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Exhibit 10.6
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT, is made as of the 29th day of January,
2007, by IMAR
Group, LLC and Challenger Powerboats, Inc., a Nevada corporation
(collectively,
the "Borrower"), on one hand, and Mark Overbye and Gekko Sports
Corporation, a
Florida corporation (collectively, the "Secured Party"), on the
other hand.
In order to secure the payment of the indebtedness evidenced by the
Asset and
Technology Acquisition Agreement ("Agreement") dated January 29,
2007 (the
"Agreement") issued by the Borrower to the Secured Party in the
original
principal amount of $670,000 and each and every other debt,
liability and
obligation of every type and description which the Borrower may now
or at any
time hereafter owe to Secured Party pursuant to such Agreement
(whether such
debt, liability or obligation now exists or is hereafter created or
incurred,
and whether it is or may be direct or indirect, due or to become
due, absolute
or contingent, primary or secondary, liquidated or unliquidated, or
sole, joint,
several or joint and several) (all such debts, liabilities and
obligations of
the Borrower to Secured Party herein collectively referred to as
the "Secured
Obligations"), Borrower hereby agrees as follows:
1. SECURITY INTEREST AND COLLATERAL. In order to secure the payment
and
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performance of the Secured Obligations, Borrower hereby grants to
Secured Party
a security interest (herein called the "Security Interest"),
subject to security
interests held by other lenders to Challenger and its subsidiaries,
in and to
the following property (hereinafter collectively referred to as
the
"Collateral")--
(i) the assets, trademarks and domain names described on Exhibit A;
(ii)
any adaptation, modification, improvement, or enhancement of the
foregoing; and
(iii) all of the pending and issued patents and patent applications
described on
Exhibit A as well as any continuations, continuations-in-part,
divisional
applications, and any Letters Patent issued there from including
reissues,
together with all non-U.S. counterparts;
together with all substitutions and replacements for and products
and proceeds
of any of the foregoing property.
The Secured Party understands and acknowledges that lenders to
Challenger (and
its subsidiaries) maintain security interests in certain assets of
the Borrower
which may include the Collateral and that the lenders' security
interests take
priority over the Security Interest maintained by the Secured
Party. Borrower
has not made any representations to the Secured Party about what if
any interest
would remain in the event that any lender exercised its rights with
respect to
the Collateral. Nothing in this section shall be read to limit the
rights of
Challenger to refinance, renegotiate or seek loans from additional
lenders by
using the Collateral described in this agreement to secure its
obligations.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Borrower hereby
represents
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and warrants to, and covenants and agrees with, Secured Party as
follows:
(a) The Collateral will be used primarily for business
purposes.
Borrower's office is located at 300 Westlink Drive, Washington,
MO
63090, and it keeps and will keep all of its books and records
with
respect to all of its accounts at such address.
(b) Borrower shall promptly notify Secured Party of any change
in
name or if it operates or conducts business under any trade name
or
"d/b/a" which is different from such name.
(c) Borrower has (or will have at the time Borrower acquires
rights
in Collateral hereafter acquired or arising) and will maintain
absolute title to each item of Collateral free and clear of all
security interests, liens and encumbrances, and will defend the
Collateral against all claims or demands of all persons other
than
Secured Party. Borrower will not sell or otherwise dispose of
the
Collateral or any interest therein except that until an Event
of
Default (as defined in the Agreement) has occurred, the Borrower
may
sell inventory in the ordinary course of its business.
(d) Borrower will not permit any Collateral to be located in
any
state (and, if county filing is required, in any county) in which
a
financing statement covering such Collateral is required to be,
but
has not in fact been, filed. Borrower will not change the state
under
which it is organized or merge with or into any other entity.
(e) All rights to payment and all instruments, documents,
chattel
paper and other agreements constituting or evidencing Collateral
are
(or will be when arising or issued) the valid, genuine and
legally
enforceable obligation, subject to no defense, set-off or
counterclaim
(other than those arising in the ordinary course of business) of
each
account debtor or other obligor named therein or in Borrower's
records
pertaining thereto as being obligated to pay such obligation.
Borrower
will not agree to any modification, amendment or cancellation of
any
such obligation without Secured Party's prior written consent,
and
will not subordinate any such right to payment to claims of
other
creditors of such account debtor or other obligor, except as is
otherwise set forth herein.
(f) Borrower will (i) keep all Collateral in good repair,
working
order and condition, normal wear and tear excepted, and will,
from
time to time, replace any worn, broken or defective parts
thereof;
provided, however, that nothing in this Section 2 (f) shall
prevent
the Borrower from discontinuing the operation and maintenance of
any
of its properties if such discontinuance is, in the Borrower's
reasonable business judgment, desirable in the conduct of the
Borrower's business and not disadvantageous in any material respect
to
the Secured Party; (ii) other than taxes and other governmental
charges contested in good faith and by appropriate proceedings,
promptly pay all taxes and other governmental charges levied or
assessed upon or against any Collateral or upon or against the
creation, perfection or continuance of the Security Interest;
(iii)
keep all Collateral free and clear of all security interests,
except
as is otherwise set forth herein, liens and encumbrances; (iv) at
all
reasonable times, permit Secured Party or its representatives
to
examine or inspect any Collateral, wherever located, and to
examine,
inspect and copy Borrower's books and records pertaining to the
Collateral and its business and financial condition and to
discuss
with account debtors and other obligors requests for verifications
of
amounts owed to Borrower; (v) keep accurate and complete
records
pertaining to the Collateral and pertaining to Borrower's business
and
financial condition and will submit to Secured Party such
periodic
reports concerning the Collateral and Borrower's business and
financial condition as Secured Party may from time to time
reasonably
request; (vi) promptly notify Secured Party of any loss or
material
damage to any Collateral in excess of $10,000 or of any
material
adverse change, known to Borrower, in the prospect of payment of
any
sums due on or under any instrument, chattel paper or account
constituting Collateral; (vii) if Secured Party at any time
reasonably
requests promptly deliver to Secured Party any instrument, document
or
chattel paper constituting Collateral, duly endorsed or assigned
by
Borrower to Secured Party; (viii) at all times keep all
Collateral
insured against risks of fire (including so called extended
coverage),
theft, collision (in case of collateral consisting of motor
vehicles)
and such other risks and in such amounts as Secured Party may
reasonably request, with any loss payable to Secured Party to
the
extent of its interest and notify the Secured Party in writing of
any
loss or damage to the Collateral or any part; (ix) from time to
time
execute such financing statements as Secured Party may reasonably
deem
required to be filed in order to perfect the Security Interest and,
if
any Collateral is covered by a certificate of title, execute
such
documents as may be required to have the Security Interest
properly
noted on a certificate of title; (x) pay when due or reimburse
Secured
Party on demand for all costs of collection of any of the
Secured
Obligations and, subject to any limitations set forth in the
Agreement, all other out-of-pocket expenses (including in each
case
all attorneys' fees) incurred by Secured Party in connection with
the
creation, perfection, satisfaction or enforcement of the
Security
Interest or the execution or creation, continuance or
enforcement
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