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Exhibit 2.4
August 23, 1999
Xxxxxxx X. Xxxxxx
President
ReelFishing Corporation
0000 X. Xxxxxxxx Xxxxx, #0000
Xxxxx Xxxx, XX 00000
Re: Letter of Intent between Reel Fishing Corporation and Revenge Marine, Inc.
Dear Xx. Xxxxxx:
This letter of intent ("Letter of Intent") between Reel Fishing
Corporation, a Delaware corporation ("Fish") and Revenge Marine, Inc., a Nevada
corporation ("Revenge") (together, the "Parties") concerns a contemplated
tax-free merger transaction (the "Merger") between the Parties. The terms of the
Merger would be set forth in a definitive agreement ("Merger Agreement"), that
would reflect the mutual agreements of the Parties and contain the customary
terms and conditions for such transactions. Revenge's counsel would prepare the
initial draft of the Merger Agreement for review by Fish. The basic terms of the
Merger would be as follows:
1. PAYMENT. Subject to the terms and conditions contained in the Merger
Agreement, Revenge would acquire all of the issued and outstanding capital stock
in Fish in exchange for shares of voting common stock in Revenge ("Payment
Shares"). The number of Payment Shares would be subject to adjustment as shall
be agreed by the Parties in the Merger Agreement. The Parties would agree on a
share exchange ratio, which would be reflected in the Merger Agreement. Revenge
warrants and covenants that at the closing of the Merger, the Payment Shares
will represent sixty-five percent (65%) of the issued and outstanding stock of
Revenge, after giving effect to all possible dilution on the effective date of
the Merger (which shall be the date that all of the required Merger documents
have been filed and accepted with the relevant state authorities), except for
current stock options as set forth on Exhibit A to this Letter of Intent.
Revenge warrants that Exhibit A is a true and complete statement of all such
options and agrees not to issue any additional options or other stock purchase
or acquisition rights without Fish approval. Revenge warrants and covenants that
the current owners of Fish will have, effective as of the date of the Merger,
actual voting control of Revenge, after giving effect to all possible dilution.
2. MERGER STRUCTURE. The Parties contemplate that a wholly owned
subsidiary of Revenge would merge into Fish. However, the Parties would
cooperate to amend or modify the proposed structure of the Merger consistent
with the terms of this Letter of Intent in order that the structure of the
Merger will qualify for tax-free treatment for the Parties.
3. MERGER AGREEMENT. Within forty-five (45) days of the date hereof,
the Parties would negotiate in good faith the Merger Agreement, setting forth
the terms and
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conditions of the Merger consistent with the terms of this Letter of Intent,
together with customary warranties and representations and such additional terms
and conditions as are mutually acceptable to the Parties. The closing would also
take place within this period.
4. FINANCING AND UNDERWRITING.
a. INTERIM FINANCING. In consideration for Fish's entering into this
Letter of Intent, Revenge will cause a loan or loans to be made to Fish, for use
by Fish as described in Exhibit B (Take Down Schedule), in the total amount of
$250,000 in immediately available cash funds. The entire $250,000 is to be
available within fifteen (15) days of the date of this Letter of Intent in
accordance with Exhibit B. In the event that the entire sum is not funded to
Fish within the required period for any reason, Fish's no shop obligation
hereunder shall be deemed void AB INITIO, and Fish may, at its option, terminate
this Letter of Intent with no further obligations other than the note. In
addition to the foregoing, Fish will be entitled to specific performance of both
loans. Revenge agrees not to contest any suit in law or equity filed by Fish to
enforce this Letter of Intent. In the event that a court is unwilling or unable
to grant specific performance, the amount of the combined loans will be deemed
liquidated damages for Revenge's default of this paragraph, and Revenge agrees
not to contest Fish's claim therefor. This Letter of Intent will be interpreted
in accordance with Florida law, excluding the conflict of laws rules thereof.
Jurisdiction and venue shall lay only in the Federal Courts of Palm Beach
County, Florida. The above loans will be evidenced by promissory notes in the
forms attached hereto as Exhibit C, such loans to be on an unsecured basis, with
simple interest of eight percent (8%). On the effective date of the Merger, as
defined above, the loans will become intercompany loans. Subject to the terms
herein, the loans will be repaid from the proceeds of the Intermediate Term
Financing in Paragraph 4.a of this Letter of Intent, or any other financing in
excess of $1,000,000 (with in excess of $800,000 to Fish), provided that such
financing is obtained within the time limit set in Subparagraph b. below. In the
event that the Merger or a similar transaction between the Parties does not
occur within forty-five (45) days of the date of this Letter of Intent or the
additional financing referred to in this paragraph or Subparagraph b. below does
not occur within the time limits specified herein, each of the loans will be
payable in full twelve (12) months respective dates of their disbursements to
Fish.
b. INTERMEDIATE TERM FINANCING. Subject to Revenge meeting its
obligations under Subparagraph a. above, Fish will cooperate with Revenge to
attempt to raise $5,000,000 in capital within one hundred and twenty (120) days
of the date of this Letter of Intent, which amount will be allocated 20% to
Revenge and 80% to Fish. Fish's approval as to the amount and terms of any such
financing is required in writing. Should Fish raise any amounts of capital from
sources not introduced to it by Revenge, Fish shall have all rights to one
hundred percent (100%) of any such financing and shall not be obligated to
provide any of such amounts to Revenge, except for repayment of the loans
described above if the amount financed to Fish exceeds $1,000,000 is cash. If
the amount financed is $1,000,000 or less, the loans shall be repaid on the
balloon basis as described.
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c. UNDERWRITING LETTER. The Parties would work together to obtain a
firm commitment underwriting for Revenge and/or Fish of at least $10,000,000 for
the combined companies (the "Public Offering") within 180 days of the effective
date of the Merger. In connection therewith, Revenge (and Fish, if its shares
were to be included in the offering) would file a Registration Statement with
the Securities and Exchange Commission.
5. TERMS AND CONDITIONS. The following terms, among others, would be
included in the Merger Agreement:
a. BOARD OF DIRECTORS. Fish and Revenge would agree on members to
Revenge's Board of Directors to be filled by individuals named by Fish.
b. WHOLLY OWNED SUBSIDIARY. Fish and Revenge would agree on the
circumstances under which Revenge would not transfer any of its interest in Fish
and will allow Fish to continue as a wholly owned subsidiary of Revenge, and the
circumstances under which Fish would be allowed to spin-off for an initial
public offering or otherwise.
c. BUSINESS LOCATION. All of the research and development and
accounting shall be done at a location mutually agreed upon by the Parties.
d. CONDITIONS. The following would be included among the conditions
precedent to the Parties obligations under the Merger Agreement:
(i) The consent to the proposed transaction, if required, by
any lenders or vendors or parties to material contracts with Fish or Revenge.
(ii) All necessary corporate action on behalf of the Parties
shall have been taken, including Board of Directors and shareholder approvals.
(iii) Fish and Revenge shall have completed due diligence
reviews of the other, including audits. The results of such reviews and audits
shall be satisfactory to Fish and Revenge in their discretion.
(iv) Employment agreements would be entered into with certain
personnel of Revenge and Fish.
e. OPTIONS AND WARRANTS. Fish and Revenge would agree on the effect
of the Merger on outstanding rights to acquire capital stock of Revenge and
Fish.
6. PRESS RELEASES. The Parties agree that all statements to the media,
wire services, or other press releases concerning the Merger shall be issued
jointly, approved in writing, in advance, by both Parties.
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7. NO-SHOP PROVISION. For a period of forty-five (45) days from the
date of this Letter of Intent, the Parties agree not to negotiate, pursue,
encourage or cooperate in: for Revenge, the sale of all or substantially all of
its assets or capital stock to or any merger with any party other than Fish; for
Fish, the purchase of, joint venture or share exchange with, or acquisition by
any marine concern other than Revenge.
8. FEES AND COSTS. Each Party will be responsible for its own fees and
costs associated with the Merger, including legal, accounting, broker and other
fees and expenses, regardless of whether the transaction contemplated hereby is
consummated.
9. COUNTERPARTS. This Letter of Intent may be signed in counterparts,
each of which shall be deemed an original and all of which shall constitute one
instrument.
10. LETTER OF INTENT. This Letter of Intent shall expire if the Parties
shall not have executed the Merger Agreement within forty-five (45) days from
the date hereof. EXCEPT WITH RESPECT THOSE PORTIONS OF PARAGRAPH 1 CONTAINING
REVENGE'S WARRANTIES AND COVENANTS WITH RESPECT TO FISH'S OWNERSHIP SHARE IN
REVENGE AND DILUTION, AND PARAGRAPHS 4.A., 4.B., 6, 7 AND 8, AND THE LAST
SENTENCE OF THIS LETTER OF INTENT, ALL OF WHICH SHALL BE BINDING, THIS LETTER OF
INTENT IS NOT INTENDED TO BE A BINDING CONTRACT. The Parties' acceptance of the
general principles set forth in this letter shall not constitute an agreement to
consummate the transaction described herein. Such an agreement will be contained
only in the Merger Agreement. Nor shall this Letter of Intent constitute an
agreement to enter into a definitive agreement. This Letter of Intent is an
expression of mutual intent to proceed with the drafting of the Merger Agreement
in accordance with the principles stated herein and is only a binding contract
to the extent mentioned above.
The Parties have executed this Letter of Intent on the date set forth
above. Each of the individuals signing for his corporation represents and
warrants that he has all necessary corporate authority to bind his corporation
to the terms of this Letter of Intent.
Revenge Marine, Inc., a Nevada corporation
By:
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Xxxxxxx X. Xxxxxxxx
President and CEO
ReelFishing Corporation, a Delaware corporation
By:
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Xxxxxxx X. Xxxxxx
President
