1
EXHIBIT 10.4
TERMINATION AND REPLACEMENT AGREEMENT
dated as of June 30, 1999
between
REVENGE MARINE, INC.
and
BYC ACQUISITION CORPORATION
2
Index
-----
1. Termination and Replacement...........................................1
2. Warrant...............................................................2
3. Fees..................................................................5
4. Representations and Warranties of Revenge.............................6
5. Representations and Warranties of BYC.................................8
6. Covenants.............................................................8
7. Legend................................................................9
8. Fees and Expenses....................................................10
9. Indemnification......................................................10
10. Survival of Representations, Warranties, Etc.........................12
11. Notices..............................................................12
12. Miscellaneous........................................................12
Definitions
-----------
Agreement.................. 1 NASDAQ.................... 8
Assumed Liabilities........ 1 Purchase Agreement........ 1
BYC........................ 1 Revenge................... 1
Common Stock............... 2 Revenge Delaware.......... 1
Exchange Act............... 7 SEC....................... 3
Exercise Date.............. 6 Warrant................... 2
Indemnified Party.......... 11 Warrant Shares............ 2
Indemnifying Party......... 11
3
TERMINATION AND REPLACEMENT AGREEMENT
This Replacement Agreement (the "Agreement") dated June 30, 1999, is
entered into by and between Revenge Marine, Inc., a Nevada corporation
("Revenge"), and BYC Acquisition Corporation, a Delaware corporate ("BYC").
Recitals
--------
A. BYC and Revenge Marine, Inc., a Delaware corporation ("Revenge
Delaware") consummated the purchase and sale of substantially all of the assets
of BYC, and the transfer and assumption of certain of the liabilities of BYC,
pursuant to a Purchase Agreement dated October 22, 1998 (the "Purchase
Agreement").
B. Revenge Delaware has assigned to Revenge, its corporate parent, all
of its rights and obligations under the Purchase Agreement and the warrant
issued in connection therewith.
B. The parties desire to replace their remaining rights and obligations
under the Purchase Agreement with the rights and obligations contained in this
Agreement.
The parties hereto agree as follows:
1. Termination and Replacement.
----------------------------
(a) The Purchase Agreement is hereby terminated, and neither party will
have any further rights or obligations thereunder. In connection with such
termination, the parties acknowledge the following:
(1) BYC's right to receive, and Revenge's obligation to
pay, the fees described in Sections 1(c) and 4 of the
Purchase Agreement, including amounts accrued
thereunder, is hereby terminated.
(2) BYC is simultaneously surrendering to Revenge the
warrant described in Section 1(b) of the Purchase
Agreement for cancellation.
(3) Revenge hereby grants, bargains, sells, transfers,
assigns and delivers to BYC all of its obligations
with respect to the Assumed Liabilities (as defined
in the Purchase Agreement), and BYC hereby agrees to
assume, perform, and discharged the Assumed
Liabilities.
(b) In consideration of the termination of the Purchase Agreement, and
in replacement of the rights and obligations described above:
(1) Revenge shall pay BYC the fees described in Section 3
of this Agreement.
1
4
(2) Revenge is simultaneously issuing to BYC 1,206 shares
of its Series B Cumulative Convertible Preferred
Stock pursuant to a separate stock purchase
agreement.
(3) Revenge is simultaneously issuing to BYC a warrant
(the "Warrant") to purchase up to 1,500,000 shares
(subject to adjustment) of Revenge's Common Stock,
par value $0.001 per share (the "Common Stock"), at
an exercise price of $0.37 per share (subject to
adjustment).
2. 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 2(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 2(a) after it has filed two
separate registration statements that have become effective pursuant to requests
by BYC under this Section 2(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 2(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 2(b) are subject to the following conditions:
2
5
(1) If at any time after giving written notice of its intention to
register any securities under this Section 2(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) 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 2(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 2(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
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
2(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 2(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.
3
6
(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 2(a) and (b), Revenge will promptly:
(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 2(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
more
4
7
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 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 2(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 2(f), and
Revenge will not complete its sale to the purchaser if the purchaser fails 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 2(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.
3. Fees.
-----
(a) Revenge will pay BYC a fee of 1% of its total revenues from all
Blackfin Sales sources for the period from April 1, 1999 to June 30, 1999 and 1%
of its total revenues from June 30, 1999 to April 30, 2002 Not to include the
sale of the assets listed in the security agreement with Finova Capital. The fee
will be due and payable quarterly by wire transfer to BYC's designated account
in United States dollars or acceptable securities within 30 days following each
calendar quarter during the applicable term, beginning with the year ending June
5
8
30, 1999. Revenge will simultaneously with each such payment furnish BYC the
quarterly financial statements described in Section 6(e), together with such
other information as BYC may from time to time reasonably request.
(b) Revenge will maintain complete, clear and accurate records in
sufficient detail to enable the fees payable under this Section 3 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 3, 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
annum 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.
4. 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 Nevada.
(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,
6
9
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 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 1,500,000 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
7
10
necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading.
5. 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) Subject to Section 2, 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.
(d) 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 thereunder.
6. 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) 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).
8
11
(d) 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.
(e) 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 (e) 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 BYC may from time to time reasonably request.
(f) As long as the Warrant or any Warrant Shares are outstanding,
unless BYC otherwise consents in advance in writing:
(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 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 other than the manufacturing
assets know as Blackfin and Egret and Consolidated.
(3) 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.
7. 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):
9
12
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.
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.
8. 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.
9. 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; or
(3) 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
10
13
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.
(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), that 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; or
(3) 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 9, 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 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 9 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)
11
14
does not include a statement constituting an admission of fault, culpability or
a failure to act by or on behalf of any Indemnified Party.
10. 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.
11. 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.
2051 NW 11th
Miami, Florida 33125
Fax: (305) 643-0393
Attention: William Robinson, 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
12. 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 9 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.
(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.
12
15
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 Purchase 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:
----------------------------------
William Robinson
Its: President
BYC ACQUISITION CORPORATION
By:
----------------------------------
Daniel J. McEnroe
Its: Vice President
13