Exhibit 10.5
ASSET AND TECHNOLOGY ACQUISITION AGREEMENT
BY AND BETWEEN
IMAR GROUP, LLC, A WHOLLY-OWNED SUBSIDIARY
OF CHALLENGER POWERBOATS, INC.
AND
XXXX XXXXXXX AND GEKKO SPORTS, CORPORATION
This Asset and Technology Acquisition Agreement ("Agreement") dated January
_30_, 2007, sets forth the terms on which IMAR Group, LLC ("Buyer"), a wholly
owned subsidiary of Challenger Powerboats, Inc. ("Challenger"), will purchase
certain ownership rights and interests in assets and technology, as defined
below, from Xxxx Xxxxxxx ("Xxxxxxx") and Gekko Sports Corporation, a Florida
corporation with its principal place of business at is 000 Xxxxx Xxxxx,
Xxxxxxxx, XX (the "Seller").
1. Buyer's Purchase of Seller's Assets and Technology
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1.1 Subject to the terms and conditions of this Agreement, Buyer hereby
purchases from Seller and Seller hereby sells, transfers and assigns to Buyer
all of Seller's right, title and interest in (i) the assets, trademarks,
copyrights and domain names described on Exhibit A; (ii) any adaptation,
modification, improvement, or enhancement of the foregoing; (iii) all of the
pending and issued patents and patent applications described on Exhibit D 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; (iv) the trade names "Gekko Sports", "Gekko Sports
Corporation" and related variations thereon; and (v) all goodwill, know-how,
service marks, industrial property rights related to the foregoing (the "Assets
and Technology"). Seller agrees to take all necessary steps to effect the
transfer of the Assets and Technology, including, without limitation, the
transfer of USPTO # DVH 0066.
2. Representations and Warranties
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2.1 Seller represents and warrants to Buyer as follows:
2.1.1 Seller holds all right, title and interest in the Assets and
Technology free and clear of any and all claims, liens, and
encumbrances of any kind and nature whatsoever. No third party retains
any residual rights or claims to the Assets and Technology. There are
no claims of Seller which have not been fully asserted and which may,
as a result, lead to issues of laches or estoppel.
2.1.2 Seller has the right and authority to enter into this Agreement,
and the execution and performance of this Agreement by Seller will not
violate or result in violation of any other agreement to which Seller
is a party.
2.1.3 Seller has delivered to Buyer copies of copyrights and copyright
applications, patents and patent applications, patent and patent
application status reports, patent prosecution files, opinions Seller
has received regarding third party patents, all lab books, research
reports, invention disclosures, documentation, and any and all other
materials that were used in creation of the Assets and Technology and
are currently in Seller's possession, custody, or control, that embody
the Assets and Technology. The following shall be provided for all
patents related to the Seller's Assets and Technology:
2.1.3.1 Titles, copyright numbers, patent numbers, and serial
numbers of issued patents; titles and serial numbers of pending
patents; and titles of inventions or technology not yet filed.
2.1.3.2 Names and status of inventors (present employee, past
employee, contractor) for each item listed in 2.1.3.1.
2.1.3.3 Countries filed in (U.S. and foreign).
2.1.3.4 Representation that if issued, maintenance fees or other
necessary payments are fully paid up.
2.1.3.5 Representation that, to the Seller's knowledge, none of
the items listed in 2.1.3.1 are subject to any asserted ownership
dispute, litigation, reexamination, reissue, or interference.
2.1.4 Seller has delivered to Buyer a true and complete copy of, and
listed on Exhibit B hereto, each written agreement and license and an
accurate description of each oral agreement and license relating to
the Assets and Technology (other than as provided hereunder),
including all amendments, waivers, or other changes thereto. There are
no other written or oral contractual commitments, contracts, or
licenses to which Seller is a party or by which it is bound which
shall be binding upon the Buyer, Challenger, any of Challenger's
subsidiaries or any other party.
2.1.5 Every employee, consultant, licensee, or other person who has
contributed in any way to the development of the Assets and Technology
was, at the time such contributions were made, subject to an agreement
wherein such person agreed to hold the Assets and Technology in
secrecy and confidence and transfer and assign to Seller all rights in
the Assets and Technology including without limitation trade secret
and patent rights.
2.1.6 Seller has transferred to Buyer copies of all material business
and legal files related to the Assets and Technology including those
related to the Assets and Technology. Buyer will be responsible for
prosecuting all patent applications and maintaining all patents after
the Effective Date of this Agreement. Seller has paid, and is current
on, all patent maintenance fees due as of the Effective Date.
2.1.7 The Assets and Technology do not infringe any patents,
copyrights, trade secrets, or other proprietary rights of any third
party. No rights or licenses are required from third parties to
exercise any rights with respect to the Assets and Technology or any
part thereof. To the knowledge of the Seller, the Assets and
Technology have not been infringed by any third party. Seller has
taken proper steps to protect the trade secrets and know-how
associated with the Assets and Technology.
2.1.8 There are no actions, suits, litigation, proceedings, or
controversy in any court or legal proceeding pending or, to the
knowledge of Seller, threatened by or against Seller or any of its
employees, officers, or agents arising out of or related to the Assets
and Technology. To the knowledge of Seller, there are no claims,
demands or controversies that would, if proven, constitute a breach of
any of the representations and warranties of Seller contained herein.
2.1.9 Seller has not and will not license, assign, sell or otherwise
transfer or grant any rights in the Assets and Technology to any third
party and shall not use or otherwise commercialize the Assets and
Technology to develop, market, or distribute a product that competes
with Buyer or any other subsidiary of Challenger. Seller will
indemnify and hold Buyer harmless against any and all losses, costs,
or liabilities that may arise as a result of a claim that would
constitute a material breach of Seller's warranties or obligations
under this Agreement. Notwithstanding the foregoing indemnification,
and not in derogation of it, Seller may elect to defend or to settle,
at its sole discretion and expense, any claim that would alter,
diminish, or otherwise affect Seller's rights in the Assets and
Technology.
3. Consideration
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3.1. In consideration for this Agreement, Buyer shall pay Xxxxxxx a total of
$670,000 in U.S. dollars by wire transfer or company check in accordance with
the terms and conditions set forth in the Promissory Note of even date herewith.
The payments in this Section 3.1 represent the total cash consideration for the
Buyer's purchase of the Assets and Technology and other rights provided to Buyer
by Seller under this Agreement, including any and all amounts due under the
Technology, Transfer, License and Royalty Agreement by and between Gekko and
IMAR, a copy of which has been attached hereto as Exhibit C (the "Royalty
Agreement"), and under the Executive Employment Agreement entered into by and
between Xxxx Xxxxxxx and IMAR Group, LLC, a copy of which has been attached
hereto as Exhibit F (the "Terminated Employment Agreement").
The parties further agree that $435,000 of the amount set forth in this Section
3 represents the Buyer's purchase of the Assets and Technology from Seller. The
parties believe that this amount fairly and accurately values the Assets and
Technology. The remaining cash portion is being paid to Seller as compensation
for wages, royalties, commissions or any other amounts due to Xxxxxxx,
personally, or Seller, under the Royalty Agreement or the Terminated Employment
Agreement.
3.2. In consideration for this Agreement, Buyer further agrees to provide
the following to Xxxxxxx:
3.2.1. Within 10 business days following closing, and after transfer
and delivery of the Assets and Technology, the Buyer shall issue
625,000 shares of Challenger's restricted common stock to Xxxxxxx.
Resale of the shares is governed by a Leak-Out Agreement between Buyer
and Xxxxxxx.
3.2.2. In addition, at closing, Xxxxxxx shall receive a warrant for
the purchase of 125,000 shares of Challenger Powerboat's common stock
at the strike price of $0.15 which shall vest two years from the date
of this Agreement. Resale of the warrants is governed by a Leak-Out
Agreement between Buyer and Xxxxxxx. The terms concerning the warrant
are set forth in the Common Stock Purchase Warrant of even date
herewith.
3.2.3. In addition, at closing, Xxxxxxx shall receive a warrant for
the purchase of 125,000 shares of Challenger Powerboat's common stock
at the strike price of $0.20 which shall vest two years from the date
of this Agreement. Resale of the warrants is governed by a Leak-Out
Agreement between Buyer and Xxxxxxx. The terms concerning the warrant
are set forth in the Common Stock Purchase Warrant of even date
herewith.
3.3. In addition, at closing, Buyer will enter into a two-year
Employment Agreement with Xxxxxxx, as set forth in Exhibit E (the
"Employment Agreement"). This Agreement is entered into by Buyer upon
the condition that the Terminated Employment Agreement, has been
cancelled.
3.4. In consideration for the receipt and enjoyment of the
consideration set forth in Section 3.1, Seller and Xxxxxxx waive their
right to receive any additional compensation from IMAR or Challenger,
regardless of whether such amounts are past due, under either the
Royalty Agreement and/or under the Terminated Employment Agreement, or
under any other agreements between the parties.
4. Employment Arrangements
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Seller does not have any obligation, contingent or otherwise, under any
employment agreement, collective bargaining or other labor agreement, any
agreement containing severance or termination pay arrangements, deferred
compensation agreement, retainer or consulting arrangements, pension or
retirement plan, bonus or profit-sharing plan, stock option or purchase plan or
other employee contract or non-terminable (whether with or without penalty)
arrangement, group life, health, medical or hospitalization insurance, plan or
program or other employee or fringe benefit plan, including vacation plans or
programs and sick leave plans or programs.
5. Seller's Employees and Other Business Relations
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Except as otherwise set forth herein and in the Employment Agreement, Buyer
shall have no obligation to employ any particular present employee of Seller
after the closing of this Agreement, but Seller will use its best efforts to
persuade such employees of Seller as Buyer may designate to become employees of
Buyer after the Closing Date. Seller will use its best efforts prior to the
Closing Date to preserve its business organization intact, to keep available to
Buyer the services of its present employees, and to preserve for Buyer the
present relations between Seller and its suppliers, customers and other persons
having business relations with it, it being understood that, except as otherwise
in this Agreement provided, Buyer shall have no obligation to continue any such
relation with suppliers, customers or other persons.
7. Tax Matters
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All sales, use, or other taxes or other fees payable in connection with the
transfer of the Assets and Technology shall be borne by Seller.
Seller has filed in accordance with applicable law all federal, state, county
and local personal property tax returns which are required to be filed
concerning the Assets and Technology. As of the closing date, no tax
liabilities have been assessed or proposed which remain unpaid. Seller has paid
all taxes which have become due and has paid all taxes due as of the closing
date.
8. Confidential Information
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Seller shall not disclose information concerning the Assets or Technology,
or any nonpublic information concerning the Buyer to any person or other
business entity nor use such information for any purpose other than in
accordance with this Agreement.
9. Brokers and Finders
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Seller and Buyer represent to each other that no person or persons assisted in
or brought about the negotiation of this Agreement in the capacity of broker or
agent or finder. Seller agrees to indemnify and hold harmless Buyer against any
claims asserted against Buyer for brokerage or agent's or finder's commission or
compensation in respect of the transactions contemplated by this Agreement by
any persons purporting to act on behalf of Seller. Buyer agrees to indemnify
and hold harmless Seller against any claims asserted against Seller for
brokerage or agent's or finder's commissions or compensation in respect of the
transactions contemplated by this Agreement by any person purporting to act on
behalf of Buyer.
10. No Governmental Authorizations or Approvals Required
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No authorization or approval of, or filing with, any governmental agency,
authority or other body will be required in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
11. General
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11.1. The parties agree that the following individuals shall represent
them in any discussions related to this Agreement. All contacts with
any employee of the other party will be through these principals.
Whenever notice is required, it shall be made to the following
addresses:
For Seller: Xxxx Xxxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Copy to: Xxxxxxx X. Xxxxx
Xxxxxxxx & Weinstine, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
P 000-000-0000
F 000-000-0000
For Buyer: Xxxxxx X. Xxxxxxxx
Challenger Powerboats, Inc.
000 Xxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
P (000) 000-0000
F (000) 000-0000
Copy to: Xx. Xxxxxxx Xxxxxxxx
0000 Xx. 00, Xxxxx 000
XxXxxxxxxxxxx, XX 00000
P (000) 000-0000
F (000) 000-0000
11.2. Except as may be agreed between the parties or to the extent
required by law, no press release or public announcement shall be made
concerning this Agreement.
11.3. Each party shall bear its own expense and costs with regard to
all activities relating to this Agreement.
11.4. This Agreement shall be construed in accordance with the laws of
the State of Missouri. Any dispute arising under this Agreement shall
be settled by the parties in a court of competent jurisdiction located
in St. Louis County, Missouri.
11.5 This Agreement is intended to grant full and complete legal
rights, title and interest to Seller.
11.6 If at any time, a party shall waive its rights arising out of any
breach of the other party's duties, such waiver shall not be construed
as a continuing waiver of that party's rights respecting other
breaches of the same or other provisions of this Agreement.
11.7. Both parties agree that this Agreement is the complete and
exclusive statement of agreement between the parties and supersedes
all prior agreements, whether oral or written, with respect to the
subject matter hereof. This Agreement may only be amended or
superseded by a writing signed by both parties.
11.8. The parties agree that the effective date of this agreement is
January 1, 2007 for operational, tax and accounting treatment.
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ACCEPTED AND AGREED TO:
IMAR Group, LLC
Challenger Powerboats, Inc.
_________________________
Xxxxxx X. Xxxxxxxx
President & CEO
DATE: __________________
_________________________
Xxxx Xxxxxxx, personally
DATE: __________________
Gekko Sports Corporation
_________________________
By: Xxxx Xxxxxxx
Title: __________________
DATE: ___________________
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EXHIBIT A
Description of Gekko Technology
PURCHASE
ASSET PRICE
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BOAT MOLDS
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Revo7.1 xxxxxxxx mold, gas tank door mold, back seat mold, 2ea. Hull molds, Deck mold $85,000
Revo 6.7 xxxxxxxx mold, Xxxx mold, Deck mold, 2 ea. Back seat molds $58,000
Revo 6.7 hull, deck and liner plugs $29,000
GTR 22 trunk mold, Bow ring, Hull mold $24,000
GTX 22 Deck mold, Hull mold $45,000
GTO 00 Xxx xxxx, Xxxx mold, Deck mold, Engine cover mold (used for all in-line Gekko) $50,000
GTS 20 Hull mold, Deck mold, Deck Plug $59,000
REGISTERED TRADEMARKS
Gekko $75,000
OTHER TRADEMARKS
GTS 20, GTO 22, GTR 22, REVO 6.7, REVO 6.7i, REVO 7.1 $ 0
COPYRIGHTS
USPTO #DVH0066 $ 0
INTERNET DOMAIN NAME AND CONTENT
xxx.xxxxxxxxxxx.xxx $10,000
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EXHIBIT B
Existing Licenses
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Technology Transfer, License and Royalty Agreement by and between Gekko Sports
Corporation and IMAR Group, LLC (attached)
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EXHIBIT C
Technology Transfer, License and Royalty Agreement
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Attached
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EXHIBIT D
Issued Patents
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Patent Applications
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EXHIBIT E
Employment Agreement by and between Challenger Powerboats, Inc. and Xxxx Xxxxxxx
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Attached
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EXHIBIT F
Executive Employment Agreement by and between IMAR Group, LLC and Xxxx Xxxxxxx
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Attached
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EXHIBIT G
Security Agreement
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Attached
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EXHIBIT H
Promissory Note
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Attached