Exhibit 10.1
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (the "Agreement"), dated
January 30, 2007 by
and between
IMAR Group, LLC, a North Dakota limited liability
company (the
"Company"), in the
business of designing, manufacturing and selling boats under
the names IMAR Group, Sugar Sand and Gekko with its
Members, Mike Bullinger,
Chuck Crary,
Howard Dahl, Mark Overbye, Tom Shorma, Bill Schlossman, Gary
Rutherford, and
North Dakota
Development Fund (the "Members") (the Company and
the Members
are collectively referred to
hereinafter as the "Seller"), on the
one hand, and Challenger Powerboats, Inc., a
Nevada corporation ("Buyer"), on
the other hand.
RECITALS
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A. For the consideration and on the terms set forth in this
Agreement, the
Seller desires to sell to Buyer and Buyer desires to purchase from
Seller all of
the business and
assets of the Company, including without limitation all of the
Members' interests
in the Company (the "Membership Interests").
AGREEMENT
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The
parties, intending to be legally bound, agree as follows:
1.
DEFINITIONS. For
purposes of this Agreement, the following
terms shall
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have the meaning specified or referred to in this Section 1.
1.1
BUYER - As defined in the first paragraph of this Agreement.
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1.2
CLOSING - As defined in Section 2.3.
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1.3
CLOSING BALANCE
SHEET - As represented in Section 3.4(b).
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1.4
COMPANY - As defined in the first paragraph of this Agreement.
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1.5
CONTEMPLATED
TRANSACTIONS - All of the transactions contemplated by the
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Related
Agreements.
1.6
EFFECTIVE DATE
- As defined in the first paragraph
of this Agreement.
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1.7
ENCUMBRANCES -
Any charge, claim, addition, interest, lien,
option,
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pledge, security interest, right of first refusal or restriction of
any kind, or
exercise of
any other attribute of ownership.
1.8
MEMBERS - As defined in the first paragraph of this Agreement.
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1.9
MEMBERSHIP INTERESTS
- As defined in the Recitals of this
Agreement.
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1.10
NOTE HOLDERS
- Holders of the Buyers Notes
referred to under Section
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2.2 identified
as Mike Bullinger, Chuck Crary, Howard Dahl, Tom
Shorma, and
William
Schlossman.
1.11
ORGANIZATIONAL
DOCUMENTS -
The Articles of Organization, the
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Certificate of
Organization
and all Operating Agreements and Member
Control
Agreements of
Company, including any amendments to any of the
foregoing, and
minutes of
meetings of the governors and members of the Company.
1.12
PURCHASE PRICE
- As defined in Section 2.2.
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1.13
REAL PROPERTY
LEASE AGREEMENT - The Company's lease with Branick
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Industries, Inc.
involving the land and building located at 2300 3rd
Avenue
North, Fargo,
North Dakota.
1.14
RELATED AGREEMENTS
- The Gary Rutherford Agreement to Transfer
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Membership Interests,
the Mark Overbye Release, the November 30, 2006 Mark
Overbye Agreement,
and the Mark Overbye Employment Agreement.
1.15
SELLER - As defined in the first paragraph of this Agreement.
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1.16
UNIT HOLDERS - Individuals holding Membership Interests in the
Company.
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2.
SALE AND TRANSFER OF SELLERS' INTERESTS; CLOSING.
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2.1 SELLER'S
INTERESTS.
Subject to the terms and conditions of this
--------------------
Agreement, the
Seller will sell, assign transfer and deliver all of their
collective interests
in the Company, including the Membership Interests and all
of the assets of the Company to Buyer (the "Assets")and
Buyer will purchase
those Assets
and Membership Interests. The Assets of the Company include,
without limitation,
the following:
(a)
all real property, if any, listed in the disclosure
schedule of even
date heretofore
delivered by Seller to
Buyer (hereinafter sometimes called the
"Disclosure
Schedule");
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(b)
all leases
(including,
without limitation, mineral rights leases)
of
real property,
if any, listed in the Disclosure Schedule
in respect of which
Buyer consents
in writing to the assignment thereof;
(c)
all fixtures
and other fixed assets, including without limitation
leasehold
improvements, of
any kind or description owned by the
Company and
located, affixed,
installed in or upon the real property owned or leased (which
leases are
to be assigned to Buyer) by the Company or used or usable in
connection with
the business or
operations of Seller, other than machinery and
equipment included
under (d) below, such fixtures and other fixed assets,
including leasehold
improvements,
being hereinafter sometimes collectively
called the
"Fixed Assets");
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(d)
all furniture,
vehicles, machinery and equipment of any kind or
description owned by
Seller and located, affixed, installed in or upon the real
property owned
or leased by the Company (which leases are to
be assigned to
Buyer), or
used or usable in
connection with the business or operations of the
Company, such
furniture,
vehicles, machinery and equipment being
hereinafter
sometimes collectively
called the "Machinery and Equipment";
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(e)
all inventories
of merchandise and
supplies of any kind or description
owned by the Company and located in or upon the real property owned
or leased by
Seller (which
leases are to be assigned to Buyer), or used or usable in
connection with
the Business or
operations of Seller, including raw materials,
work-in-process and
finished goods, such
inventory being hereinafter sometimes
collectively called
the "Inventory";
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(f)
all customer
and trade accounts
receivable arising out of the business
or operations
of the Company, such accounts receivable being hereinafter
sometimes collectively
called the "Receivables";
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(g)
all leases of personal
property of the Company listed in the Disclosure
Schedule in
respect of which Buyer consents in writing to the assignment
thereof;
(h)
all of the Company's contracts listed in the Disclosure Schedule
in
respect of
which Buyer consents in writing to the
assignment thereof and all
other such
contracts entered into by the Company in the
ordinary and regular
course of business;
(i)
all of the Company's patents, trademarks,
trade names, service marks,
copyrights,
registrations, applications, licenses and rights, including
without
limitation those
listed in the Disclosure Schedule;
(j)
all of the Company's insurance policies listed in the Disclosure
Schedule to the extent such policies or rights there under are
assignable and in
respect of
which Buyer consents in writing to the assignment thereof;
(k)
all of the outstanding capital stock of,
all other investments in, and
all loans to, all subsidiaries, if any, of the Company; and
(l)
any other asset of the Company, whether or not reflected in its
financial statements
or on its books, including but not
limited to rights and
claims to refund or
abatement of taxes, claims against suppliers for damaged or
faulty merchandise,
claims against insurance carriers under the policies listed
in the Disclosure Schedule, claims
against customers for inventory sold, right
to use its corporate name, supplier and
customer lists, trade secrets and any
other intangible
asset, all of the Company's deposits and escrow
accounts,
including without
limitation
those set forth in the Disclosure
Schedule, all
Investment Securities
and any other asset of the Company, whether or not
reflected in
its financial
statements or on its books, unless Buyer shall have
specifically elected
in writing not to acquire certain assets of Seller.
2.2
PURCHASE PRICE
AND SECURITY. The purchase price to be paid for
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Membership Interests
to be transferred by Seller to Buyer
shall be an amount
equal to the following:
(a)
At
the Closing, Buyer shall deliver to
Seller's Note Holders
the
sum of $256,500 in
cash Dollars (such amount being hereinafter sometimes called
the "Closing
Payment"), payable by certified or bank cashier's check or
checks,
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or wire funds transfer.
(b)
Within 10 business days of Closing, Buyer shall deliver to
Seller's
Note Holders
3,000,000 shares of Challenger Power Boat, Inc. stock (the
"Shares"), which
shall be issued 600,000 shares to each of
the five (5) Note
Holders. The Shares
shall be restricted from sale, contract for sale, transfer,
loan, gift,
donation, or any other
disposition for a period of eighteen months
from the date of this Agreement.
(c) At the Closing, Buyer shall deliver to
Seller's Note Holders a Promissory
Note (Note1)
in the sum of $1,680,778, a copy of which
is attached hereto as
Exhibit 2.2(c).
(d) At the Closing, Buyer shall deliver to Seller's Note Holders a
second
Promissory Note
(Note2) in the sum of $1,151,500, a copy
of which is attached
hereto as Exhibit 2.2(d).
(e) Buyer shall guaranty the $275,000 Mercury Marine and GE
letter of credit
with State Bank of Fargo, which letter of credit shall be further
secured by the
Guaranty set
forth under 2.2(f) below.
(f) The Notes referred to above, and the Letter of Credit
referred to above
shall be secured by Dutchess Private Equities Fund, Ltd guaranty of
even date, a
copy of which is attached as Exhibit 2.2(f). In addition, Buyer grants to
Seller's Note
Holders a security interest in all Assets of the Company as
defined herein
and as modified by the Closing balance sheet.
2.3
CLOSING. The
Closing, involving the purchase and sale
provided for in
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this Agreement,
will take place at 11:30 a.m. on January 30, 2007, at
the
offices of
Anderson & Bottrell, Fargo, North
Dakota or at such other time and
place as the parties may agree.
2.4
CLOSING OBLIGATIONS.
At the Closing:
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(a)
Sellers will
deliver to Buyer:
(i)
A certificate
representing
all of the ownership interests in the
Company, including,
without limitation, the Membership Interests; and
(ii)
A certificate
executed by each Member representing and
warranting to
Buyer that each of
Company's and the Members' representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and
is accurate
in all respects as if made on the date of Closing.
(iii) An opinion of
Anderson & Bottrell, legal counsel for Seller, dated the
Closing Date,
in the form of Exhibit 2.4(a)(iii).
(b)
Buyer will deliver to Seller the Notes and Guaranty specified in
Section
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2.2.
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(c)
Buyer will enter into an Employment Agreement with Mark Overbye
attached
hereto as Exhibit 2.4 (c).
(d)
Buyer will
enter into a Transfer Agreement with Mark Overbye
which
transfers Overbye's
rights in various Gekko Sports Corp. related assets to
Buyer, attached
hereto as Exhibit 2.4(d).
(e)
Buyer will deliver an opinion of Trombly Business Law, corporate
counsel
for Buyer,
dated the Closing Date, in the form of Exhibit 2.4(e).
(f)
Buyer will deliver an
opinion of Rose, Chintz & Rose, legal counsel for
Dutchess, dated
the Closing Date, in the form of Exhibit 2.4(f).
3.
REPRESENTATIONS AND
WARRANTIES OF SELLER.
Company and Members represent
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and warrant,
to the best of their knowledge, to Buyer as follows:
3.1
ORGANIZATION AND
GOOD STANDING.
---------------------------------
(a)
Company is
a corporation duly organized,
validly existing and in good
standing under the
laws of the State of North Dakota, with full corporate power
and authority
to conduct its business.
(b)
Company has delivered to Buyer copies of the Organizational
Documents as
currently in
effect.
3.2
AUTHORITY; NO
CONFLICT.
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(a)
This Agreement
constitutes
a legal, valid and binding obligation
of
Company, enforceable
against Company and
Members in accordance with its terms.
(b)
Neither the
execution and delivery of this Agreement nor the
consummation or
performance of the
Contemplated Transactions will, directly or
indirectly: (i)
Contravene,
conflict with, or result in a violation of any
provision of
the Organizational Documents; (ii)
Contravene, conflict with, or
result in a violation
of, or give any governmental body or other person a right
to challenge
the contemplated transaction or to
exercise any remedy or obtain
any relief; (iii)
Contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a
default or
exercise any
remedy under, to
accelerate the maturity or performance of, or to
cancel, terminate
or modify, any binding
legal contract; or (iv) Result in the
imposition or
creation of any lien
or encumbrance on or with respect to any of
Company's assets
or the Membership Interests.
3.3
CAPITALIZATION.
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(a)
The authorized
equity securities of Company consist entirely of
Membership Interests
as set forth on the attached
Statement of Contributions.
Each of the Members
represents that they own their Membership Interest free and
clear of any liens or other encumbrances and that they have
not pledged or
hypothecated their
Membership
Interest in any way.
(b)
There are no outstanding options, contracts, calls, commitments,
demands
or Member Buy-Sell Agreements of any kind
relating to the Membership Interests
of the Company except as set forth on the Statement of Contributions.
(c)
Company owns
no outstanding stock or ownership
interests in any other
business entities.
3.4
FINANCIAL
STATEMENTS.
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(a)
Copies of the unaudited financial statements of
Company consisting of
balance sheets and
income statements as of the close of business on December 31
for each of the three (4) years ending
December 31, 2003 through December 31,
2006 have been delivered by Company to Buyer.
(b)
The Company's
Closing Balance Sheet, a copy of which is attached
as
Exhibit 3.4(b),
and which has been
approved by Buyer as of the Effective Date,
is true and correct in all material respects and, except as
otherwise disclosed,
presents an
accurate and complete disclosure of the Company's financial
condition as of the Effective Date. There have been no material
adverse changes
in the financial condition of Company other than as reflected
in the Closing
Balance Sheet.
3.5
ORGANIZATIONAL DOCUMENTS. The Organizational Documents,
copies of which
------------------------
have been provided to Buyer, contain accurate and complete records of all
meetings held
of, and company action taken by, the Members and Board of
Governors of
Company. Seller represents that there are no other operative
documents with
respect to the organization,
capitalization or other ownership
interests in
the Company.
3.6
ACCOUNTS RECEIVABLE.
All accounts receivable as reflected on the
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Closing Balance Sheet represent or will represent valid obligations
arising from
sales actually made or
services actually performed by the Company. The Closing
Balance Sheet
shall make note of any doubtful accounts and the reasons
therefore.
3.7
NO UNDISCLOSED
LIABILITIES.
Company has no
liabilities or obligations
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of any nature, whether known or unknown and whether absolute, accrued,
contingent or
otherwise,
except for liabilities or obligations
reflected or
reserved against
in the Closing
Balanc
