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, Xxxx Xxxxxxxxx,
Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxx
Xxxxxxxxxx, 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
--------
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
---------
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
-----------
have the meaning specified or referred to in this Section 1.
1.1 BUYER - As defined in the first paragraph of this Agreement.
-----
1.2 CLOSING - As defined in Section 2.3.
-------
1.3 CLOSING BALANCE SHEET - As represented in Section 3.4(b).
-----------------------
1.4 COMPANY - As defined in the first paragraph of this Agreement.
-------
1.5 CONTEMPLATED TRANSACTIONS - All of the transactions contemplated by the
--------------------------
Related Agreements.
1.6 EFFECTIVE DATE - As defined in the first paragraph of this Agreement.
---------------
1.7 ENCUMBRANCES - Any charge, claim, addition, interest, lien, option,
------------
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.
-------
1.9 MEMBERSHIP INTERESTS - As defined in the Recitals of this Agreement.
---------------------
1.10 NOTE HOLDERS - Holders of the Buyers Notes referred to under Section
-------------
2.2 identified as Xxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx, and
Xxxxxxx Xxxxxxxxxx.
1.11 ORGANIZATIONAL DOCUMENTS - The Articles of Organization, the
-------------------------
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.
---------------
1.13 REAL PROPERTY LEASE AGREEMENT - The Company's lease with Xxxxxxx
--------------------------------
Industries, Inc. involving the land and building located at 0000 0xx Xxxxxx
Xxxxx, Xxxxx, Xxxxx Xxxxxx.
1.14 RELATED AGREEMENTS - The Xxxx Xxxxxxxxxx Agreement to Transfer
-------------------
Membership Interests, the Xxxx Xxxxxxx Release, the November 30, 2006 Xxxx
Xxxxxxx Agreement, and the Xxxx Xxxxxxx Employment Agreement.
1.15 SELLER - As defined in the first paragraph of this Agreement.
------
1.16 UNIT HOLDERS - Individuals holding Membership Interests in the Company.
------------
2. SALE AND TRANSFER OF SELLERS' INTERESTS; CLOSING.
------------------------------------------------------
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");
--------------------
(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");
-------------
(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";
-------------------------
(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";
---------
(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";
-----------
(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
------------------------------
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,
---------------
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
-------
this Agreement, will take place at 11:30 a.m. on January 30, 2007, at the
offices of Xxxxxxxx & Xxxxxxxx, Fargo, North Dakota or at such other time and
place as the parties may agree.
2.4 CLOSING OBLIGATIONS. At the Closing:
--------------------
(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 Xxxxxxxx & Xxxxxxxx, 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
-------
2.2.
---
(c) Buyer will enter into an Employment Agreement with Xxxx Xxxxxxx attached
hereto as Exhibit 2.4 (c).
(d) Buyer will enter into a Transfer Agreement with Xxxx Xxxxxxx 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 Xxxxxxx 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
-----------------------------------------
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.
------------------------
(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.
--------------
(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.
---------------------
(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
--------------------
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
----------------------------
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 Balance Sheet and current liabilities incurred
in the ordinary course of business the nature of which have been disclosed in
writing to the Buyer.
3.8 TAXES. All federal, state, county and local income, ad valorem, excise,
-----
sales, use, premium, gross receipts and other taxes and assessments which are
due and payable have been duly reported, fully paid and discharged as reported
by Company, and there are no unpaid taxes which are or could become a lien on
the properties and assets of Company. True and complete copies of the Company's
tax returns for the years 2003, 2004, and 2005 have been provided to Buyer. The
amount of accrued taxes, if any, is set forth in the Closing Balance Sheet of
Company. All tax returns of any kind required to be filed have been filed and
the taxes paid or accrued, except the Company's 2006 income tax return, which is
not yet due. Seller is responsible for filing all necessary tax returns for tax
year 2006. Company has no knowledge of any possible deficiency assessments in
respect to any federal income tax return or other tax returns filed by Company.
The Seller is not aware of any deficiencies or penalties that will apply to the
Company's 2006 tax return.
3.9 TITLE TO PROPERTIES; ENCUMBRANCES. Except as otherwise disclosed to
------------------------------------
Buyer, Company owns all of the assets (whether real, personal, or mixed and
whether tangible or intangible) that Company purports to own, including all of
the assets reflected on the Closing Balance Sheet, and except as reflected on
the Closing Balance Sheet, all such material properties and assets are free and
clear of all Encumbrances. As of the Effective Date, all assets and business
properties of Company are in reasonably good operating condition and repair
subject only to ordinary wear and tear. None of the Members own any right,
title or interest in the Assets of the Company other than through their
Membership Interests.
3.10 EMPLOYEES; LABOR RELATIONS; COMPLIANCE. Company has provided Buyer
-----------------------------------------
with a complete and accurate list of all of Company's employees who perform
functions necessary to the continuation of the operation of Company's business
together with a list of their current salary and benefits. In addition to the
foregoing, to the best of Seller's knowledge, as of the Effective Date:
(a) Company has complied with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes.
(b) Since its organization, Company has not been a party to any collective
bargaining or other labor contract.
(c) There are no worker's compensation claims threatened or pending against
Company.
(d) No employee or former employee of Company has any claim relating to
employment, equal employment opportunity, non-discrimination, immigration,
wages, hours, benefits, the payment of social security and similar taxes,
occupational safety and heath, pension, retirement, profit sharing, deferred
compensation, stock bonus, stock option, cash bonus, employee stock ownership,
severance pay, insurance, medical, welfare, vacation plan or any other employee
benefit plan.
3.11 EMPLOYEE BENEFIT PLANS. Except for Company's 401(k) plan, a copy of
------------------------
which has been disclosed to Buyer, Company has no other employee pension or
benefit plans of any kind. With respect to the Company's 401(k) plan, all
required contributions payments which are due by Company have been timely made.
The Seller is not aware of any claims or threatened claims with respect to the
Company's 401 (k) plan.
3.12 ABSENCE OF PROHIBITED PAYMENTS. Since the Company's organization, the
-------------------------------
Company and Members have not directly or indirectly made any contribution gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
person or entity, regardless of form, whether in money, property or services:
to obtain favorable treatment in securing business; to pay for favorable
treatment for business secured; to obtain special concessions or for special
concessions already obtained for; or in violation of any statutory prohibition.
3.13 AGREEMENTS.
----------
(a) Except as otherwise disclosed in writing to Buyer, all of the contracts
between Company and its vendors, suppliers and customers have been disclosed to
Buyer. Except as otherwise disclosed to Buyer, such contracts are in full force
and effect and, to Seller's knowledge, there is no intent to terminate or cancel
any of such contracts nor is the Company in default under such contracts.
(b) The Real Property Lease Agreement disclosed to Buyer represents the only
real estate used by Company in its business. The Seller is in full and complete
compliance with the terms of the Real Property Lease Agreement and the Seller is
not aware of any claims or threatened claims related to that agreement.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
--------------------------------------------------------------------
(a) Since its organization, Company has been in full compliance with each
legal requirement that is or was applicable to Company or to the conduct or
operation of its business or the ownership or use of its assets.
(b) Except as otherwise disclosed to Buyer, no governmental authorization is
required for the Company to conduct its business.
3.15 LEGAL PROCEEDINGS. Except as otherwise disclosed to Buyer, there are
------------------
no legal, administrative or other proceedings, investigations or inquiries,
errors or omissions or other claims, judgments, injunctions or restrictions,
either threatened, pending or outstanding against or involving Company or any of
its assets, business properties or employees, nor does Seller know or have
reasonable grounds to know of any basis for any proceedings, investigations or
inquiries, errors, omissions or other claims, judgments, injunctions or
restrictions.
3.16 INSURANCE. Seller has delivered to Buyer true and complete copies of
---------
all policies of insurance to which the Company is a party. All policies to
which the Company is a party are valid, outstanding and enforceable and, taken
together, provide adequate insurance coverage for the assets and the operations
of the Company, its assets and its business properties.
3.17 ENVIRONMENTAL MATTERS.
----------------------
(a) Company is and at all times has been in full compliance with, and has
not been and is not in violation of or liable under any federal, state or local
environmental laws.
(b) There are no pending or, to the knowledge of Seller, any threatened
claims arising under or pursuant to any federal, state or local environmental
laws with respect to or affecting the Company, its assets or business
properties.
(c) There are no hazardous materials present on the leasehold property
occupied by the Company nor, to Seller's knowledge, has there been any release
of any hazardous materials at or on these leasehold facilities.
(d) Company has delivered to Buyer true and complete copies and results of
any reports, studies, analysis, tests or monitoring pertaining to hazardous
materials on the leasehold property.
3.18 DISCLOSURE.
----------
(a) No representation or warranty of Seller in this Agreement omits to state
a material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) There is no fact known to Seller that has specific application to
Company and that materially or adversely affects the assets, business
properties, prospects, financial conditions or operations of Company that has
not been set forth in this Agreement.
3.19 BROKERS OR FINDERS. Seller and their agents have incurred no
--------------------
obligation or liability, contingent or otherwise, for brokerage or finder's fees
or agent's commissions or similar payments in connection with this Agreement.
Seller acknowledges that it has engaged LBW Management, LLC, as consultants, and
will pay any LBW fee out of the proceeds of this sale. Buyer shall have no
obligation to LBW.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
-----------------------------------------
to the best of its knowledge, to Seller as follows:
4.1 AUTHORITY; NO CONFLICT.
------------------------
(a) This Agreement constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
(b) Buyer is not and will not be required to give any notice or obtain any
consent from any person in connection with the execution and delivery of this
Agreement or the consummation or performance of the contemplated transactions.
4.2 BROKERS OR FINDERS. Buyer and its agents have incurred no obligation or
------------------
liability, contingent or otherwise, for brokerage or finder's fees or agent's
commissions or other similar payment in connection with this Agreement.
4.3 XXXX XXXXXXX MATTERS. Buyer acknowledges that Seller is under no
-----------------------
obligation to satisfy any commission, royalty, or purchase option due to Xxxx
Xxxxxxx. Prior to or at Closing, Buyer will have negotiated satisfaction of any
such commission, royalty, or purchase option, and indemnifies and holds Seller
harmless from and against any claim by Xxxx Xxxxxxx for any commission, royalty,
or purchase option.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation
----------------------------------------------------
to complete this transaction on the terms set forth herein and to take such
other action as is required to be taken by Buyer at Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
any of which may be waived by Buyer, in whole or in part:
5.1 ACCURACY OF REPRESENTATIONS. All of Seller's representations and
-----------------------------
warranties in this Agreement, individually and collectively, must have been
accurate in all material respects as of the Effective Date.
5.2 RELATED AGREEMENTS. The Buyer and Xxxx Xxxxxxx will have approved,
-------------------
executed and delivered the Related Agreements.
5.3 APPROVAL OF CLOSING BALANCE SHEET. Buyer will have approved the Closing
---------------------------------
Balance Sheet.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
----------------------------------------------------------
6.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
-----------------------------
warranties in this Agreement must have been accurate in all material respects as
of the Effective Date.
6.2 RELATED AGREEMENTS. Xxxx Xxxxxxxxxx, Buyer and Xxxx Xxxxxxx will have
-------------------
approved, executed and delivered the Related Agreements.
6.3 RELEASE OF GUARANTEES. Buyer will have either (1) secured the release
------------------------
of Members, or (2) indemnified the Members.from all known ongoing personal
guarantees of any and all Company debt and obligations, including vendors and
dealer floor plan loans.
6.4 LETTER OF CREDIT. Buyer will guarantee, and obtain the further
------------------
guarantee from Dutchess Private Equities Fund, Ltd of the $275,000 Mercury
Marine and GE letter of credit with State Bank of Fargo as set forth under
Section 2.2(f).
7. TERMINATION EVENTS.
-------------------
7.1 This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) By either Buyer or Seller if a material Breach of any provision of this
Agreement or related agreements have been committed by the other party and such
Breach has not been waived;
(b) By Buyer, if any of the conditions in Section 5 have not been satisfied
as of the Closing or if the satisfaction of such a condition is or becomes
impossible and Buyer has not waived such condition on or before Closing; or
(c) By Seller, if any of the conditions in Section 6 have not been satisfied
as of the Closing or if the satisfaction of any such a condition is or becomes
impossible and Seller has not waived such condition on or before the closing.
(d) By mutual consent of Buyer and Seller; or
(e) By either Buyer or Seller if the Closing has not occurred on or before
February 1, 2007, or such later date as the parties may agree upon.
7.2 EFFECT OF TERMINATION. Each party's right of termination under Section
----------------------
7.1 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If the Agreement is terminated pursuant to Section 7.1, all further
obligations of the parties under this Agreement will terminate; provided,
however, if this Agreement is terminated by a party because of a breach of this
Agreement by the other party, the terminating the party's right to pursue all
legal remedies will survive such termination unimpaired.
8. SURVIVAL OF WARRANTIES; INDEMNIFICATION.
------------------------------------------
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
----------------------------------------------
warranties contained in this Agreement, any Schedule and any certificate
delivered at the Closing of the Seller or Buyer shall survive the Closing and be
unaffected by any investigation made by or on behalf of any party hereto.
Anything in this Section 8.1 or elsewhere in this Agreement to the contrary
------------
notwithstanding, neither Seller nor Buyer may make any claim or demand against
the other based upon any alleged breach, untruth, inaccuracy of, or error in,
any representation or warranty or failure to perform any of the covenants,
conditions or agreements set forth in this Agreement unless such claim or demand
be in writing and delivered to the party alleged to have committed such breach
or made such untruthful, inaccurate or erroneous representation or warranty or
failed to perform such covenant, condition or agreement within (a) thirty-six
(36) months from the Closing Date, to the extent related to non-tax matters, and
(b) the applicable statute of limitations (including extensions thereof) to the
extent related to tax matters.
8.2 SELLER'S' INDEMNIFICATION OBLIGATIONS. Subject to the limitations in
---------------------------------------
this Section and under Subsection 8.3, the Seller agrees, jointly and
severally, to indemnify, defend, and hold harmless the Buyer against any and all
claims to the extent such claims are based upon, arise out of or relate to any
inaccurate, untruthful or erroneous representation or any breach of any warranty
or any failure to perform any of the covenants, conditions or agreements of
Seller set forth in this Agreement or in any certificate delivered pursuant
hereto.
8.3 BUYER'S INDEMNIFICATION OBLIGATIONS. Buyer agrees to indemnify, defend
------------------------------------
and hold harmless Members against any and all claims to the extent that such
claims are based upon, arise out of or relate to any inaccurate, untruthful or
erroneous representation or any breach of any warranty or any failure to perform
any of the covenants, conditions or agreements of Buyer set forth in this
Agreement or in any certificates delivered pursuant hereto.
8.4 CONDITIONS OF INDEMNITY. The indemnification provided for in
-------------------------
subsections 8.2 and 8.3 is subject to the following conditions:
--
(a) No indemnity is required to the extent any claim is covered under any
policy of insurance obtained by Company;
(b) Buyer is not entitled to indemnity for any claim arising out of any
matter to the extent Seller establishes that the liability was incorporated into
the Closing Balance Sheet.; and
(c) Indemnity is required only after and to the extent that the aggregate
amount of all claims covered by the indemnity running to such party's benefit
exceeds the aggregate sum of $100,000 (the "Basket").
(d) Any claim for indemnification hereunder must be asserted within the
applicable time period referred to in Section 8.1.
------------
8.5 CLAIM. As used in this Section 8 the word "claim" shall mean any and
----- ---------
all liabilities, obligations, losses, damages, deficiencies, claims,
assessments, penalties, actions, proceedings, suits and judgments of whatever
kind and nature and all costs and expenses (including, without limitation,
reasonable attorneys' fees) relating thereto.
9. MISCELLANEOUS.
-------------
(a) NOTHIRD PARTY BENEFICIARIES. This Agreement shall not confer any rights
---------------------------
or remedies upon any person other than the Buyer and Seller and their
respective successors and permitted assigns.
(b) ENTIRE AGREEMENT. This Agreement (including the documents referred to
-----------------
herein) and the Related Agreements constitute the entire agreement among the
parties and supersedes any prior understandings, agreements, or representations
by or among the parties, written or oral, to the extent they related in any way
to the subject matter hereof.
(c) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other.
(d) COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
---
together will constitute one and the same instrument.
(e) HEADINGS. The section headings contained in this Agreement are inserted
--------
for convenience only and shall not affect in any way the meaning of
interpretation of this Agreement.
(f) GOVERNING LAW. The Agreement shall be governed by and construed in
--------------
accordance with the domestic laws of the State of North Dakota without giving
effect to any choice or conflict of law provision or rule (whether of the State
of North Dakota or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of North Dakota.
(g) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement
----------------------
shall be valid unless the same shall be in writing and signed by Buyer, the
Company and the Members. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(h) CONSTRUCTION. The parties have participated jointly in the negotiation
------------
and drafting of this Agreement.
(i) ENFORCEABILITY. If any provision of this Agreement or its application
--------------
to any person or circumstance is invalid or unenforceable, then the remainder of
this Agreement or the application of the provision to other persons or
circumstances shall not be affected. If any provision or application is invalid
or unenforceable, then a suitable and equitable provision shall be substituted
to carry out, as far as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable provision.
(j) COOPERATION AFTER CLOSING. Each party will cooperate, and will use its
--------------------------
best efforts to have its officers, directors and other employees cooperate, with
the other party at its request, on and after the Closing Date, in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes relating to adjustment of federal
income and other taxes of Seller for all periods prior to the Closing Date and
in connection with any such other actions, proceedings, arrangements or disputes
involving either party or based upon any of Seller's contracts, agreements, acts
or omissions which were in effect or occurred on or prior to the Closing Date.
Seller agrees that it will, at any time and from time to time after the Closing
Date, upon request of Buyer, take or cause to be taken such further action and
execute and deliver or cause to be executed and delivered all such further
documents as may be reasonably required for the assigning, transferring,
delivering, assuring and confirming to Buyer, or for aiding or assisting in
collecting or reducing to possession, any or all of the subject Assets to be
sold, transferred, assigned and delivered hereunder, including, without
limitation, payments received by Seller with respect to Receivables.
(k) PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity with
--------------------
respect to this Agreement or the contemplated transactions will be issued, if at
all, at such time and in such manner as Buyer determines.
(l) NOTICES. All notices, consents, waivers and other communications under
--------
this Agreement shall be given in writing by certified mail, signed return
receipt requested, which, unless otherwise designated by a party, shall be
addressed as follows:
To Seller: Xxxxx X. Xxxx
Xxxxxxxx & Xxxxxxxx
State Bank Center, Suite 302
3100 13th Avenue SW
X.X. Xxx 00000
Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail:xxxxxx@xxxxxxxxxxxxxxxx.xxx
To Buyer: Ms. Xxxxxx Xxxxxxxx, President &
CEO
Challenger Powerboats, Inc.
000 Xxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
P (000) 000-0000
F (000) 000-0000
with a copy to:
Xx. Xxxxxxx Xxxxxxxx
0000 Xx. 00, Xxxxx 000
XxXxxxxxxxxxx, XX 00000
P (000) 000-0000
F (000) 000-0000
(m) EFFECTIVE DATE.The parties agree that the effective date of this
----------------
agreement is January 1, 2007 for operational, tax and accounting treatment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
SELLER
IMAR Group, LLC.
By /s/ Xxxx Xxxxxxxx
------------------
Xxxx Xxxxxxxx CEO/President
/s/ Xxxx Xxxxxxxxx
-------------------
Xxxx Xxxxxxxxx, Member and Note Holder
/s/ Xxxxx Xxxxx
----------------
Xxxxx Xxxxx, Member Note Holder
/s/ Xxxxxx Xxxx
----------------
Xxxxxx Xxxx, Member and Note Holder
/s/ Xxxx Xxxxxxx
-----------------
Xxxx Xxxxxxx, Member
/s/ Xxxx Xxxxxxxxxx
--------------------
Xxxx Xxxxxxxxxx, Member
/s/ Xxx Xxxxxx
---------------
Xxx Xxxxxx, Member and Note Holder
/s/ Xxxx Xxxxxxxxxx
--------------------
Xxxx Xxxxxxxxxx, Member and Note Holder
North Dakota Development Fund, Member
By /s/ Xxxx Xxxxxxxx
------------------
Xxxx Xxxxxxxx, President
BUYER
Challenger Powerboats, Inc.
By /s/ Xxxxxx Xxxxxxxx
-------------------
Xxxxxx Xxxxxxxx, President
