
or remedies hereunder or thereunder.
(g) As used in this Agreement, the phrase "reasonable efforts" means,
with respect to any action, those reasonable good faith efforts required to
diligently pursue completion of the subject action in a timely manner.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.
REVENGE MARINE, INC.
By: /s/ Donald Mitchell
---------------------------------
Donald Mitchell
Its: President
BYC ACQUISITION CORPORATION
By:
---------------------------------
Daniel J. McEnroe
Its: Vice President
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<PAGE> 18
SCHEDULE 1A
BYC ASSETS
----------
<TABLE>
<CAPTION>
MOLDS AND RELATED ASSETS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
24' BLACKFIN 29' BLACKFIN 38' BLACKFIN
Hull Combi Hull Combi Deck
Deck Combi Deck Combi Liner
Liner Combi Liner Combi Patterns & Templates
Parts Flybridge Deck Combi Drawings & Blueprints
Drawings & Blueprints Flybridge Liner Flybridge Deck
Parts Flybridge Liner
25' BLACKFIN Patterns & Templates Flybridge Patterns & Templates
Hull Drawings & Blueprints Flybridge Drawings &
Deck Hull Plug Blueprints
Liner
Parts 31' BLACKFIN 40' BLACKFIN
Drawings & Blueprints Combi Hull Combi Hull
Combi Deck Combi Deck
27' BLACKFIN SPORTSMAN Combi Liner Combi Liner
Hull Combi Parts Combi Patterns & Templates
Deck Patterns & Templates Combi Drawings & Blueprints
Liner Drawings & Blueprints
Parts 46' BLACKFIN
Patterns & Templates 33' BLACKFIN Hull
Drawings & Blueprints Hull Deck
Combi Deck Parts
Combi Liner Drawings & Blueprints
Combi Parts
Combi Patterns & Templates MISCELLANEOUS
Combi Drawings & Blueprints All other Blackfin molds, plugs
Flybridge Deck and related parts that appear on
Flybridge Liner the August 6, 1998 Valuation
Flybridge Parts Report prepared by Seamaster
Flybridge Patterns & Templates Yachts, to the extent they exist
Flybridge Drawings & in the Blackfin assets held by
Blueprints BYC on the date hereof.
</TABLE>
INTANGIBLES
- --------------------------------------------------------------------------------
All patents, trademarks, copyrights, service marks, trade names, corporate name
and logos associated with Blackfin, Blackfin Yacht and Blackfin Yacht
Corporation.
MISCELLANEOUS
- --------------------------------------------------------------------------------
Miscellaneous production and office equipment.
<PAGE> 19
SCHEDULE 1B
ASSUMED LIABILITIES
-------------------
<TABLE>
<CAPTION>
HULL SERVICE DATE BROKER WARRANTY EXPIRES CUSTOMER
---- ------------ ------ ---------------- --------
<S> <C> <C> <C> <C>
29-775 02/10/98 RBI (Coleman) Parts--2/10/99 Robert J. Bryan
Hull--2/10/03 13140 SW 95th Ave. Miami, FL
33176 (305) 264-8799
31-153 02/12/98 RBI Parts--2/12/99 John S. Marini
Hull--2/12/03 367 Bolivar
Canton, MA
31-154 02/25/98 RBI Parts--2/25/99 William C. Scott
Hull--2/25/03 503 Savoy
Sugarland, TX 77478
33-293 03/11/98 Moran Yachts (Callahan) Parts--3/11/99 Robert Furness
Hull-- 3/11/03 2755 E. Oakland Park
Ft. Lauderdale, FL 33306
(954) 561-3777
33-294 03/05/98 RBI (RCY Deal) Parts--3/5/99 David Boyer
Hull--3/5/03 306 Laurel Lane
Haverford, PA 19401
33-295 10/25/97 Clark's Landing (Levy) Parts--10/25/98 Martin Judge
Hull--10/25/02 4414 5th Ave.
Avalon, NJ 08202
(609) 967-1880
33-543 04/03/98 RBI Parts--4/3/99 Lee Goodbar
Hull--4/3/03 6 South Tejon
Colorado Springs, CO 80903
33-544 12/10/97 Pete Horst Yacht Sales Parts--12/10/98 James H. Price
Hull--12/10/02 601 Aldeborough Lane
Charlotte, NC 28270
40-503 03/20/98 RBI Parts--3/20/99 Michael Cherico
Hull--3/20/03 1220 N. Market St.
Wilmington, DE 19801
40-504 04/03/98 RBI Parts--4/3/99 Roberto Duran, Jr.
Hull-4/3/03 Consultenos, S.A.
Panama
</TABLE>
<PAGE> 20
REVENGE MARINE, INC.
(A Delaware Corporation)
Secretary's Certificate
I, the undersigned, being the duly elected, qualified and acting
Secretary of REVENGE MARINE, INC., a Delaware corporation (the "Corporation"),
and as such having access to the Corporation's corporate records and being
familiar with the Purchase Agreement dated as of October 22, 1998 (the
"Agreement"), between the Corporation and BYC Acqusition Corporation, and the
Warrant issued thereunder, do hereby certify that I am authorized to execute
and deliver this Certificate on behalf of the Corporation, and that:
1. The following persons are the duly elected, qualified and acting
officers of the Corporation and occupy the offices set opposite their
respective names, and the signatures set opposite their names are the true
signatures of said officers:
NAME OFFICE SIGNATURE
---- ------ ---------
Donald Mitchell President /s/ Donald Mitchell
-------------------
2. Attached hereto as Exhibit A is a true, correct and complete copy
of the Certificate of Incorporation of the Corporation and all amendments
thereto, together with a certificate of the Secretary of State (or reproduction
thereof) certifying as to the authenticity of such documents, and since the
date of such certificate, such Certificate of Incorporation has not been
revoked and remains in full force and effect on the date hereof.
3. Attached hereto as Exhibit B is a true, correct and complete copy
of the Bylaws of the Corporation as in effect on the date hereof. Such Bylaws
have not been rescinded or modified and remain in full force and effect.
4. Attached hereto as Exhibit C are resolutions adopted by the Board
of Directors at a duly convened meeting on October 14, 1998, authorizing the
execution, delivery and performance of the Agreement and the Warrant. Such
resolutions constitute the only resolutions adopted by the Board of Directors,
or any committee thereof, in connection with the execution and delivery of the
Agreement and such resolutions have not been amended or rescinded and each is
in full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand, on behalf of the
Corporation, as of October 22, 1998.
/s/ Linda D. Riznick
--------------------
Asst., Secretary
<PAGE> 21
I, Donald A. Mitchell, President of REVENGE MARINE, INC., a Delaware
corporation (the "Corporation"), do hereby certify that Linda Riznick is the
duly elected, qualified and acting Secretary of the Corporation, and that his
signature set forth above is his true signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of October 22, 1998.
/s/ Donald A. Mitchell
------------------------------
10/22/98, Pres.
---------------
2
<PAGE> 22
EXHlBIT C
RESOLUTIONS
-----------
<PAGE> 23
MINUTES OF THE TELEPHONIC MEETING OF THE BOARD 0F DIRECTORS
OF
REVENGE MARINE, INC. (A Delaware Corporation)
A telephonic meeting of the Board of Directors of Revenge Marine, Inc. (a
Delaware Corporation), was held on the 14th of October, 1998 at 1:30 p.m.
There were present at said meeting the following directors constituting a
majority of the full Board:
Donald A. Mitchell
William Robinson
Linda Riznick
James Gardiner
Scott Flanders
The meeting was called to order with a majority of the board present.
PRESIDING OFFICER
Donald Mitchell, Chairman, called the meeting to order
VALIDITY OF MEETING
The chairman announced that the meeting was held pursuant to written Waiver of
Notice thereof and consent thereto signed by all the Directors of the
Corporation named as such by the incorporator thereof; such Waiver and consent
was presented to the meeting and upon motion duly made, seconded, and
unanimously carried, was made a part of the records of the meeting and now
precedes the Minutes of this meeting in the Book of Minutes of the Corporation.
The Chairman stated that the purpose of the meeting was (1) to approve the
purchase of the BYC Acquisition Corporation from the Detroit Diesel Corporation,
(2) to approve the qualification of the Corporation to do business in the State
of Florida, and (3) to appoint Desai Robinson and Linda Riznick as Assistant
Secretaries for the Corporation.
RESOLVED
It was resolved that the Board of Directors has approved the purchase of BYC
Acquisition Corporation, a Delaware Corporation, and any and all of its
accompanying assets, tangible and intangible, pursuant to a purchase agreement
to be finalized by the officers herein designated.
RESOLVED
It was resolved that the Board of Directors appoints Donald Mitchell and William
Robinson to negotiate and finalize the purchase agreement with the designated
representatives of the seller, Detroit Diesel Corporation, so as to conclude the
purchase of such assets and/or stock.
<PAGE> 24
RESOLVED
It was resolved that the Board of Directors has approved the intent and ability
of the Corporation to do business in the State of Florida and to cause its
designated officers to qualify the Corporation to register with the Secretary of
State of Florida, Division of Corporations, so as to take all means and courses
of action to so qualify Revenge Marine, Inc. (a Delaware Corporation) as a
qualifying entity within the State of Florida.
RESOLVED
It was resolved that the Board of Directors hereby appoints Desai Robinson and
Linda Riznick Assistant Secretaries of the Corporation.
ADJOURNMENT
There being no further business to come before the meeting, upon motion duly
made, seconded, and unanimously carried, the meeting adjourned.
---------------------------
William Robinson, Secretary
/s/ Linda Riznick
----------------------------------
Linda Riznick, Assistant Secretary
APPROVED:
- --------------------------------------
Donald Mitchell, President
<PAGE> 25
NOTICE OF NOTICE AND CONSENT TO THE HOLDING OF
A TELEPHONIC MEETING OF THE BOARD OF DIRECTORS OF
REVENGE MARINE, INC. (A DELAWARE CORPORATION).
The undersigned, being the directors named as such by the incorporator of
Revenge Marine, Inc. (a Delaware Corporation), desiring to hold a telephonic
meeting of the Board of Directors of said corporation for the purpose of (1)
approving the purchase of the BYC Acquisition Corporation from the Detroit
Diesel Corporation, (2) approving the qualification of the Corporation to do
business in the State of Florida, and (3) appointing Desai Robinson and Linda
Riznick as Assistant Secretaries for the Corporation, does hereby waive notice
of said meeting and consent to the holding thereof at the time and place
designated hereunder:
The undersigned agree and consent that this meeting be held for the purpose of
(1) approving the purchase of the BYC Acquisition Corporation from the Detroit
Diesel Corporation, (2) approving the qualification of the Corporation to do
business in the State of Florida, and (3) appointing Desai Robinson and Linda
Riznick as Assistant Secretaries for the Corporation, and transacting such other
business as may be brought before said meeting; and do further agree that any
business transacted at said meeting shall be valid and legal and of the same
force and effect as though said meeting was held after notice duly given.
Dated: October 14, 1998
/s/ Donald A. Mitchell
---------------------------
Donald Mitchell, Chairman
<PAGE> 1
EXHIBIT 10.8
CONTRACT FOR THE ENGINEERING OF A
85' CONSOLIDATED MOTOR YACHT
THIS AGREEMENT (Hereinafter referred to as "AGREEMENT"), is made and entered
into this ____ day of October, 1998, by and between Arthur M. Barbeito &
Associates, Inc., a Florida Corporation (hereinafter refer as Barbeito), whose
office is located at 4967 SW 74 Ct., Miami FL 33155, and Consolidated Marine,
Inc. located at 775-B Taylor Lane, Dania, FL 33004.
WHEREAS, ARTHUR M. BARBEITO & ASSOCIATES, INC. is engaged in the yacht design
and engineering, business; and
WHEREAS, CONSOLIDATED MARINE is a production yacht builder and Barbeito is
willing to enter into this Agreement with Consolidated, in accordance with the
terms, covenants, and conditions hereinafter set forth; and
WHEREAS, BARBEITO AND CONSOLIDATED agree that the purpose of the Agreement is
to foster a furthering relationship between the parties.
NOW, THEREFORE, for the reasons set forth above, and in consideration of the
mutual covenants and promises of the parties hereto, and for separate
consideration and $10.00 (Ten dollars) paid in hand by Consolidated to
Barbeito, Barbeito and Consolidated mutually covenant and agreed with each
other as follows:
1.0 RECITALS. The foregoing recitals are hereby ratified and confirmed as
being true and correct and incorporated herein in all respects.
2.0 DESCRIPTION OF BARBEITO'S SERVICES. Subject to the orders, advice and
direction of Consolidated, Barbeito shall provide the engineering services
described in EXHIBIT A necessary for the construction of an 85' MOTOR
YACHT. Consolidated will receive three copies and DXF.files for all the
drawings.
3.0 PLACE OF RENDERING SERVICES. Barbeito shall use its office space located
at 4967 SW 74 Ct., Miami, FL 33155 to render the services to be performed
hereunder.
<PAGE> 2
Page 2/85' Consolidated Motor Yacht
4.0 DESCRIPTION OF CONSOLIDATED'S OBLIGATIONS. Consolidated will discuss all
preferences and requirements prior to the commencement of the engineering work.
All drawings will be approved and signed off by Consolidated within two days of
the delivery of the drawings. A signed copy will be returned to Barbeito. Any
changes to the drawings, after the drawings have been approved by Consolidated,
will be billed at $50.00 (Fifty dollars) per hour. Consolidated will advise
Barbeito of any inaccuracies for correction. All deviations from the drawings
are to be communicated to Barbeito.
5.0 PAYMENT FOR SERVICES AND EXPENSES.
5.1 Barbeito shall be paid by Consolidated the amount of $150,000.00 (One
hundred fifty thousand dollars) for the services to be performed
hereunder EXHIBIT A, subject to the payment schedule EXHIBIT A and the
terms and conditions set forth herein. All payments will be due 30
days from the billing date. EXHIBIT A is divided into 10 sections.
Consolidated will instruct Barbeito when to start each section.
The terms and conditions of each section are as follows 50% upon
commencement and 50% when the work is completed.
5.2 Some sections of EXHIBIT A may vary in scope. Some may require the
deletion of certain drawings, or certain drawings may need to be
added. The contract amount will be adjusted as required. It should
be keep in mind that this contract is for the scope of work described
in EXHIBIT A and that this clause is to provide flexibility to the
scope of work.
5.3 If travel shall be required by Barbeito to work on the project
hereunder, Barbeito will provide Consolidated with a budget, prior
to travel, detailing the expenses involved. Barbeito will be
reimbursed by Consolidated for the expenses incurred and cost of
travel within a period of five days. Travel to the Consolidated
Marine, Dania facility, is not considered travel.
6.0 MANNER OF PERFORMANCE. Barbeito shall at all times, faithfully,
industriously, and to the best of it's ability, experience and talents, render
all the services that may be required of and from it pursuant to the express
and implicit terms.
7.0 NONDISCLOSURE OF INFORMATION. Barbeito acknowledges that all of
Consolidated's products, suppliers, processes, information, advertising, trade
secrets, records, marketing information, techniques and all other information
related to Consolidated's business, are of proprietary interest to
Consolidated. Barbeito agrees that all such trade secrets are the permanent
proprietary property of Consolidated and as such
<PAGE> 3
Page 3/85' Consolidated Motor Yacht
will not be copied or disseminated in any manner without the written consent of
Consolidated. Consolidated acknowledges that all of Barbeito's drawings or
calculations are trade secrets and as such will not be given to third parties
without a written consent from Barbeito.
8.0 TERMS. This written Agreement contains the sole and entire
agreements between the parties hereto and supersedes any and all other
agreements, discussions, or conversations. Therefore, the parties have
voluntarily entered into this Agreement with full knowledge, understanding and
comprehension.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the
day and year or first above written.
WITNESSES:
ARTHUR M. BARBEITO & ASSOCIATES, INC.
- ------------------------------------ By:
---------------------------------
Print Name: Arthur M. Barbeito
------------------------
(Corporate seal)
CONSOLIDATED MARINE, INC.
- ------------------------------------ By:
---------------------------------
Print Name: Print Name:
------------------------ -------------------------
(Corporate seal)
ACCEPTED BY: REVENGE MARINE, INC.
By:
---------------------------------
Print Name:
-------------------------
<PAGE> 1
Exhibit 10.9
Stock Loan Agreement
For valuable consideration, the receipt of which is hereby acknowledged, Palm
Tree Promotions, Inc. ("Lender") hereby lends and remits to The Wall St. Trading
Group, 455 California Street, Suite 433, San Francisco, California 94104
("Borrower"), 100,000 (one hundred thousand) Shares of Revenge Marine, Inc., a
company whose shares are traded on NASDAQ/Bulletin Board (the "RMI Shares").
Borrower hereby acknowledges receipt of the RMI shares and agrees to remit to
Lender an equal number of RMI shares, or payment in case equal to their fair
market value, but no later than July 31, 1999 (the "Maturity Date").
Should borrower fail to remit the aforementioned RMI shares when due, Borrower
shall be in default. Upon any default hereunder, Borrower shall immediately
become indebted to Lender for the aforementioned RMI shares, plus interest at
the rate of 12% (twelve per cent) per annum on the Listed market value of said
securities on the date of default. Any interest due hereunder is payable in
lawful money of the United States. Borrower hereby waives presentment, demand,
notice of dishonor and protest and the right to assert any statue of limitations
in connection with remitting the RMI shares to Lender.
If any legal action becomes necessary to recover the aforementioned RMI shares
or to collect any sums due pursuant to this Agreement, the parties agree to
submit the matter to arbitration before the American Arbitration Association or
JAMS Endispute pursuant to their rules for resolving commercial disputes.
Borrower promises and agrees to pay Lender all legal fees, expenses and costs as
the arbitrator may award.
Dated February 17, 1998
Palm Tree Promotions
/s/
The Wall Street Trading Group
/s/ Bruce K. Dorfman
<PAGE> 1
EXHIBIT 10.10
STOCKBROKER RELATIONS, INC.
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT made this May, day of 14, 1998 by and between
STOCKBROKER RELATIONS, INC.
2232 E. Semoran Blve.
Apopka, Florida 32703
Telephone (407) 884-0444
a Florida Corporation (hereinafter referred to as "SRI") and Revenge Marine
(hereinafter referred to as "COMPANY"), collectively SRI and COMPANY hereinafter
referred to as "the parties."
WITNESSETH:
WHEREAS, SRI is an investor relations, direct marketing, public relations and
advertising firm with expertise in the dissemination of information about
private and publicly traded companies; and is in the business of providing
investor relations services, public relations services, general consulting
services, advertising services, fulfillment services, markeitng of business
formats and opportunities, finanacing arrangemnet, privage placements and other
related programs, services and prodcuts to other clients; and
WHEREAS, COMPANY is publicly held with its common stock trading on one or more
stock exchanges and/or over-the-counter and;
WHEREAS COMPANY desires to publicize itself with the intention of making its
name and general business operations better known to its shareholder, investors,
brokerage houses, potential investors or shareholders and various media; and
WHEREAS SRI is willing to accept COMPANY as a client.
WHEREAS, COMPANY requires investor relations/public relations services and
desires to employ and/or retain SRI to provide such services as an independent
contractor, and SRI is agreeable to such a relationship and/or arrangement, and
the parties desire a written document formalizing and defining their
relationship and evidencing the terms of their agreement;
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable considerations, it is agreed as follows:
<PAGE> 2
STOCK BROKER RELATIONS, INC.
"ADDENDA A"
Revenge Marine
<TABLE>
<CAPTION>
BASE BROKER RELATIONS
- ---------------------
<S> <C> <C>
Broker Relations and Broker Alert $ 30,000.00
Broker Teleconference calls deposit $ 5,000.00
6 profilers, full time billed weekly for 6 months ($93,600.00) deposit $ 46,800.00
3 broker Road Shows $ 15,000.00
Guideria Communications
4 months @ 3250 $ 13,000.00
2 TV Shows Channel 22 $ 3,000.00
-----------
$112,800.00
</TABLE>
215,761 free trading shares
For and in Behalf of COMPANY;
/s/ William C. Robinson
William C. Robinson
President
5/14/98
For and in Behalf of SRI;
/s/ Roy Meadows
Roy Meadows
President
5/14/98
<PAGE> 3
Stockbroker Relations, Inc.
"ADDENDA B"
Date: 5/14/98
1. It is mutual agreed by and between the parties hereto, that in the event of
SBR opts or agrees to accept shares of COMPANY's free trading stock now as full
or partial payment for any part or portion of SBR/s compensation or fee under
this agreement, that the number of such shares necessary for such equal value
alternative compensation shall be determined pursuant to a formulas or
computation that discounts the stock from the bid price at the rate of 50% bases
solely upon the bid as of the date of execution of the agreement or such other
subsequent written agreement to accept said stock as alternative compensation.
2. COMPANY acknowledges and agrees SBR shall not provide or continue to provide
service until all fees are paid. COMPANY acknowledges that it has verified with
its corporate council, accountants, corporate officers, board of directors,
executive decision makers, and appropriate stock exchanges that said stock can,
in fact, be timely delivered to SBR as agreed.
3. COMPANY agrees that in the event the stock has not been received in SBR=s
account within (10) ten days of the dated of execution of this agreement or any
subsequent written agreements related hereto, COMPANY shall pay to SBR in U.S.
funds an additional amount dqual to 5% of such equal value alternative
compensation as liquidated damages. This shall contined for each and every 10
day period that said stock is not received by SBR. Said funds to be wired to
SBR, without notice, within (3) three days of any such default.
4. Time period for options begins when S&P or Moodys is current financial
statements, DTC sheets, current shareholder list and payment per contract is
received.
5. The Company will grant SBR the following options as a performance bonus:
Revenge agrees to file within 10 days to register the following options for SRI
NUMBER PRICE
- ------ -----
175,000.00 @ 1.00
175,000.00 @ 1.50
175,000.00 @ 2.00
For and in Behalf of COMPANY;
/s/ William C. Robinson
William C. Robinson
President
5/14/98
For and in Behalf of SRI;
/s/ Roy Meadows
Roy Meadows, President
5/14/98
<PAGE> 1
EXHIBIT 10.11
Grant Douglas Publishing, Inc.
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT made this May, day of 14, 1998 by and between Grant
Douglas Publishing, Inc.
2232 E. Semoran Blve.
Apopka, Florida 32703
Telephone (407) 884-0444
a Florida Corporation (hereinafter referred to as "GDP") and Revenge Marine
(hereinafter referred to as "COMPANY"), collectively SRI and COMPANY hereinafter
referred to as "the parties."
WITNESSETH:
WHEREAS, COMPANY wishes to utilize Opportunist magazine for the purpose of
advertising and/or publishing of information in various publications produced by
(GDP) and in consideration thereof;
1. GDP agrees to provide the following, in various publications, See
ADDENDA A with written copy and or final film to be provided by
COMPANY, GDP will send and or forward to COMPANY all inquiry
information received by GDP.
2. COMPANY agrees to pay GDP a fee in U.S. funds or other valuable
consideration for the above mentioned services in the total amount of
118,000 free trading shares. See Addenda B for the terms on free
trading stock.
3. This agreement is non-cancelable and the full total amount of the above
mentioned compensation or fee shall become immediately due and payable
to GDP in the event of any default by Company, GDP shall not be
obligated hereunder to insert, place or publish COMPANY'S advertisement
or information in Opportunist Magazine and the full and total amount of
the above mentioned compensation or fee shall remain due and payable to
GDP.
4. This agreement may be executed in counterparts, not withstanding the
date or dates upon which this agreement is executed and delivered by
any of the parties and shall be deemed to be an original and all of
which will constitute on and the same agreement, effective as of the
reference date first written above. The fully executed telecopy (fax)
version of this agreement shall be construed by all parties hereto as
an original version of said agreement.
5. In the event that either party is in default of the terms and
conditions of this agrement and legal action is initiated or suiet be
entered as a result of such default, the pervailling party shall be
entitled to recover all costs incurred as a result of such default,
including all costs, reasonably attorney fees, expenses in cout coss
through trial, appeal and to final disposition.
<PAGE> 2
6. It is mutually agreed by and between the parties that this agreement is
governed and construed under the laws of the State of Florida, County
of Orange which courts shall have jurisdiction over all matter and
disputes related hereto.
IN WITNESS WHEREOF, the parties have set their hands on execution of this
agreement.
For and in Behalf of COMPANY;
/s/ William C. Robinson
William C. Robinson
President
5/14/98
For and in Behalf of GDP;
/s/ Roy Meadows
Roy Meadows, President
5/14/98
<PAGE> 3
Grant Douglas Publishing, Inc.
"ADDENDA B"
Date: 5/14/98
1. It is mutual agreed by and between the parties hereto, that in the event of
GDP opts or agrees to accept shares of COMPANY's free trading stock now as full
or partial payment for any part or portion of GDP/s compensation or fee under
this agreement, that the number of such shares necessary for such equal value
alternative compensation shall be determined pursuant to a formulas or
computation that discounts the stock from the bid price at the rate of 50% bases
solely upon the bid as of the date of execution of the agreement or such other
subsequent written agreement to accept said stock as alternative compensation.
2. COMPANY acknowledges and agrees GDP shall not provide or continue to provide
service until all fees are paid. COMPANY acknowledges that it has verified with
its corporate council, accountants, corporate officers, board of directors,
executive decision makers, and appropriate stock exchanges that said stock can,
in fact, be timely delivered to GDP as agreed.
3. COMPANY agrees that in the event the stock has not been received in GDP's
account within (10) ten days of the dated of execution of this agreement or any
subsequent written agreements related hereto, COMPANY shall pay to GDP in U.S.
funds an additional amount dqual to 5% of such equal value alternative
compensation as liquidated damages. This shall contined for each and every 10
day period that said stock is not received by GDP. Said funds to be wired to
GDP, without notice, within (3) three days of any such default.
4. Time period for options begins when S&P or Moodys is current financial
statements, DTC sheets, current shareholder list and payment per contract is
received.
For and in Behalf of COMPANY;
/s/ William C. Robinson
William C. Robinson
President
5/14/98
For and in Behalf of GDP;
/s/ Roy Meadows
Roy Meadows, President
5/14/98
<PAGE> 1
Exhibit 21.1
Subsidiaries of the Registrant
Name of Subsidiary State of Incorporation
Consolidated Marine, Inc. Florida
Egret Boat Company, Inc. Florida
Revenge Marine, Inc. Oklahoma
<PAGE> 1
EXHIBIT 21.2
CERTIFICATE OF INCORPORATION
State of Delaware
Certificate of Incorporation
A Stock Corporation
First: The name of this corporation is Revenge Marine, Inc.
Second: Its registered office in the State of Delaware is to be
located at 15 E. North Street, in the city of Dover, County
of Kent, Zip Code 19901. The Registered Agent in charge
thereof is Permacorp Incorporated
Third: The purpose of this corporation is to engage in any lawful
act or activity for which corporations may be organized under
the General Corporation Law of Delaware.
Fourth: The amount of the total authorized capital stock of this
corporation is one hundred thousand Dollars ($ 100,000.00)
divided into 10,000,000 shares of .01 Dollars ($0.01) each.
Fifth: The name and mailing address of the incorporator are as
follows: William C. Robinson, 7711 S. Jamestown, Tulsa, OK
74136
Sixth: I, THE UNDERSIGNED, for the purpose of forming a corporation
under the laws of the State of Delaware, do intake, file and
record this Certificate and do certify that the facts herein
stated are true, and have accordingly set my hand this second
day of October, A.D. 1998.
/s/ William C. Robinson
Incorporator
<PAGE> 1
EXHIBIT 21.3
REVENGE MARINE, INC.
(A Delaware Corporation)
BY-LAWS
ARTICLE I
Offices
SECTION 1.1. PRINCIPAL EXECUTIVE OFFICE: The principal executive
office for the transaction of business of the Corporation shall be fixed and
located at 2051 N.W. 11th Street, Miami, Florida 33125.
The Board of Directors are hereby granted full power and authority to
change said principal executive office from one location to another. Any such
change shall be noted in the minutes of the corporation:
SECTION 1.2. OTHER OFFICES: Branch or subordinate offices may at any
time be established by the Board of Directors at any place or places where the
Corporation is qualified to do business. If any offices, including the
principal office, are in Florida, the Board shall designate one of the Florida
offices as the principal business office in Florida.
ARTICLE II
The Stockholders
SECTION 2.1. ANNUAL MEETING. There shall be an annual meeting of the
stockholders on the second Friday in June of each year at 1:00 p.m. local time,
or at such other date or time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, for the election of
directors and for the transaction of such other business as may come before the
meeting.
SECTION 2.2. SPECIAL MEETINGS. A special meeting of the stockholders
may be called at any time by the written resolution or request of a majority or
more of the members of the board of directors, the president, or any executive
vice president and shall be called upon the written request of the holders of
fifty percent (50%) or more in amount, of each class or series of the capital
stock of the corporation entitled to vote at such meeting on the matters that
are the subject of the proposed meeting, such written request in each case to
specify the purpose or purposes for which such meeting shall be called, and
with respect to stockholder proposals, shall further comply with the
requirements of Section 2.8 of this Article II.
SECTION 2.3. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders, whether annual or special, stating the date, hour and place where
it is to be held, shall be served either personally or by mail, no less than
ten nor more than sixty days before the meeting, upon each stockholder of
record entitled to vote at such meeting, and to any other stockholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called and shall
indicate that
<PAGE> 2
it is being issued by, or at the direction of, the person or persons calling
the meeting. If, at any meeting, action is proposed to be taken that would, if
taken, entitle stockholders to receive payment for their stock pursuant to the
General Corporation Law of Delaware, the notice of such meeting shall include a
statement of that purpose and to that effect. If mailed, notice shall be deemed
to be delivered when deposited in the United States mail or with any private
express mail service, postage or delivery fee prepaid, and shall be directed to
each such stockholder at his address, as it appears on the records of the
stockholders of the corporation, unless he shall have previously filed with the
secretary of the corporation a written request that notices intended of him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
SECTION 2.4. FIXING DATE OF RECORD. (a) In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders, or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date is fixed by the board of directors,
the record date for determining stockholders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of, or to
vote at, a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting (to the
extent that such action by written consent is permitted by law, the Certificate
of Inc. and these By-Laws), the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, and which date shall not be
more than ten days after the date upon which the resolution fixing the record
date is adopted by the board of directors. If no record date has been fixed by
the board of directors, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the board of directors is required by law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directions is required by law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders
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entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. if no record date
is fixed, the record date for determining stockholders of any such purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
SECTION 2.5. INSPECTORS. At each meeting of the stockholders, the
polls shall be opened and closed, the proxies and ballots shall be received and
be taken in charge, and all questions touching the qualification of voters and
the validity of proxies and the acceptance or rejection of votes, shall be
decided by one or more inspectors. Such inspectors shall be appointed by the
board of directors before or at the meeting, or, if no such appointment shall
have been made, then by the presiding officer at the meeting. If for any reason
any of the inspectors previously appointed shall fail to attend or refuse or be
unable to serve, inspectors in place of any so failing to attend or refusing or
unable to serve shall be appointed in like manner.
SECTION 2.6. QUORUM. At any meeting of the stockholders the holders of
one-half of all of the outstanding shares of the capital stock of the
corporation taken together as a single class, present in person or represented
by proxy, shall constitute a quorum of the stockholders for all purposes,
unless the representation of a larger number shall be required by law, and, in
that case, the representation of the number so required shall constitute a
quorum.
If the holders of the amount of stock necessary to constitute a quorum
shall fail to attend in person or by proxy at the time and place fixed in
accordance with these By-Laws for an annual or special meeting, a majority in
interest of the stockholders present in person or by proxy may adjourn, from
time to time, without notice other than by announcement at the meeting, until
holders of the amount of stock requisite to constitute a quorum shall attend.
At any such adjourned meeting at which a quorum shall be present, any business
may be transacted which might have been transacted at the meeting as originally
notified.
SECTION 2.7. BUSINESS. The chairman of the board, if any, the
president, or in his absence the vice-chairman, if any, or an executive vice
president, in the order named, shall call meetings of the stockholders to
order, and shall act as chairman of such meeting; provided, however, that the
board of directors or executive committee may appoint any stockholder to act as
chairman of any meeting in the absence of the chairman of the board. The
secretary of the corporation shall act as secretary at all meetings of the
stockholders, but in the absence of the secretary at any meeting of the
stockholders, the presiding officer may appoint any person to act as secretary
of the meeting.
SECTION 2.8. STOCKHOLDER PROPOSALS. No proposal by a stockholder shall
be presented for vote at a special or annual meeting of stockholders unless
such stockholder shall, not later than the close of business on the fifth day
following the date on which notice of the meeting is first given to
stockholders, provide the board of directors or the secretary of the
corporation with written notice of intention to present a proposal for action
at the forthcoming
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meeting of stockholders, which notice shall include the name and address of
such stockholder, the number of voting securities that he holds of record and
that he holds beneficially, the text of the proposal to be presented to the
meeting and a statement in support of the proposal.
Any stockholder who was as stockholder of record on the applicable
record date may make any other proposal at an annual meeting or special meeting
of stockholders and the same may be discussed and considered, but unless stated
in writing and filed with the board of directors or the secretary prior to the
date set forth hereinabove, such proposal shall be laid over for action at any
adjourned, special, or annual meeting of the stockholders taking place sixty
days or more thereafter. This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers,
directors, and committees, but in connection with such reports, no new business
proposed by a stockholder, shall be acted upon at such annual meeting unless
stated and filed as herein provided.
Notwithstanding any other provision of these By-Laws, the Company
shall be under no obligation to include any stockholder proposal in its proxy
statement materials or otherwise present any such proposal to stockholders at a
special or annual meeting of stockholders if the Board of Directors reasonably
believes the proponents thereof have not complied with Sections 13 or 14 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, if applicable; nor shall the Company be required to include any
stockholder proposal not required to be included in its proxy materials to
stockholders in accordance with any such section, rule or regulation.
SECTION 2.9. PROXIES. At all meetings of stockholders, a stockholder
entitled to vote may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the secretary before or at the time of the meeting. No proxy shall
be valid after three years from the date of its execution, unless otherwise
provided in the proxy.
SECTION 2.10. VOTING BY BALLOT. The votes for directors, and upon the
demand of any stockholder or when required by law, the votes upon any question
before the meeting, shall be by ballot.
SECTION 2.11. VOTING LISTS. The officer who has charge of the stock
ledger of the corporation shall prepare and make at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares of stock registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present.
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SECTION 2.12. PLACE OF MEETING. The board of directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or any special meeting called by the board of
directors. If no designation is made or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the corporation.
SECTION 2.13. VOTING OF STOCK OF CERTAIN HOLDERS. Shares of capital
stock of the corporation standing in the name of another corporation, domestic
or foreign, may be voted by such officer, agent, proxy as the By-Laws of such
corporation may prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine.
Shares of capital stock of the corporation standing in the name of a
deceased person, a minor ward or an incompetent person may be voted by his
administrator, executor, court-appointed guardian or conservator, either in
person or by proxy, without a transfer of such stock into the name of such
administrator, executor, court-appointed guardian or conservator. Shares of
capital stock of the corporation standing in the name of a trustee may be voted
by him, either in person or by proxy.
Shares of capital stock of the corporation standing in the name of a
receiver may be voted, either in person or by proxy, by such receiver, and
stock held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained
in any appropriate order of the court by which such receiver was appointed.
A stockholder whose stock is pledged shall be entitled to vote such
stock, either in person or by proxy, until the stock has been transferred into
the name of the pledgee, and thereafter the pledgee shall be entitled to vote,
either in person or by proxy, the stock so transferred.
Shares of its own capital stock belonging to this corporation shall
not be voted, directly or indirectly, at any meeting and shall not be counted
in determining the total number of outstanding stock at any given time, but
shares of its own stock held by it in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding stock at any
given time.
SECTION 2.14. DIVIDENDS. Subject to the provisions of the certificate
of Inc. and to applicable law, dividends on the outstanding shares of the
corporation may be declared in such amounts and at such time or times as the
board may determine. Before payment of any dividend, there may be set aside out
of the net profits of the corporation available for dividends each sum or sums
as the board from time to time in its absolute discretion deems proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the board may determine to be in the best interests of the
corporation, and the board may modify or abolish any such reserve.
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ARTICLE III
Board of Directors
SECTION 3.1. NUMBER AND TERM OF OFFICE. The business and the property
of the corporation shall be managed and controlled by the board of directors.
The number of directors which shall constitute the whole board shall be three
(3). Within the limits above specified, the number of directors shall be
determined by the board of directors pursuant to a resolution adopted by a
majority of the directors then in office. Within the limits above specified,
the number of directors shall be determined by the board of directors pursuant
to a resolution adopted by a majority of the directors then in office. If there
is more than one director, the directors shall be classified, in respect solely
to the time for which they shall hold office, by dividing them into three
classes, each such class to be as nearly as possible equal in number of
directors to each other class. The first term of office of directors of the
first class shall expire at the first annual meeting after their election, and
thereafter such terms shall expire on each three year anniversary of such date;
the term of office of the directors of the second class shall expire on the one
year anniversary of the first annual meeting after their election, and
thereafter such terms shall expire on each three year anniversary of such one
year anniversary; and the term of office of the directors of the third class
shall expire on the two year anniversary of the first annual meeting after
their election, and thereafter such terms shall expire on each three year
anniversary of such two year anniversary. At each succeeding annual meeting,
the stockholders shall elect directors for a full term or the remainder
thereof, as the case may be, to succeed those terms have expired. Each director
shall hold office for the term for which elected and until his or her successor
shall be elected and shall qualify. Directors need not be stockholders.
SECTION 3.2. VACANCIES. Vacancies in the board of directors, including
vacancies resulting from an increase in the number of directors, shall be
filled only by a majority vote of the remaining directors then in office,
though less than a quorum; except that vacancies resulting from removal from
office by a vote of the stockholders may be filled by the stockholders at the
same meeting at which such removal occurs provided that the holders of not less
than seventy-five percent of the outstanding shares of capital stock of the
corporation entitled to vote for the election of directors, voting together as
a single class, shall vote for each replacement director. All directors elected
to fill vacancies shall hold office for a term expiring at the time at which
the term of the class to which they have been elected expires. No decrease in
the number of directors constituting the board of directors shall shorten the
term of an incumbent director. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at any
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the board (as
constituted immediately prior to any applicable increase), the Court of proper
jurisdiction may, upon application of any stockholder of stockholders holding
at least ten percent of the total number of the shares of capital stock at the
time outstanding, taken together as a class, having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the
directors then in office.
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SECTION 3.3. PLACE OF MEETINGS, ETC. The board of directors may hold
its meetings, and may have an office and keep the books of the corporation
(except as otherwise may be provided for by law), in such place or places in
the state of Florida or outside of the state of Florida, as the board from time
to time may determine. Any director may participate telephonically in any
meeting of the board of directors, and such participation shall be considered
to be the same as his physical presence thereat.
SECTION 3.4. REGULAR MEETINGS. Regular meetings of the board of
directors shall be held on the day of the annual meeting of stockholders after
the adjournment of such meeting of stockholders, and at such other times and
places as the board of directors may fix. No notice shall be required for any
such regular meeting of the board.
SECTION 3.5. SPECIAL MEETINGS. Special meetings of the board of
directors shall be held whenever called by direction of the chairman or
vice-chairman of the board, the president, an executive vice president or
two-thirds of the directors then in office.
The secretary shall give notice of each special meeting, stating the
date, hour and place thereof, by mailing or telegraphing the same, at least ten
days before the meeting, to each director; but such notice may be waived by any
director. If mailed, notice shall be deemed to be delivered when deposited in
the United States mail or with any private express mail service, postage or
delivery fee prepaid. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting. At any meeting at which
every director shall be present, even though without any notice, any business
may be transacted.
SECTION 3.6. QUORUM. A majority of the total number of directors then
in office shall constitute a quorum for the transaction of business; but if at
any meeting of the board there be less than a quorum present, a majority of
those present may adjourn the meting from time to time.
SECTION 3.7. BUSINESS. Business shall be transacted at meetings of the
board of directors in such order as the board may determine. At all meetings of
the board of directors, the chairman of the board, if any, the president, or in
his absence the vice-chairman, if any, or an executive vice president, in the
order named, shall preside.
SECTION 3.8. CONTRACTS. (a) No contract or transaction between the
corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association, or other
organization in which one or more of the corporation's directors or officers,
are directors or officers, or have a financial interest, shall be void or
voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the board or committee which
authorizes the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
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(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair to the corporation as of the
time it is authorized, approved or ratified, by the board of directors, a
committee or the stockholders.
(b) Interested directors may be counted in determining the presence of
a quorum at a meeting of the board of directors or of a committee which
authorizes the contract or transaction.
SECTION 3.9 COMPENSATION OF DIRECTORS. Each director of the
corporation who is not a salaried officer or employee of the corporation, or of
a subsidiary of the corporation, shall receive such allowances for serving as a
director and such fees for attendance at meetings of the board of directors or
the executive committee or any other committee appointed by the board as the
board may from time to time determine.
SECTION 3.10. ELECTION OF OFFICERS AND COMMITTEES. At the first
regular meeting of the board of directors in each year (at which a quorum shall
be present) held next after the annual meeting of stockholders, the board of
directors shall elect the principal officers of the corporation, and members of
the executive committee, if any, to be elected by the board of directors under
the provisions of Article IV and Article V of these By-Laws. The board of
directors may designate such other committees with such power and authority (to
the extent permitted by law, the Certificate of Inc. and these By-Laws), as may
be provided by resolution of the board of directors.
SECTION 3.11. NOMINATION. Subject to the rights of holders of any
class or series of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for the election of directors may be
made by the board of directors or by any stockholder entitled to vote in the
election of directors generally. However, any stockholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if written notice of such stockholder's
intent to make such nomination or nominations has been given, either by
personal delivery or by United States mail, postage prepaid, to the secretary
of the corporation not later than (i) with respect to an election to be held at
the annual meeting of the stockholders, the close of business on the last day
of the eighth month after the immediately preceding annual meeting of
stockholders, and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the tenth day following the date on which notice of such meeting is first given
to stockholders. Each such notice shall set forth: (1) the name and address of
the stockholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee
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and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder; (d) such
other information regarding each nominee proposed by such stockholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the board of directors, and; (e) the
consent of each nominee to serve as a director or the corporation if so
elected. The presiding officer at the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
SECTION 3.12. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors, or any
committee thereof, may be taken without a meeting of all members of the Board
or Committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of the proceedings of the Board or
Committee.
SECTION 3.13. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any Committee thereof, may
participate in a regular or special meeting of the Board of Committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
ARTICLE IV
Executive Committee
SECTION 4.1. NUMBER AND TERM OF OFFICE. The board of directors may, at
any meeting, by majority vote of the board of directors, elect from the
directors an executive committee, audit committee and/or a compensation
committee or any other committee that the board of directors so determines is
in the best interest of the corporation. The committees shall consist of such
number of members as may be fixed from time to time by resolution of the board
of directors. The officer-directors, by virtue of their offices shall be
members of the committees. Unless otherwise ordered by the board of directors,
each elected member of a committee shall continue to be a member thereof until
the expiration of his term of office as a director.
SECTION 4.2. POWERS. The executive committee may, while the board of
directors is not in session, exercise all or any of the powers of the board of
directors in all cases in which specific directions shall not have been given
by the board of directors; except that the executive committee shall not have
the power or authority of the board of directors in reference to amending the
Certificate of Inc., adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
amending the By-Laws of the corporation, declaring a dividend, authorizing the
issuance of stock or adopting a certificate of ownership and merger.
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SECTION 4.3. MEETINGS Regular meetings of the executive committee may
be held without notice at such times and places the executive committee may fix
from time to time by resolution. Special meetings of the executive committee
may be called by any member thereof upon not less than ten days notice given in
person, by mail, by telegraph or by facsimile (if allowed by law), stating the
place, date and hour of the meeting, but such notice may be waived by any
member of the executive committee. If mailed, notice shall be deemed to be
delivered when deposited in the United States mail or with any private express
mail service, postage or delivery fee prepaid. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at a special
meeting. At any meeting at which every member of the executive committee shall
be present, in person or by telephone, even though without any notice any
business may be transacted.
SECTION 4.4. PRESIDING OFFICER. At all meetings of the executive
committee the chairman of the executive committee, who shall be designated by
the board of directors from among the members of the committee, shall preside,
and the board of directors shall designate a member of such committee to
preside in the absence of the chairman thereof. The board of directors may also
similarly elect from their number one or more alternate members of the
executive committee to serve at the meetings of such committee in the absence
or disqualification of any regular member or members, and, in case more than
one alternate is elected, shall designate at the time of election the
priorities as between them.
SECTION 4.5. VACANCIES. The board of directors, by majority vote of
the board of directors then in office, shall fill vacancies in the executive
committee by election from the directors.
SECTION 4.6. RULES OF PROCEDURE; QUORUM. All action by the executive
committee shall be reported to the board of directors at its meeting next
succeeding such action, and shall be subject to revision or alteration by the
board of directors.
The executive committee shall fix its own rules of procedure, and
shall meet where and as provided by such rules or by resolution of the board of
directors, but in every case the presence of a majority of the total number of
members of the executive committee shall be necessary to constitute a quorum.
In every case, the affirmative vote of a majority of all of the members of the
committee present at the meeting shall be necessary for the adoption of any
resolution.
ARTICLE V
The Officers
SECTION 5.1. NUMBER AND TERM OF OFFICE. The officers of the
corporation may be a president (who shall be a director), one or more executive
vice-presidents, a secretary, a treasurer, and such other officers as may from
time to time be elected or appointed by the board of directors, including such
additional vice-presidents with secretaries and assistant treasurers as may be
determined by the board of directors. In addition, the board of directors may
elect a chairman of the board and may also elect a vice-chairman as officers of
the
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corporation, each of whom must also be a director. Any two or more offices
may be held by the same person, except that the offices of president and
secretary may not be held by the same person. In its discretion, the board of
directors may leave unfilled any office except those of president, treasurer
and secretary.
The officers of the corporation shall be elected or appointed annually
by the board of directors at the first meeting of the board of directors held
after each annual meeting of stockholders. Vacancies or new officers may be
filled any time. Each officer shall hold office until his successor shall have
been duly elected or appointed or until his death or until he shall resign or
shall have been removed by the board of directors.
Each of the salaried officers of the corporation shall devote his
entire time, skill and energy to the business of the corporation, unless the
contrary is expressly consented to by the board of directors or the executive
committee.
SECTION 5.2. REMOVAL. Any officer may be removed by the board of
directors whenever, in its judgment, the best interests of the corporation
would be served thereby.
SECTION 5.3. THE CHAIRMAN OF THE BOARD. The chairman of the board, if
any, shall preside at all meetings of stockholders and of the board of
directors and shall have such other authority and perform such other duties as
are prescribed by law, by these By-Laws and by the board of directors. The
board of directors may designate the chairman of the board as chief executive
officer, in which case he shall have such authority and perform such duties as
are prescribed by these By-Laws and the board of directors for the chief
executive officer.
SECTION 5.4. THE VICE-CHAIRMAN. The vice-chairman, if any, shall have
such authority and perform such other duties as are prescribed by these By-Laws
and by the board of directors. In the absence or inability to act of the
chairman of the board and the president, he shall preside at the meetings of
the stockholders and of the board of directors and shall have and exercise all
of the powers and duties of the chairman of the board. The board of directors
may designate the vice-chairman as chief executive officer, in which case he
shall have such authority and perform such duties as are prescribed by these
By-Laws and the board of directors for the chief executive officer.
SECTION 5.5. THE PRESIDENT. The president shall have such authority
and perform such duties as are prescribed by law, by these By-Laws, by the
board of directors and by the chief executive officer (if the president is not
the chief executive officer). The president, if there is no chairman of the
board, or in the absence or the inability to act of the chairman of the board,
shall preside at all meetings of stockholders and of the board of directors.
Unless the board of directors designates the chairman of the board or the
vice-chairman as chief executive officer, the president shall be the chief
executive officer, in which case he shall have such authority and perform such
duties as are prescribed by the By-Laws and the board of directors for the
chief executive officer.
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SECTION 5.6. THE CHIEF EXECUTIVE OFFICER. Unless the board of
directors designates the chairman of the board or the vice-chairman as chief
executive officer, the president shall be the chief executive officer. The
chief executive officer o the corporation shall have, subject to the
supervision and direction of the board of directors, general supervision of the
business, property and affairs of the corporation, including the power to
appoint and discharge agents and employees, and the powers vested in hiring the
board of directors, by law or by these By-Laws, or which usually attach or
pertain to such office.
SECTION 5.7. THE EXECUTIVE VICE-PRESIDENTS. In the absence of the
chairman of the board, if any, the president and the vice-chairman, if any, or
in the event of their inability or refusal to act, the executive vice-president
(or in the event there is more than one executive vice-president, the executive
vice-presidents in the order designated, or in the absence of any designation,
then in the order of their election) shall perform the duties of the chairman
of the board, of the president and of the vice-chairman, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
chairman of the board, the president and the vice-chairman. Any executive
vice-president may sign, with the secretary or an authorized assistant
secretary, certificates for stock of the corporation and shall perform such
other duties as from time to time may be assigned to him by the chairman of the
board, the president, the vice-chairman, the board of directors or these
By-Laws.
SECTION 5.8. THE VICE-PRESIDENTS. The vice-presidents, if any, shall
perform such duties as may be assigned to them from time to time by the
chairman of the board, the president, the vice-chairman, the board of
directors, or these By-Laws.
SECTION 5.9. THE TREASURER. Subject to the direction of chief
executive officer and the board of directors, the treasurer shall have charge
and custody of all the funds and securities of the corporation; when necessary
or proper he shall endorse for collection, or cause to be endorsed, on behalf
of the corporation, checks, notes and other obligations, and hall cause the
deposit of same to the credit of the corporation in such bank or banks or
depositary as the board of directors may designate or as the board of directors
by resolution may authorize; he shall sign all receipts and vouchers for
payments made to he corporation other than routine receipts and vouchers, the
signing of which he may delegate; he shall sign all checks made by the
corporation (provided, however, that the board of directors may authorize and
prescribe by resolution the manner in which checks drawn on banks or
depositaries shall be signed, including the use of facsimile signatures, and
the manner in which officers, agents or employees shall be authorized to sign);
unless otherwise provided by resolution of the board of directors, he shall
sign with an officer-director all bills of exchange and promissory notes of the
corporation; he may sign with the president or an executive vice-president all
certificates of shares of the capital stock; whenever required by the board of
directors, he shall render a statement of his cash account; he shall enter
regularly full and accurate account of the corporation in books of the
corporation to be kept by him for that purpose; he shall, at all reasonable
times, exhibit his books and accounts to any director of the corporation upon
application t his office during business hours; and he shall perform all acts
incident to the position of treasurer. If required by the board of directors,
the treasurer shall give a bond for the faithful discharge of his duties in
such sum as the board of directors may require.
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SECTION 5.10. THE SECRETARY. The secretary shall keep the minutes of
all meetings of the board of directors, the minutes of all meetings of the
stockholders and (unless otherwise directed by the board of directors) the
minutes of all committees, in books provided for that purpose, he shall attend
to the giving and serving of all notices of the corporation; he may sign with
an officer-director or any other duly authorized person, in the name of the
corporation, all contracts authorized by the board of directors or by the
executive committee, and, when so ordered by the board of directors or the
executive committee, he shall affix the seal of the corporation thereto; he
shall have charge of the certificate books, transfer books and stock ledgers,
and such other books and papers as the board of directors or the executive
committee may direct, all of which shall, at all reasonable times, be open to
the examination of any director, upon application at the secretary's office
during business hours; and he shall in general perform all the duties incident
to the office of the secretary, subject to the control of the chief executive
officer and the board of directors.
SECTION 5.11. THE ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers, if any, shall respectively, if required by the board of
directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the board of directors may determine. The assistant
secretaries, if any, as thereunto authorized by the board of directors may sign
with the chairman of the board, the president, the vice-chairman or an
executive vice-president, certificates for stock of the corporation, the issue
of which shall have been authorized by a resolution of the board of directors.
The assistant treasurers and assistant secretaries, in general, shall perform
such duties as shall be assigned to them by the treasurer or the secretary,
respectively, or chief executive officer, the board of directors, or these
By-Laws.
SECTION 5.12. SALARIES. The salaries of the officers shall be fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
SECTION 5.13. VOTING UPON STOCKS. Unless otherwise ordered by the
board of directors or by the executive committee, any officer-director or any
person or persons appointed in writing by any of them, shall have full power
and authority in behalf of the corporation to attend and to act and to vote at
any meetings of stockholders of any corporation in which the corporation may
hold stock, and at any such meeting shall possess and may exercise any and all
the rights and powers incident to the ownership of such stock, and which, as
the owner thereof, the corporation might have possessed and exercised if
present. The board of directors may confer like powers upon any other person or
persons.
ARTICLE VI
Contracts and Loans
SECTION 6.1. CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
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SECTION 6.2 LOANS. The Board of Directors shall grant senior
management, in an amount to be set by the Board of Directors, a right to
contract for indebtedness on behalf of the corporation.
ARTICLE VII
Certificates for Stock and Their Transfer
SECTION 7.1. CERTIFICATES FOR STOCK. Certificates representing stock
of the corporation shall be in such form as may be determined by the board of
directors. Such certificates shall be signed by the chairman of the board, the
president, the vice-chairman or an executive vice-president and by the
secretary or an authorized assistant secretary and shall be sealed with the
seal of the corporation. The seal may be a facsimile. If a stock certificate is
countersigned (i) by a transfer agent other than the corporation or its
employee, or (ii) by a registrar other than the corporation or its employee,
any other signature on the certificate may be a facsimile. In the event that
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue. All certificates for stock
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares of stock represented thereby are issued, with the number of
shares of stock and the date of issue, shall be entered on the books of the
corporation. All certificates surrendered to the corporation for transfer shall
be canceled and no new certificates shall be issued until the former
certificate for a like number of shares of stock shall have been surrendered
and canceled, except that, in the event of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
SECTION 6.2. TRANSFERS OF STOCK. Transfers of stock of the corporation
shall be made only on the books of the corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transferor thereunto authorized by power of attorney duly executed
and filed with the secretary of the corporation, and on surrender for
cancellation of the certificate for such stock. The person in whose name stock
stands on the books of the corporation shall be deemed the owner thereof for
all purposes as regards the corporation.
ARTICLE VIII
Fiscal Year
SECTION 8.1. FISCAL YEAR. The fiscal year of the corporation shall
coincide with the calendar year, that ending on June 30th.
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ARTICLE IX
Seal
SECTION 9.1. SEAL. The board of directors shall approve a corporate
seal which shall be in the form of a circle and shall have inscribed thereon
the name of the corporation.
ARTICLE X
Waiver of Notice
SECTION 10.1. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of these By-Laws or under the provisions of the
Certificate of Inc. or under the provisions of the General Corporation Law of
Delaware, waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice. Attendance of any person at a
meeting for which any notice is required to be given under the provisions of
these By-Laws, the Certificate of Inc. or the General Corporation Law of
Delaware shall constitute a waiver of notice of such meeting except when the
person attends for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any businesses because the meeting is not
lawfully called or convened.
ARTICLE XI
Amendments
SECTION 11.1. AMENDMENTS. These By-Laws may be altered, amended or
repealed and new By-Laws may be adopted at any meeting of the board of
directors of the corporation by the unanimous affirmative vote of the members
of the board, or by the affirmative vote of the holders of 66-2/3% or more of
the outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors, voting together as a single class, cast
at a meeting of the shareholders called for that purpose.
ARTICLE XII
Indemnification
SECTION 12.1. INDEMNIFICATION. The Company shall indemnify its
officers, directors, employees and agents to the fullest extent permitted by
Delaware law, as amended from time to time.
SECTION 12.2. PERSONS. The Corporation shall indemnify, to the extent
provided in Sections 12.3, 12.4 or 12.5:
(1) any person who is or was director, officer, agent or employee of
the Corporation, and
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(2) any person who serves or served at the Corporation's requested as
a director, officer, agent, employee, partner or trustee of another corporation
or of a partnership, joint venture, trust or other enterprise.
SECTION 12.3. EXTENT - DERIVATIVE SUITS. In case of a suit by or in
the right of the Corporation against a person named in Section 12.2 by reason
of his or her holding a position named in Section 12.2 the Corporation shall
indemnify him/her, if he/she satisfies the standard in Section 12.3, for
expenses (including attorney's fees but excluding amounts paid in settlement)
actually and reasonably incurred by him or her in connection with the defense
or settlement of the suit.
SECTION 12.4. STANDARD - DERIVATIVE SUITS. In case of a suit by or in
the right of the Corporation, a person named in Section 12.2 shall be
indemnified only if:
(1) he or she is successful on the merits or otherwise, or
(2) he or she acted in good faith in the transaction which is the
subject of the suit, and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation. However, he or she shall not
be indemnified in respect of any claim, issue or matter as to which he or she
has been adjudged liable for negligence or misconduct in the performance of his
duty to the Corporation unless (and only to the extent that) the court in which
the suit was brought shall determine, upon application, that despite the
adjudication but in view of all the circumstances, he or she is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper.
SECTION 12.5. EXTENT - NONDERIVATIVE SUITS. In case of a suit, action
or proceeding (whether civil, criminal, administrative or investigative), other
than a suit by or in the right of the Corporation against a person named in
Section 12.2 by reason of his holding a position named in Section 12.2, the
Corporation shall indemnify him/her, if he or she satisfies the standard in
Section 12.6 for amounts actually and reasonably incurred by him/her in
connection with the defense or settlement of the suit as
(1) expenses (including attorneys' fees),
(2) amounts paid in settlement
(3) judgments, and
(4) fines.
SECTION 12.6. STANDARD - NONDERIVATIVE SUITS. In case of a
nonderivative suit, a person named in Section 12.2 shall be indemnified only
if:
(1) he/she is successful on the merits or otherwise, or
(2) he/she acted in good faith in the transaction which is the subject
of the nonderivative suit, and in a manner he/she reasonably believed to be in,
or not opposed to, the best interests of the Corporation and, with respect to
any criminal action or proceeding, he/she
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had no reason to believe his conduct was unlawful. The termination of a
nonderivative suit by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent shall not, of itself, create a presumption
that the person failed to satisfy this Section 12.6(2).
SECTION 12.7. DETERMINATION THAT STANDARD HAS BEEN MET. A
determination that the standard of Section 12.4 or Section 12.6 has been
satisfied may be made by a court of law or equity or the determination may be
made by:
(1) a majority of the directors of the Corporation (whether or not a
quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the
directors of the Corporation, whether or not a quorum, or elected by the
Shareholders of the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation.
SECTION 12.8. PRORATION. Anyone making a determination under Section
12.7 may determine that a person has met the standard as to some matters but
not as to others, and may reasonably prorate amounts to be indemnified.
SECTION 12.9. ADVANCE PAYMENT. The Corporation may pay in advance any
expenses (including attorneys' fees) which may become subject to
indemnification under Sections 12.2 - 12.8 if:
(1) the Board of Directors authorizes the specific payment and
(2) the person receiving the payment undertakes in writing to repay
unless it is ultimately determined that he is entitled to indemnification by
the Corporation under Sections 12.2 - 12.8.
SECTION 12.10. NONEXCLUSIVE. The indemnification provided by Sections
12.2 - 12.8 shall not be exclusive of any other rights to which a person may be
entitled by law or by by-law, agreement, vote of Shareholders or disinterested
directors, or otherwise.
SECTION 12.11. CONTINUATION. The indemnification and advance payment
provided by Sections 12.2 - 12.8 shall continue as to a person who has ceased
to hold a position named in Section 12.2 and shall inure to his heirs,
executors and administrators.
SECTION 12.12. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who holds or who has held any position named
in Sections 12.2 against any liability incurred by him in any such positions or
arising out of this status as such, whether or not the Corporation would have
power to indemnify him against such liability under Sections 12.2 - 12.8.
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SECTION 12.13. REPORTS. Indemnification payments, advance payments,
and insurance purchases and payments made under Sections 12.2 - 12.12 shall be
reported in writing to the Shareholders of the Corporation with the next notice
of annual meeting, or within six months, whichever is sooner.
SECTION 12.14. LIABILITY OF DIRECTORS. The directors shall not be
personally liable for monetary damages for breach of a director's fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty or loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions, or (iv) for any transaction from which the
director derived an improper personal benefit.
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EXHIBIT 23.1
Consent of Independent Auditor
To the Board of Directors and Stockholder of Revenge Marine, Inc.
We hereby do consent to the inclusion of the June 30, 1998 Independent
Auditor's Report in the Revenge Marine, Inc. Form 10 or Form 10-SB for the year
ended June 30, 1998.
Yours very truly,
CROSS AND ROBINSON
/s/ Cross and Robinson
Certified Public Accountants
September 8, 1998
