Document:

Exhibit 10.21(b) - Warrant dated November 1, 2006

    Exhibit
      10.21(b)

     

    Execution
      Copy 

     

    WARRANT

     

    THE
      SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
      SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
      SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
      SAID
      ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT.

     

     

    NEWGOLD,
      INC.

     

     

    Warrant
      To Purchase Common Stock

     

    
      	
              Warrant
                No.: NGLD-2-2

               

               

            	
              Number
                of Shares:         1,500,000

              Warrant
                Exercise Price:        $0.60

              Expiration
                Date:      November 1,
                2010

            

    

    

    Date
      of
      Issuance: November 1, 2006

    

    Newgold,
      Inc., a Delaware corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, Cornell
      Capital Partners, LP
      (the
“Holder”),
      the
      registered holder hereof or its permitted assigns, is entitled, subject to
      the
      terms set forth below, to purchase from the Company upon surrender of this
      Warrant, at any time or times on or after the date hereof, but not after
      11:59 P.M. Eastern Time on the Expiration Date (as defined herein) One
      Million Five Hundred Thousand (1,500,000) fully paid and nonassessable shares
      of
      Common Stock (as defined herein) of the Company (the “Warrant
      Shares”)
      at the
      exercise price per share provided in Section 1(b) below or as subsequently
      adjusted; provided, however, that in no event shall the holder be entitled
      to
      exercise this Warrant for a number of Warrant Shares in excess of that number
      of
      Warrant Shares which, upon giving effect to such exercise, would cause the
      aggregate number of shares of Common Stock beneficially owned by the holder
      and
      its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
      following such exercise, except within sixty (60) days of the Expiration Date
      (however, such restriction may be waived by Holder (but only as to itself and
      not to any other holder) upon not less than 65 days prior notice to the
      Company). For purposes of the foregoing proviso, the aggregate number of shares
      of Common Stock beneficially owned by the holder and its affiliates shall
      include the number of shares of Common 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Stock
      issuable upon exercise of this Warrant with respect to which the determination
      of such proviso is being made, but shall exclude shares of Common Stock which
      would be issuable upon (i) exercise of the remaining, unexercised Warrants
      beneficially owned by the holder and its affiliates and (ii) exercise or
      conversion of the unexercised or unconverted portion of any other securities
      of
      the Company beneficially owned by the holder and its affiliates (including,
      without limitation, any convertible notes or preferred stock) subject to a
      limitation on conversion or exercise analogous to the limitation contained
      herein. Except as set forth in the preceding sentence, for purposes of this
      paragraph, beneficial ownership shall be calculated in accordance with Section
      13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
      Warrant, in determining the number of outstanding shares of Common Stock a
      holder may rely on the number of outstanding shares of Common Stock as reflected
      in (1) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be,
      (2) a more recent public announcement by the Company or (3) any other notice
      by
      the Company or its transfer agent setting forth the number of shares of Common
      Stock outstanding. Upon the written request of any holder, the Company shall
      promptly, but in no event later than one (1) Business Day following the receipt
      of such notice, confirm in writing to any such holder the number of shares
      of
      Common Stock then outstanding. In any case, the number of outstanding shares
      of
      Common Stock shall be determined after giving effect to the exercise of Warrants
      (as defined below) by such holder and its affiliates since the date as of which
      such number of outstanding shares of Common Stock was reported.

     

    Section
      1.  

     

    (a)  This
      Warrant is the common stock purchase warrant (the “Warrant”)
      issued
      pursuant to the Securities Purchase Agreement (“Securities
      Purchase Agreement”)
      dated
      September 26, 2006 between the Company and the Buyers listed on Schedule I
      thereto.

     

    (b)  Definitions.
      The
      following words and terms as used in this Warrant shall have the following
      meanings:

     

    (i)  “Approved
      Stock Plan”
means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company’s securities may be issued to any
      employee, consultant, officer or director for services provided to the
      Company.

     

    (ii)  “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the City of New York are authorized or required by law to remain
      closed.

     

    (iii)  “Closing
      Bid Price”
means
      the closing bid price of Common Stock as quoted on the Principal Market (as
      reported by Bloomberg Financial Markets (“Bloomberg”)
      through its “Volume at Price” function).

     

    (iv)  “Common
      Stock”
means
      (i) the Company’s common stock, par value $0.001 per share, and
      (ii) any capital stock into which such Common Stock shall have been changed
      or any capital stock resulting from a reclassification of such Common
      Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (v)  “Event
      of Default”
means
      an event of default under the Securities Purchase Agreement, the Convertible
      Debentures issued in connection therewith or the Investor’s Registration Rights
      Agreement.

     

    (vi)  “Excluded
      Securities”
means,
      provided such security is issued at a price which is greater than or equal
      to
      the arithmetic average of the Closing Bid Prices of the Common Stock for the
      ten
      (10) consecutive trading days immediately preceding the date of issuance, any
      of
      the following, other than shares issued to the Holder hereunder or upon
      conversion of the Convertible Debentures issued pursuant to the Securities
      Purchase Agreement: (a) any issuance by the Company of securities in connection
      with a strategic partnership or a joint venture (the primary purpose of which
      is
      not to raise equity capital), (b) any issuance by the Company of securities
      as
      consideration for a merger or consolidation or the acquisition of a business,
      product, license, or other assets of another person or entity and (c) options
      to
      purchase shares of Common Stock, provided (I) such options are issued after
      the
      date of this Warrant to employees of the Company within thirty (30) days of
      such
      employee’s starting his employment with the Company, and (II) the exercise price
      of such options is not less than the Closing Bid Price of the Common Stock
      on
      the date of issuance of such option.

     

    (vii)  “Expiration
      Date”
means
      the date four (4) years from the Issuance Date of this Warrant or, if such
      date
      falls on a Saturday, Sunday or other day on which banks are required or
      authorized to be closed in the City of New York or the State of New York or
      on
      which trading does not take place on the Principal Exchange or automated
      quotation system on which the Common Stock is traded (a “Holiday”),
      the
      next date that is not a Holiday.

     

    (viii)  “Issuance
      Date”
means
      the date hereof.

     

    (ix)  “Options”
means
      any rights, warrants or options to subscribe for or purchase Common Stock or
      Convertible Securities. 

     

    (x)  “Other
      Securities”
means
      other than shares issued to the Holder hereunder or upon conversion of the
      Convertible Debentures issued pursuant to the Securities Purchase Agreement
      (i) those options and warrants of the Company issued prior to, and
      outstanding on, the Issuance Date of this Warrant, (ii) the shares of Common
      Stock issuable on exercise of such options and warrants, provided such options
      and warrants are not amended after the Issuance Date of this Warrant and
      (iii) the shares of Common Stock issuable upon exercise of this Warrant.

     

    (xi)  “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (xii)  “Principal
      Market”
means
      the New York Stock Exchange, the American Stock Exchange, the Nasdaq National
      Market, the Nasdaq SmallCap Market, whichever is at the time the principal
      trading exchange or market for such security, or the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg or,
      if
      no bid or sale information is reported for such security by Bloomberg, then
      the
      average of the bid prices of each of the market makers for such security as
      reported in the “pink sheets” by the National Quotation Bureau,
      Inc.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (xiii)  “Securities
      Act”
means
      the Securities Act of 1933, as amended. 

     

    (xiv)  “Warrant”
means
      this Warrant and all Warrants issued in exchange, transfer or replacement
      thereof. 

     

    (xv)  “Warrant
      Exercise Price”
shall
      be $0.60 or as subsequently adjusted as provided in Section 8 hereof.

     

    (xvi)  “Warrant
      Shares”
means
      the shares of Common Stock issuable at any time upon exercise of this Warrant.
      

     

    (c)  Other
      Definitional Provisions. 

     

    (i)  Except
      as
      otherwise specified herein, all references herein (A) to the Company shall
      be deemed to include the Company’s successors and (B) to any applicable law
      defined or referred to herein shall be deemed references to such applicable
      law
      as the same may have been or may be amended or supplemented from time to time.
      

     

    (ii)  When
      used
      in this Warrant, the words “herein”,
      “hereof”,
      and
“hereunder”
      and
      words of similar import, shall refer to this Warrant as a whole and not to
      any
      provision of this Warrant, and the words “Section”,
      “Schedule”,
      and
“Exhibit”
shall
      refer to Sections of, and Schedules and Exhibits to, this Warrant unless
      otherwise specified. 

     

    (iii)  Whenever
      the context so requires, the neuter gender includes the masculine or feminine,
      and the singular number includes the plural, and vice versa. 

     

    Section
      2.  Exercise
      of Warrant.
      

     

    Subject
      to the terms and conditions hereof, this Warrant may be exercised by the holder
      hereof then registered on the books of the Company, pro rata as hereinafter
      provided, at any time on any Business Day on or after the opening of business
      on
      such Business Day, commencing with the first day after the date hereof, and
      prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of
      a written notice, in the form of the subscription notice attached as
Exhibit
      A
      hereto
      (the “Exercise
      Notice”),
      of
      such holder’s election to exercise this Warrant, which notice shall specify the
      number of Warrant Shares to be purchased, payment to the Company of an
      amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares
      being purchased, multiplied by the number of Warrant Shares (at the
      applicable Warrant Exercise Price) as to which this Warrant is being
      exercised (plus any applicable issue or transfer taxes) (the “Aggregate
      Exercise Price”)
      in
      cash or wire transfer of immediately available funds and the surrender of this
      Warrant (or an indemnification undertaking with respect to this Warrant in
      the
      case of its loss, theft or destruction) to a common carrier for overnight
      delivery to the Company as soon as practicable following such date
      (“Cash
      Basis”)
      In the
      event of any exercise of the rights represented by this Warrant in compliance
      with this Section 2, the Company shall on or before the fifth (5th)
      Business Day following the date of receipt of the Exercise Notice, the Aggregate
      Exercise Price and this Warrant (or an indemnification undertaking with respect
      to 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    this
      Warrant in the case of its loss, theft or destruction) and the receipt of the
      representations of the holder specified in Section 6 hereof, if requested by
      the
      Company (the “Exercise
      Delivery Documents”),
      and
      if the Common Stock is DTC eligible, credit such aggregate number of shares
      of
      Common Stock to which the holder shall be entitled to the holder’s or its
      designee’s balance account with The Depository Trust Company; provided, however,
      if the holder who submitted the Exercise Notice requested physical delivery
      of
      any or all of the Warrant Shares, or, if the Common Stock is not DTC eligible
      then the Company shall, on or before the fifth (5th)
      Business Day following receipt of the Exercise Delivery Documents, authorize
      the
      issuance and surrender to a common carrier for overnight delivery to the address
      specified in the Exercise Notice, a certificate, registered in the name of
      the
      holder, for the number of shares of Common Stock to which the holder shall
      be
      entitled pursuant to such request. Upon delivery of the Exercise Notice and
      Aggregate Exercise Price referred to in clause (i) or (ii) above the holder
      of this Warrant shall be deemed for all corporate purposes to have become the
      holder of record of the Warrant Shares with respect to which this Warrant has
      been exercised. In the case of a dispute as to the determination of the Warrant
      Exercise Price, the Closing Bid Price or the arithmetic calculation of the
      Warrant Shares, the Company shall promptly issue to the holder the number of
      Warrant Shares that is not disputed and shall submit the disputed determinations
      or arithmetic calculations to the holder via facsimile within one (1) Business
      Day of receipt of the holder’s Exercise Notice. 

     

    (a)  If
      the
      holder and the Company are unable to agree upon the determination of the Warrant
      Exercise Price or arithmetic calculation of the Warrant Shares within one (1)
      day of such disputed determination or arithmetic calculation being submitted
      to
      the holder, then the Company shall immediately submit via facsimile (i) the
      disputed determination of the Warrant Exercise Price or the Closing Bid Price
      to
      an independent, reputable investment banking firm or (ii) the disputed
      arithmetic calculation of the Warrant Shares to its independent, outside
      accountant. The Company shall cause the investment banking firm or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the holder of the results no later than forty-eight
      (48) hours from the time it receives the disputed determinations or
      calculations. Such investment banking firm’s or accountant’s determination or
      calculation, as the case may be, shall be deemed conclusive absent manifest
      error.

     

    (b)  Unless
      the rights represented by this Warrant shall have expired or shall have been
      fully exercised, the Company shall, as soon as practicable and in no event
      later
      than five (5) Business Days after any exercise and at its own expense, issue
      a
      new Warrant identical in all respects to this Warrant exercised except it shall
      represent rights to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant exercised, less the number
      of Warrant Shares with respect to which such Warrant is exercised.

     

    (c)  No
      fractional Warrant Shares are to be issued upon any pro rata exercise of this
      Warrant, but rather the number of Warrant Shares issued upon such exercise
      of
      this Warrant shall be rounded up or down to the nearest whole
      share.

     

    If
      the
      Company or its Transfer Agent shall fail for any reason or for no reason to
      issue to the holder within ten (10) days of receipt of the Exercise
      Delivery Documents, a certificate for the number of Warrant Shares to which
      the
      holder is entitled or to credit the holder’s balance account with The Depository
      Trust Company for such number of Warrant Shares to which the 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    holder
      is
      entitled upon the holder’s exercise of this Warrant, the Company shall, in
      addition to any other remedies under this Warrant or otherwise available to
      such
      holder and/or the Company fails to deliver a new Warrant to the holder for
      the
      number of Warrant Shares to which such holder is entitled pursuant to Section
      2
      hereof, then, pay as additional damages in cash to such holder on each day
      the
      issuance of such certificate for Warrant Shares is not timely effected an amount
      equal to 0.25% of the product of (A) the sum of the number of Warrant Shares
      not
      issued to the holder on a timely basis and to which the holder is entitled,
      and
      (B) the Closing Bid Price of the Common Stock for the trading day immediately
      preceding the last possible date which the Company could have issued such Common
      Stock to the holder without violating this Section 2.

     

    Section
      3.  Covenants
      as to Common Stock.
      The
      Company hereby covenants and agrees as follows:

     

    (a)  This
      Warrant is, and any Warrants issued in substitution for or replacement of this
      Warrant will upon issuance be, duly authorized and validly issued.

     

    (b)  All
      Warrant Shares which may be issued upon the exercise of the rights represented
      by this Warrant will, upon issuance, be validly issued, fully paid and
      nonassessable and free from all taxes, liens and charges with respect to the
      issue thereof.

     

    (c)  During
      the period within which the rights represented by this Warrant may be exercised,
      the Company will at all times have authorized and reserved at least one hundred
      percent (100%) of the number of shares of Common Stock needed to provide for
      the
      exercise of the rights then represented by this Warrant and the par value of
      said shares will at all times be less than or equal to the applicable Warrant
      Exercise Price. If at any time the Company does not have a sufficient number
      of
      shares of Common Stock authorized and available, then the Company shall call
      and
      hold a special meeting of its stockholders within sixty (60) days of that
      time for the sole purpose of increasing the number of authorized shares of
      Common Stock.

     

    (d)  If
      at any
      time after the date hereof the Company shall file a registration statement,
      the
      Company shall include the Warrant Shares issuable to the Holder, pursuant to
      the
      terms of this Warrant and shall maintain, so long as any other shares of Common
      Stock shall be so listed, such listing of all Warrant Shares from time to time
      issuable upon the exercise of this Warrant; and the Company shall so list on
      each national securities exchange or automated quotation system, as the case
      may
      be, and shall maintain such listing of, any other shares of capital stock of
      the
      Company issuable upon the exercise of this Warrant if and so long as any shares
      of the same class shall be listed on such national securities exchange or
      automated quotation system.

     

    (e)  The
      Company will not, by amendment of its Certificate of Incorporation or through
      any reorganization, transfer of assets, consolidation, merger, dissolution,
      issue or sale of securities, or any other voluntary action, avoid or seek to
      avoid the observance or performance of any of the terms to be observed or
      performed by it hereunder, but will at all times in good faith assist in the
      carrying out of all the provisions of this Warrant and in the taking of all
      such
      action as may reasonably be requested by the holder of this Warrant in order
      to
      protect the exercise privilege of the holder of this Warrant against dilution
      or
      other impairment, consistent with the tenor and purpose of this Warrant. The
      Company will not increase the par value of any shares of Common Stock receivable
      upon the exercise of this Warrant above the Warrant Exercise Price then in
      effect, and (ii) will take all such actions as may be necessary or
      appropriate in order that the Company may validly and legally issue fully paid
      and nonassessable shares of Common Stock upon the exercise of this
      Warrant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f)  This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation or acquisition of all or substantially all of the Company’s
      assets.

     

    Section
      4.  Taxes.
      The
      Company shall pay any and all taxes, except any applicable withholding, incurred
      by the Company, which may be payable with respect to the issuance and delivery
      of Warrant Shares upon exercise of this Warrant.

     

    Section
      5.  Warrant
      Holder Not Deemed a Stockholder.
      Except
      as otherwise specifically provided herein, no holder, as such, of this Warrant
      shall be entitled to vote or receive dividends or be deemed the holder of shares
      of capital stock of the Company for any purpose, nor shall anything contained
      in
      this Warrant be construed to confer upon the holder hereof, as such, any of
      the
      rights of a stockholder of the Company or any right to vote, give or withhold
      consent to any corporate action (whether any reorganization, issue of stock,
      reclassification of stock, consolidation, merger, conveyance or otherwise),
      receive notice of meetings, receive dividends or subscription rights, or
      otherwise, prior to the issuance to the holder of this Warrant of the Warrant
      Shares which he or she is then entitled to receive upon the due exercise of
      this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on such holder to purchase any securities (upon
      exercise of this Warrant or otherwise) or as a stockholder of the Company,
      whether such liabilities are asserted by the Company or by creditors of the
      Company. Notwithstanding this Section 5, the Company will provide the holder
      of
      this Warrant with copies of the same notices and other information given to
      the
      stockholders of the Company generally, contemporaneously with the giving thereof
      to the stockholders.

     

    Section
      6.  Representations
      of Holder.
      The
      holder of this Warrant, by the acceptance hereof, represents that it is
      acquiring this Warrant and the Warrant Shares for its own account for investment
      only and not with a view towards, or for resale in connection with, the public
      sale or distribution of this Warrant or the Warrant Shares, except pursuant
      to
      sales registered or exempted under the Securities Act; provided, however, that
      by making the representations herein, the holder does not agree to hold this
      Warrant or any of the Warrant Shares for any minimum or other specific term
      and
      reserves the right to dispose of this Warrant and the Warrant Shares at any
      time
      in accordance with or pursuant to a registration statement or an exemption
      under
      the Securities Act. The holder of this Warrant further represents, by acceptance
      hereof, that, as of this date, such holder is an “accredited investor” as such
      term is defined in Rule 501(a)(1) of Regulation D promulgated by the
      Securities and Exchange Commission under the Securities Act (an “Accredited
      Investor”).
      Upon
      exercise of this Warrant, except pursuant to an effective registration statement
      covering the Warrant Shares, the holder shall, if requested by the Company,
      confirm in writing, in a form satisfactory to the Company, that the Warrant
      Shares so purchased are being acquired solely for the holder’s own account and
      not as a nominee for any other party, for investment, and not with a view toward
      distribution or resale and that such holder is an Accredited Investor. If such
      holder cannot make such representations because they would be factually
      incorrect, it shall be a condition to such holder’s exercise of this Warrant
      that the Company receive such other representations as the Company considers
      reasonably necessary to assure the Company that the issuance of its securities
      upon exercise of this Warrant shall not violate any United States or state
      securities laws.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      7.  Ownership
      and Transfer.

     

    (a)  The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee. The Company may treat the person in whose
      name any Warrant is registered on the register as the owner and holder thereof
      for all purposes, notwithstanding any notice to the contrary, but in all events
      recognizing any transfers made in accordance with the terms of this Warrant
      and
      accompanied by an opinion of counsel from counsel to the Holder in a generally,
      in a generally acceptable form, to the effect that such securities to be sold,
      assigned or transferred may be sold, assigned or transferred pursuant to an
      exemption from such registration requirements.

     

    Section
      8.  Adjustment
      of Warrant Exercise Price and Number of Shares.
      The
      Warrant Exercise Price and the number of shares of Common Stock issuable upon
      exercise of this Warrant shall be adjusted from time to time as
      follows:

     

    (a)  Adjustment
      of Warrant Exercise Price and Number of Shares upon Issuance of Common
      Stock.
      If and
      whenever on or after the Issuance Date of this Warrant, the Company issues
      or
      sells, or is deemed to have issued or sold, any shares of Common
      Stock (other than (i) Excluded Securities, (ii) shares of Common Stock
      which are issued or deemed to have been issued by the Company in connection
      with
      an Approved Stock Plan, or (iii) the Other Securities) for a consideration
      per
      share less than a price (the “Applicable
      Price”)
      equal
      to the Warrant Exercise Price in effect immediately prior to such issuance
      or
      sale, then immediately after such issue or sale the Warrant Exercise Price
      then
      in effect shall be reduced to an amount equal to such consideration per share.
      Upon each such adjustment of the Warrant Exercise Price hereunder, the number
      of
      Warrant Shares issuable upon exercise of this Warrant shall be adjusted to
      the
      number of shares determined by multiplying the Warrant Exercise Price in effect
      immediately prior to such adjustment by the number of Warrant Shares issuable
      upon exercise of this Warrant immediately prior to such adjustment and dividing
      the product thereof by the Warrant Exercise Price resulting from such
      adjustment.

     

    (b)  Effect
      on Warrant Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Warrant Exercise Price under Section 8(a)
      above, the following shall be applicable:

     

    (i)  Issuance
      of Options.
      If
      after the date hereof, the Company in any manner grants any Options and the
      lowest price per share for which one share of Common Stock is issuable upon
      the
      exercise of any such Option or upon conversion or exchange of any convertible
      securities issuable upon exercise of any such Option is less than the Applicable
      Price, then such share of Common Stock shall be deemed to be outstanding and
      to
      have been issued and sold by the Company at the time of the granting or sale
      of
      such Option for such price per share. For purposes of this Section 8(b)(i),
      the
      lowest price per share for which one share of 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Common
      Stock is issuable upon exercise of such Options or upon conversion or exchange
      of such Convertible Securities shall be equal to the sum of the lowest amounts
      of consideration (if any) received or receivable by the Company with respect
      to
      any one share of Common Stock upon the granting or sale of the Option, upon
      exercise of the Option or upon conversion or exchange of any convertible
      security issuable upon exercise of such Option. No further adjustment of the
      Warrant Exercise Price shall be made upon the actual issuance of such Common
      Stock or of such convertible securities upon the exercise of such Options or
      upon the actual issuance of such Common Stock upon conversion or exchange of
      such convertible securities.

     

    (ii)  Issuance
      of Convertible Securities.
      If the
      Company, other than shares issued to the Holder hereunder or upon conversion
      of
      the Convertible Debentures issued pursuant to the Securities Purchase Agreement,
      in any manner issues or sells any convertible securities and the lowest price
      per share for which one share of Common Stock is issuable upon the conversion
      or
      exchange thereof is less than the Applicable Price, then such share of Common
      Stock shall be deemed to be outstanding and to have been issued and sold by
      the
      Company at the time of the issuance or sale of such convertible securities
      for
      such price per share. For the purposes of this Section 8(b)(ii), the lowest
      price per share for which one share of Common Stock is issuable upon such
      conversion or exchange shall be equal to the sum of the lowest amounts of
      consideration (if any) received or receivable by the Company with respect to
      one
      share of Common Stock upon the issuance or sale of the convertible security
      and
      upon conversion or exchange of such convertible security. No further adjustment
      of the Warrant Exercise Price shall be made upon the actual issuance of such
      Common Stock upon conversion or exchange of such convertible securities, and
      if
      any such issue or sale of such convertible securities is made upon exercise
      of
      any Options for which adjustment of the Warrant Exercise Price had been or
      are
      to be made pursuant to other provisions of this Section 8(b), no further
      adjustment of the Warrant Exercise Price shall be made by reason of such issue
      or sale. 

     

    (iii)  Change
      in Option Price or Rate of Conversion.
      Other
      than shares issued to the Holder hereunder or upon conversion of the Convertible
      Debentures issued pursuant to the Securities Purchase Agreement, if the purchase
      price provided for in any Options, the additional consideration, if any, payable
      upon the issue, conversion or exchange of any convertible securities, or the
      rate at which any convertible securities are convertible into or exchangeable
      for Common Stock changes at any time, the Warrant Exercise Price in effect
      at
      the time of such change shall be adjusted to the Warrant Exercise Price which
      would have been in effect at such time had such Options or convertible
      securities provided for such changed purchase price, additional consideration
      or
      changed conversion rate, as the case may be, at the time initially granted,
      issued or sold and the number of Warrant Shares issuable upon exercise of this
      Warrant shall be correspondingly readjusted. For purposes of this Section
      8(b)(iii), if the terms of any Option or convertible security that was
      outstanding as of the Issuance Date of this Warrant are changed in the manner
      described in the immediately preceding sentence, then such Option or convertible
      security and the Common Stock deemed issuable upon exercise, conversion or
      exchange thereof shall be deemed to have been issued as of the date of such
      change. No adjustment pursuant to this Section 8(b) shall be made if such
      adjustment would result in an increase of the Warrant Exercise Price then in
      effect.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Effect
      on Warrant Exercise Price of Certain Events.
      For
      purposes of determining the adjusted Warrant Exercise Price under
      Sections 8(a) and 8(b), the following shall be applicable:

     

    (i)  Calculation
      of Consideration Received.
      If any
      Common Stock, Options or convertible securities are issued or sold or deemed
      to
      have been issued or sold for cash, the consideration received therefore will
      be
      deemed to be the net amount received by the Company therefore. If any Common
      Stock, Options or convertible securities are issued or sold for a consideration
      other than cash, the amount of such consideration received by the Company will
      be the fair value of such consideration as determined in good faith by the
      Company’s Board of Directors, except where such consideration consists of
      marketable securities, in which case the amount of consideration received by
      the
      Company will be the market price of such securities on the date of receipt
      of
      such securities. If any Common Stock, Options or convertible securities are
      issued to the owners of the non-surviving entity in connection with any merger
      in which the Company is the surviving entity, the amount of consideration
      therefore will be deemed to be the fair value of such portion of the net assets
      and business of the non-surviving entity as is attributable to such Common
      Stock, Options or convertible securities, as the case may be. If the holders
      of
      warrants representing at least two thirds (2/3) of the Warrant Shares issuable
      upon exercise of these Warrants then outstanding indicate their disagreement,
      in
      writing, to the Company as to the Calculation of the consideration received
      within five (5) days after the occurrence of an event requiring valuation (the
      “Valuation Event”) and if such parties are unable to reach agreement within
      ten (10) days after notice from the warrant holders is received by the
      Company (the “Notification Date”), then the fair value of such consideration
      will be determined within five (5) Business Days after the
      tenth (10th)
      day
      following the Notification Date by an independent, reputable appraiser jointly
      selected by the Company and the holders of Warrants representing at least
      two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
      then
      outstanding. The determination of such appraiser shall be final and binding
      upon
      all parties and the fees and expenses of such appraiser shall be borne jointly
      by the Company and the holders of Warrants.

     

    (ii)  Integrated
      Transactions.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration as determined by the
      Company’s Board of Directors.

     

    (iii)  Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time does not include
      shares owned or held by or for the account of the Company, and the disposition
      of any shares so owned or held will be considered an issue or sale of Common
      Stock.

     

    (iv)  Record
      Date.
      If the
      Company takes a record of the holders of Common Stock for the purpose of
      entitling them (1) to receive a dividend or other distribution payable in
      Common Stock, Options or in convertible securities or (2) to subscribe for
      or purchase Common Stock, Options or convertible securities, then such record
      date will be deemed to be the date of the issue or sale of the shares of Common
      Stock deemed to have been issued or sold upon the declaration of such dividend
      or the making of such other distribution or the date of the granting of such
      right of subscription or purchase, as the case may be.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)  Adjustment
      of Warrant Exercise Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time after the date of issuance of this Warrant subdivides (by
      any stock split, stock dividend, recapitalization or otherwise) one or more
      classes of its outstanding shares of Common Stock into a greater number of
      shares, any Warrant Exercise Price in effect immediately prior to such
      subdivision will be proportionately reduced and the number of shares of Common
      Stock obtainable upon exercise of this Warrant will be proportionately
      increased. If the Company at any time after the date of issuance of this Warrant
      combines (by combination, reverse stock split or otherwise) one or more classes
      of its outstanding shares of Common Stock into a smaller number of shares,
      any
      Warrant Exercise Price in effect immediately prior to such combination will
      be
      proportionately increased and the number of Warrant Shares issuable upon
      exercise of this Warrant will be proportionately decreased. Any adjustment
      under
      this Section 8(d) shall become effective at the close of business on the
      date the subdivision or combination becomes effective.

     

    (i)  Distribution
      of Assets.
      If the
      Company shall declare or make any dividend or other distribution 

     

    (e)  Certain
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 8
      but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company’s Board of Directors will
      make an appropriate adjustment in the Warrant Exercise Price and the number
      of
      shares of Common Stock obtainable upon exercise of this Warrant so as to protect
      the rights of the holders of the Warrants; provided, except as set forth in
      section 8(d),that no such adjustment pursuant to this Section 8(f) will increase
      the Warrant Exercise Price or decrease the number of shares of Common Stock
      obtainable as otherwise determined pursuant to this Section 8.

     

    (f)  Notices.

     

    (i)  Immediately
      upon any adjustment of the Warrant Exercise Price, the Company will give written
      notice thereof to the holder of this Warrant, setting forth in reasonable
      detail, and certifying, the calculation of such adjustment.

     

    (ii)  The
      Company will give written notice to the holder of this Warrant at least ten
      (10)
      days prior to the date on which the Company closes its books or takes a record
      (A) with respect to any dividend or distribution upon the Common Stock,
      (B) with respect to any pro rata subscription offer to holders of Common
      Stock or (C) for determining rights to vote with respect to any Organic
      Change (as defined below), dissolution or liquidation, provided that such
      information shall be made known to the public prior to or in conjunction with
      such notice being provided to such holder.

     

    (iii)  The
      Company will also give written notice to the holder of this Warrant at least
      ten
      (10) days prior to the date on which any Organic Change, dissolution or
      liquidation will take place, provided that such information shall be made known
      to the public prior to or in conjunction with such notice being provided to
      such
      holder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      9.  Purchase
      Rights; Reorganization, Reclassification, Consolidation, Merger or
      Sale.

     

    (a)  In
      addition to any adjustments pursuant to Section 8 above, if at any time the
      Company grants, issues or sells any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property pro rata to the record
      holders of any class of Common Stock (the “Purchase
      Rights”),
      then
      the holder of this Warrant will be entitled, upon exercise of this Warrant,
      to
      acquire, upon the terms applicable to such Purchase Rights, the aggregate
      Purchase Rights which such holder could acquire pursuant to the number of shares
      of Common Stock acquired upon exercise of this Warrant, the date on which a
      record is taken for the grant, issuance or sale of such Purchase Rights, or,
      if
      no such record is taken, the date as of which the record holders of Common
      Stock
      are to be determined for the grant, issue or sale of such Purchase
      Rights.

     

    (b)  Any
      recapitalization, reorganization, reclassification, consolidation, merger,
      sale
      of all or substantially all of the Company’s assets to another Person or other
      transaction in each case which is effected in such a way that holders of Common
      Stock are entitled to receive (either directly or upon subsequent liquidation)
      stock, securities or assets with respect to or in exchange for Common Stock
      is
      referred to herein as an “Organic
      Change.”
Prior
      to the consummation of any (i) sale of all or substantially all of the Company’s
      assets to an acquiring Person or (ii) other Organic Change following which
      the
      Company is not a surviving entity, the Company will secure from the Person
      purchasing such assets or the successor resulting from such Organic Change
      (in
      each case, the “Acquiring
      Entity”)
      a
      written agreement (in form and substance satisfactory to the holders of Warrants
      representing at least two-thirds of the Warrant Shares issuable upon exercise
      of
      the Warrants then outstanding) to deliver to each holder of Warrants in exchange
      for such Warrants, a security of the Acquiring Entity evidenced by a written
      instrument substantially similar in form and substance to this Warrant and
      satisfactory to the holders of the Warrants (including an adjusted warrant
      exercise price equal to the value for the Common Stock reflected by the terms
      of
      such consolidation, merger or sale, and exercisable for a corresponding number
      of shares of Common Stock acquirable and receivable upon exercise of the
      Warrants without regard to any limitations on exercise, if the value so
      reflected is less than any Applicable Warrant Exercise Price immediately prior
      to such consolidation, merger or sale). Prior to the consummation of any other
      Organic Change, the Company shall make appropriate provision (in form and
      substance satisfactory to the holders of Warrants representing a
      majority of
      the
      Warrant Shares issuable upon exercise of the Warrants then outstanding) to
      insure that each of the holders of the Warrants will thereafter have the right
      to acquire and receive in lieu of or in addition to (as the case may be) the
      Warrant Shares immediately theretofore issuable and receivable upon the exercise
      of such holder’s Warrants (without regard to any limitations on exercise),
      such shares of stock, securities or assets that would have been issued or
      payable in such Organic Change with respect to or in exchange for the number
      of
      Warrant Shares which would have been issuable and receivable upon the exercise
      of such holder’s Warrant as of the date of such Organic Change (without taking
      into account any limitations or restrictions on the exercisability of this
      Warrant).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      10.  Lost,
      Stolen, Mutilated or Destroyed Warrant.
      If this
      Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly,
      on
      receipt of an indemnification undertaking (or, in the case of a mutilated
      Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
      this Warrant so lost, stolen, mutilated or destroyed.

     

    Section
      11.  Notice.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Warrant must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally;
      (ii) upon receipt, when sent by facsimile (provided confirmation of receipt
      is received by the sending party transmission is mechanically or electronically
      generated and kept on file by the sending party); or (iii) one Business Day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      	
              If
                to Holder:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Attention: Mark
                A. Angelo

            
	 	
              Telephone: (201)
                985-8300

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 
	
              With
                Copy to:

            	
              David
                Gonzalez, Esq.

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Telephone: (201)
                985-8300

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 
	
              If
                to the Company, to:

            	
              Newgold,
                Inc.

            
	 	
              400
                Capital Mall - Suite 900

            
	 	
              Sacramento,
                CA 95814

            
	 	
              Attention:
                Scott Dockter

            
	 	
              Telephone:
                (916) 449-3913

            
	 	
              Facsimile: (916)
                449-8259

            
	 	 
	
              With
                a copy to:

            	
              James
                W. Kluber 

            
	 	
              327
                Copperstone Trail

            
	 	
              Coppell,
                TX 75019

            
	 	
              Telephone: (214)
                447-5336

            
	 	
              Facsimile: (214)
                359-0306

            
	 	 
	 	
              Weintraub
                Genshlea Chediak

            
	 	
              400
                Capital Mall - 11th
                Floor

            
	 	
              Sacramento,
                CA 95814

            
	 	
              Attention:
                Roger Linn, Esq.

            
	 	
              Telephone:
                (916) 558-6000

            
	 	
              Facsimile:
                (916) 446-1611

            
	 	 

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If
      to a
      holder of this Warrant, to it at the address and facsimile number set forth
      on
Exhibit C
      hereto,
      with copies to such holder’s representatives as set forth on Exhibit C,
      or at
      such other address and facsimile as shall be delivered to the Company upon
      the
      issuance or transfer of this Warrant. Each party shall provide five days’ prior
      written notice to the other party of any change in address or facsimile number.
      Written confirmation of receipt (A) given by the recipient of such notice,
      consent, facsimile, waiver or other communication, (or (B) provided by a
      nationally recognized overnight delivery service shall be rebuttable evidence
      of
      personal service, receipt by facsimile or receipt from a nationally recognized
      overnight delivery service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    Section
      12.  Date.
      The
      date of this Warrant is set forth on page 1 hereof. This Warrant, in all
      events, shall be wholly void and of no effect after the close of business on
      the
      Expiration Date, except that notwithstanding any other provisions hereof, the
      provisions of Section 8(b) shall continue in full force and effect after
      such date as to any Warrant Shares or other securities issued upon the exercise
      of this Warrant.

     

    Section
      13.  Amendment
      and Waiver.
      Except
      as otherwise provided herein, the provisions of the Warrants may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the holders of Warrants representing at least two-thirds
      of
      the Warrant Shares issuable upon exercise of the Warrants then outstanding;
      provided that, except for Section 8(d), no such action may increase the Warrant
      Exercise Price or decrease the number of shares or class of stock obtainable
      upon exercise of any Warrant without the written consent of the holder of such
      Warrant.

     

    Section
      14.  Descriptive
      Headings; Governing Law.
      The
      descriptive headings of the several sections and paragraphs of this Warrant
      are
      inserted for convenience only and do not constitute a part of this Warrant.
      The
      corporate laws of the State of Delaware shall govern all issues concerning
      the
      relative rights of the Company and its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdictions) that would
      cause
      the application of the laws of any jurisdictions other than the State of New
      Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in Hudson County and the United States
      District Court for the District of New Jersey, for the adjudication of any
      dispute hereunder or in connection herewith or therewith, or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof to
      such
      party at the address for such notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      15.  Waiver
      of Jury Trial.
      AS
      A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
      PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
      RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
      ASSOCIATED WITH THIS TRANSACTION.

     

    

    REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed as of the date first set forth
      above.

     

    
      	 	
              NEWGOLD,
                INC.

            
	 	 
	 	
              By: /s/
                A. Scott Dockter   

            
	 	
              Name: 
                Scott Dockter

            
	 	
              Title: 
                Chief Executive Officer

            

    

     

    

     

    
      
         

         

      

      
         

        
          

        

      

      
         

        
        

      

    

     

    EXHIBIT
      A TO WARRANT

     

    EXERCISE
      NOTICE

     

    TO
      BE EXECUTED 

    BY
      THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

     

    NEWGOLD,
      INC.

     

    The
      undersigned holder hereby exercises the right to purchase ______________ of
      the
      shares of Common Stock (“Warrant
      Shares”)
      of
      Newgold, Inc. (the “Company”),
      evidenced by the attached Warrant (the “Warrant”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

     

    Specify
      Method of exercise by check mark:

     

    ___ Cash
      Exercise

     

    (a)
      Payment
      of Warrant Exercise Price.
      The
      holder shall pay the Aggregate Exercise Price of $______________ to the Company
      in accordance with the terms of the Warrant. 

     

    (b)
      Delivery
      of Warrant Shares.
      The
      Company shall deliver to the holder _________
      Warrant
      Shares in accordance with the terms of the Warrant. 

     

    

     

     

     

    

    Date:
      _______________ __, ______

    

    Name
      of
      Registered Holder

    

    By:_____________________________

    Name:___________________________

    Title:____________________________

    

    
      
         

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    

     

    EXHIBIT
      B TO WARRANT

     

     

    FORM
      OF WARRANT POWER

     

    FOR
      VALUE RECEIVED,
      the
      undersigned does hereby assign and transfer to ________________, Federal
      Identification No. __________, a warrant to purchase ____________ shares of
      the capital stock of Newgold, Inc. represented by warrant certificate
      no. _____, standing in the name of the undersigned on the books of said
      corporation. The undersigned does hereby irrevocably constitute and appoint
      ______________, attorney to transfer the warrants of said corporation, with
      full
      power of substitution in the premises.

     

    
      	
              Dated:      

            	 
	 	 
	 	
              By:______________________________

            
	 	
              Name:____________________________

            
	 	
              Title:_____________________________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
                                    --------

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  Mike  Bullinger,  Chuck Crary, Howard Dahl, Tom Shorma, and
William  Schlossman.

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 Branick
         --------------------------------
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
         -------------------
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.
         ------

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  Anderson  & Bottrell, 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 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
                                                                         -------
2.2.
---

(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
       -----------------------------------------
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     MARK  OVERBYE  MATTERS.  Buyer  acknowledges  that  Seller  is  under no
        -----------------------
obligation  to  satisfy  any commission, royalty, or purchase option due to Mark
Overbye.  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 Mark Overbye 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  Mark  Overbye 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.   Gary Rutherford, Buyer and Mark Overbye 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:                         David  J.  Hauf
                                         Anderson  &  Bottrell
                                         State  Bank  Center,  Suite  302
                                         3100  13th  Avenue  SW
                                         P.O.  Box  10247
                                         Fargo,  ND  58106-0247
                                         Telephone:  (701)  235-3300
                                         Facsimile:  (701)  237-3154
                                         E-mail:dhauff@andersonbottrell.com

     To  Buyer:                          Ms.  Laurie  Phillips,  President  &
                                         CEO
                                         Challenger  Powerboats,  Inc.
                                         300  Westlink  Dr.
                                         Washington,  MO  63090
                                         P  (636)  390-9000
                                         F  (636)  390-2556

     with  a  copy  to:
                                         Mr.  Michael  Novielli
                                         1110  Rt.  55,  Suite  206
                                         LaGrangeville,  NY  12540
                                         P  (845)  575-6770
                                         F  (845)  575-6772

(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.

<PAGE>

                                SELLER

                                IMAR  Group,  LLC.

                                By /s/ Brad  Williams
                                   ------------------
                                   Brad  Williams  CEO/President

                                   /s/ Mike  Bullinger
                                   -------------------
                                   Mike  Bullinger,  Member  and  Note  Holder

                                   /s/ Chuck  Crary
                                   ----------------
                                   Chuck  Crary,  Member  Note  Holder

                                   /s/ Howard  Dahl
                                   ----------------
                                   Howard  Dahl,  Member  and  Note  Holder

                                   /s/ Mark  Overbye
                                   -----------------
                                   Mark  Overbye,  Member

                                   /s/ Gary  Rutherford
                                   --------------------
                                   Gary  Rutherford,  Member

                                   /s/ Tom  Shorma
                                   ---------------
                                   Tom  Shorma,  Member  and  Note  Holder

                                   /s/ Bill  Schlossman
                                   --------------------
                                   Bill  Schlossman,  Member  and  Note  Holder

                                   North  Dakota  Development  Fund,  Member

                                By /s/ Brad  Williams
                                   ------------------
                                   Brad  Williams,  President

                                BUYER

                                Challenger  Powerboats,  Inc.

                                By /s/ Laurie Phillips
                                   -------------------
                                   Laurie  Phillips,  President

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