PURCHASE AGREEMENT dated April 2,1999 among
Xxxxx Xxxxxxxxxx ("Karabochos"), Xxxxx X.
Xxxxxxx ("Desmond") Xxxxx Xxxxxxx
Karabochos, ("Xxxxx"), Kara Group Holdings,
Inc., ("Kara Holdings") Kara Group Inc
("Kara Group"), Gateways to Space, Inc., a
Delaware corporation ("GWTS") and
Entertainmax, Inc., a Florida corporation
("Purchaser").
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RECITALS
Karabochos, Xxxxxxx, Xxxxx, Xxxx Holdings, and or Kara Group and
certain other persons affiliated with Karabochos, Xxxxxxx, Xxxxx, Xxxx Group,
Kara Holdings named in Schedule I annexed hereto (collectively, "Sellers") own
at least 21,987,710 shares of common stock of GWTS, with the possibility of
32,500,000 (the "Common Shares") Common Securities, 600 Shares of Class A and
500,000 Shares of Class B Preferred Shares (the "Preferred Shares") and a
minimum of 7, 100,000 warrants to purchase Common Shares (the "Warrants").
Collectively, the Common Shares, the Preferred Shares and the Warrants are
referred to herein as the "Securities" and the Securities represent
approximately, eighty (80%) percent of the fully diluted outstanding Securities
of Gateways into Space, Inc. ("GWTS") GWTS's Securities are currently traded
on the NASDAQ OTC Bulletin Board under the symbol "GWTS",
The Securities, because of the current positions of Karabochos and
Desmond with GWTS, constitute "restricted shares," as said term is used in
Rule 144 promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "Securities Act");
Purchaser desires to acquire from the Sellers, and the Sellers desire
to sell to Purchaser, all of the Securities on the terms and subject to the
conditions set forth below.
NOW, THEREFORE, in consideration of the premises, the parties hereto
Wee as follows:
I. PURCHASE
Purchase. At the Closing (as defined in Section 2.1 below), Sellers
severally shall sell, and Purchaser shall purchase, the Securities for a
purchase price of $25,000 payable *in cash at the Closing (the "Purchase
Price7), which funds, contemporaneously herewith, is being deposited with the
Escrow Agent pursuant to the terms of the Escrow Agreement referred to in
Section 3.1 below.
II. ACTION TO BE TAKEN AT CLOSING
The Closing of the transactions contemplated hereby (the "Closing")
shall take place upon signing of all closing and transfer documents
SECTION 2.1 Resignation. Karabochos and Desmond hereby each resigns
his/her position as an officer and director of GWTS, and GWTS hereby accepts
such resignations.
SECTION 2.2 Employment Agreement. Any existing employment agreements of
each of Karabochos and Desmond with GWTS are hereby terminated.
SECTION 2.3 Release of Severance Claims. Concurrently with the closing
of this agreement Karabochos and Desmond waives all claims, including but not
limited to their respective right to receive any and all severance benefits for
stock, outstanding fees and claims for past salaries or claims for issuance of
GWTS stock upon any subsequent termination of employment and shall also deliver
a release form pertaining to GWTS and its affiliates from any claims in these
regards.
SECTION 2.4 Certificate of Absence of Material Adverse Change.
Karabochos and Desmond shall each sign and deliver to Purchaser a certificate
stating that, since 6/30/96, there has been no event or circumstances which has
had, or reasonably can be expected to have, a material adverse effect on the
business, financial condition or operations of GWTS.
III. ACTION PENDING CLOSING
SECTION 3.1 Escrow Agreement. Contemporaneously with the execution and
delivery of this Agreement, Sellers, Purchaser and GWTS shall enter into an
escrow agreement, in the form of Exhibit 3.1 hereto (the "Escrow Agreement"),
with The Law Offices Of Xxxxxxx Xxxxx, P.C., as escrow agent ("Escrow Agent"),
providing, contemporaneously with its execution, for the deposit with the Escrow
Agent of $25,000.00. The Escrow Agreement will include provisions for
application of property deposited pursuant thereto, including liquidation of
shares of common, preferred, and Warrants for stock of GWTS owned by the
Purchaser in the event of a failure to make payment in full of the purchase
price of the Securities.
SECTION 3.2 No Solicitation.
(a) Each of Karabochos and Desmond agree that prior to the
termination of this Agreement, neither of them or any other Seller shall seek to
solicit, initiate, knowingly facilitate or encourage (including by way of
furnishing or disclosing information) any merger, consolidation, other business
combination involving GWTS, acquisition of all or any substantial portion of the
assets or capital stock of GWTS or the purchase or other disposition of the
Shares, or inquiries or proposals concerning or which would reasonably be
expected to lead to, any of the foregoing (an "Acquisition Transaction") or
negotiate, explore or otherwise knowingly communicate in any way with any third
party (other than Purchaser or its affiliates, or the Escrow Agent with respect
to the Escrow Agreement) with respect to any Acquisition Transaction or enter
into any agreement arrangement or understanding requiring it to abandon,
terminate or fail to consummate any transactions expressly contemplated by this
Agreement, or contemplated to be a material part thereof
(b) Notwithstanding the foregoing, in the event that there is
an unsolicited written proposal for an Acquisition Transaction from a bona fide
financially capable third party that contains no financing contingency, GWTS, in
its discretion, shall be permitted to furnish to and communicate with any such
party all publicly available information requested by such party. GWTS
thereafter, shall promptly advise Purchaser in writing of the identity of such
party. In the event that such party requests information in addition to that
which is publicly available, GWTS may furnish to and
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communicate with such third party non-public information only if (i)
contemporaneous written notice is given to Purchaser; and (11) (A) GWTS's Board
of Directors shall have been satisfied that such third party is financially
capable, without any financing contingency, of consummating an Acquisition
Transaction, (B) GWTS's Board of Directors shall have been advised, by the
opinion of outside counsel to GWTS, that any failure to provide such
non-public information to such party would constitute a breach of the fiduciary
responsibilities of the Board of Directors to the stockholders of GWTS and (C)
the Board of Directors, after weighing such advice, determines that taking such
action is more likely than not to lead an Acquisition Transaction and that
failing to furnish such information would constitute a breach of the Board's
fiduciary duties.
SECTION 3.3 Access to Information. Each of Karabochos and Desmond shall
cause GWTS to afford to the Purchaser, the Purchaser's accountants, counsel,
financial advisors and other representatives reasonable access during normal
business hours throughout the period prior to the Closing to all properties,
books, contracts, commitments and records of GWTS and, during such period,
shall furnish promptly (a) a copy of each report, schedule and other documents
filed or received by GWTS during such period pursuant to the requirements of
federal or state securities laws or filed by GWTS during such period with the
SEC in connection with the transactions contemplated by this Agreement or which
may have a material effect on its business properties or personnel and (b) such
other information concerning GWTS's business, properties and personnel as the
Purchaser shall reasonably request; provided, however, that no investigation
pursuant to this Section 3.3 shall affect any representation or warranty made
herein. All non-public documents and information furnished to Purchaser shall be
deemed to have been received pursuant to and shall be subject to the provisions
of the confidentiality and non-disclosure agreement heretofore entered into
between Purchaser and GWTS (the "Confidentiality Agreement").
SECTION 3.4 No Exercise of Options. Karabochos and Desmond each agree
that they shall not exercise any of their respective warrants to purchase shares
of common stock of GWTS after the date of this Agreement and prior to Closing.
SECTION 3.5 Additional Share Issuances and Material Transactions. GWTS
agrees that it shall not authorize the issuance of any additional shares of its
common stock or enter into any material contracts or agreements after the date
hereof and prior to the Closing without first obtaining the consent of
Purchaser, which consent shall not be unreasonably withheld.
SECTION 3.6 Rule 14-1 Statement. A Statement on Schedule 14F shall be
filed by GWTS with the SEC, promptly following the execution and delivery of
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF XXXXXXXXXX, XXXXXXX,
Karabochos, Xxxxxxx, Xxxxx, Kara Group Inc, and Kara Group Holdings,
Inc, Jointly and severally represent and warrant to the Purchaser as follows,
with the knowledge and understanding that the Purchaser is relying materially
upon such representations and warranties:
SECTION 4.1 Organization and Standing. GWTS is not in good and standing
under the laws of the State of Delaware. GYv1TS Will perform all acts necessary
to reinstate it's good
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standing.
SECTION 4.2 Capitalization. The authorized capital stock of GWTS, the
number of shares of capital stock which are issued and outstanding and the par
value thereof are as set forth in Schedule 4.2 hereof All of such shares of
capital stock that are issued and outstanding are duly authorized, validly
issued and outstanding, fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any person. Except as set forth in GWTS's
SEC Reports (as defined below) or as otherwise disclosed therein and herein,
there are no subscriptions, options, warrants, rights or calls or other
commitments or agreements to which GWTS is a party or by which it is bound,
calling for any issuance, transfer, sale or other disposition of any class of
securities of GWTS. Other than as set forth in GWTS's SEC Reports, there are
no outstanding securities convertible or exchangeable, actually or contingently,
into common stock or any other securities of GWTS.
SECTION 4.3 Authority. GWTS's Board of Directors will approve and
ratify this Agreement.
SECTION 4.4 No Breaches. The making and performance of this Agreement
and the other agreements contemplated hereby by GWTS will not (1) conflict with
or violate the Certificate of Incorporation or the by-laws of GWTS, (11)
violate any laws, ordinances, rules, or regulations, or any order, writ,
injunction or decree to which GWTS is a party or by which GWTS or any of its
material assets, businesses, or operations may be bound or affected or (111)
result in any breach or termination of, or constitute a default under, or
constitute an event which, with notice or lapse of time, or both, would become a
default under, or result in the creation of any encumbrance upon any material
asset of GWTS under, or create any rights of termination, cancellation or
acceleration in any person under, any material agreement, arrangement or
commitment to which GWTS.
SECTION 4.5 GWTS's SEC Reports. Except as provided for in Schedule 4.5,
GWTS has filed all reports, registrations and other documents, together with any
amendments thereto, required to be filed under the Securities Act and the
Exchange Act through and as filed as up to the period ending September 31, 1995
(all such reports, registrations and documents filed with the SEC up to the date
of September 31, 1995 are collectively referred to as "GWTS's SEC Reports").
GWTS has not filed any other "GWTS SEC Reports since September 30, 1995. The
GWTS SEC Reports which have been filed in the past has complied in all material
respects with all rules and regulations promulgated by the SEC and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since October 1996 the SEC has been accruing a daily fine for GWTS
not providing necessary GWTS SEC Reports.
SECTION 4.6 Title to Shares. Each Seller owns the Securities he or she
proposes to sell pursuant to this Agreement free and clear of all liens, claims
and encumbrances and, when such Shares are purchased and paid for pursuant to
this Agreement and the Escrow Agreement, Purchaser (or GWTS in the case of the
redeemed Shares) shall acquire ownership of such Securities free and clear of
all liens, claims and encumbrances created by or through Sellers.
SECTION 4.7 Binding Effect. This Agreement constitutes the valid and
binding obligation of each of Karabochos and Xxxxx, and Xxxxxxx enforceable in
accordance with its terms.
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SECTION 4.8 Additional Assurances: Sellers warrant that they will take
any and all actions that may be necessary to convey any and all interests and
securities which may be listed in Sellers name and recorded with GWTS' stock
transfer agent, including but not limited to, the execution of lost instruments
bonds, or share assignment for those shares which have been listed by the stock
transfer agent but have not been transferred to Sellers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to GWTS and the Sellers as follows,
with the knowledge and understanding that GWTS and the Sellers each is relying
materially on such representations and warranties:
SECTION 5.1 Organization and Standing of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Purchaser has all requisite corporate power to carry on
its business as now conducted.
SECTION 5.2 Purchaser's Authority. Purchaser's Board of Directors has
approved and adopted this Agreement. No approval of this Agreement is required
of Purchaser's stockholders. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms.
SECTION 5.3 No Breaches. The making and performance of this Agreement
will not (1) conflict with the Certificate of Incorporation or the By-laws of
Purchaser, (11) violate any laws, ordinances, rules, or regulations, or any
order, writ, injunction or decree to which Purchaser is a party or by which
Purchaser or any of its material assets, business, or operations may be bound or
affected or (iii) result in any breach or termination of, or constitute a
default under, or constitute an event which, with notice or lapse of time, or
both, would become a default under, or result in the creation of any encumbrance
upon any material asset of Purchaser under, or create any rights of termination,
cancellation, or acceleration in any person under, any material agreement,
arrangement or commitment to which Purchaser is a party.
SECTION 5.4 Information. The draft statement on Schedule 14-1 prepared
by Purchaser and furnished to GWTS in anticipation of the execution and delivery
of this Agreement insofar as the information contained therein relates to
Purchaser, its designees for membership on the Board of Directors of GWTS and
its plans or intentions regarding GWTS, satisfies the information requirements
of Rule 14f- I promulgated by the SEC pursuant to the Exchange Act and does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statement
therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated by either
the Purchaser or the Sellers if the Closing does not take place within thirty
(30) days from the date hereof provided that a party whose action or inaction
the reason for the Closing not taking place shall not have the right to give
notice of termination.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Expenses. GWTS, Sellers and Purchaser shall each pay their
own expenses incident to the negotiation, preparation, and carrying out of this
Agreement, including all fees and expenses of its counsel for all activities of
such counsel undertaken pursuant to this Agreement.
SECTION 7.2 Survival of Representations and Warranties. All statements
contained in this Agreement or in any certificate delivered by or on behalf of
Purchaser and the Sellers pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations and warranties by Purchaser
and the Sellers, as the case may be, hereunder. All representations and
warranties made by Purchaser and the Sellers in this Agreement, or pursuant
hereto, shall survive the Closing only until March 1, 2000 and no action based
thereon may be commenced after such date; provided, however, that all
representations and warranties related to any claim asserted in writing prior to
the expiration of the above period shall survive until such claim shall be
resolved and payment in respect thereof, if any is owing, shall be made; and
provided, further, that the representation and warranty contained in Section 4.6
shall survive indefinitely.
SECTION 7.3 Succession and Assignments; Third Party Beneficiaries.
This Agreement may not be assigned (either voluntarily or involuntarily) by any
party hereto without the express written consent of the other party. Any
attempted assignment in violation of this Section shall be void and ineffective
for all purposes. In the event of an assignment permitted by this Section, this
Agreement shall be binding upon the heirs, successors and assigns of the parties
hereto. There shall be no third party beneficiaries of this Agreement.
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SECTION 7.4 Notices. All notices, requests, demands, or other
communications with respect to this Agreement shall be in writing and shall be
(1) sent by facsimile transmission, (ii) sent by the United States Postal
Service, registered or certified mail, return receipt requested, or (iii)
personally delivered by a nationally recognized express overnight courier
service, charges prepaid, to the following addresses (or such other addresses as
the parties may specify from time to time in accordance with this Section):
(a) To Purchaser:
EntertainMax, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxx
Fax No.: (000)-000-0000
Phone No.: (407) 000- 0000
With a copy to:
Xxxxxxxx X. Xxxx, Esquire
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxx
Fax No.: 000-000-0000
(b) To GWTS:
Attn: Xxxxxx Xxxxx
Fax No.: (000) 000-0000
Phone No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx, Esquire
0000 Xxxxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx Xxxxxxx, XX 00000
(c) To the Sellers: Xxx Xxxxxxxxxx
and/or
Xxxxx Xxxxxxx Karabochos
0000 Xxx Xxxxx Xxxx
Xxxxxx Xxxxx XX 00000
Fax No.: 000-000-0000
Phone No.: (000-000-0000
Any such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received on the earliest of (1) the day delivered
to such address or sent by facsimile transmission or electronic mail, (n) the
fifth business day following the date deposited with the United States Postal
Service, or (111) 24 hours after shipment by such courier service.
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SECTION 7.5 Construction. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Florida without
giving effect to the principles of conflicts of law thereof
SECTION 7.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
SECTION 7.7 No Implied Waiver; Remedies. No failure or delay on the
part of the parties hereto to exercise any right power, or privilege hereunder
or under any instrument executed pursuant hereto shall operate as a waiver nor
shall any single or partial exercise of any night, power, or privilege preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. All rights, powers, and privileges granted herein shall be in
addition to other rights and remedies to which the parties may be entitled at
law or in equity.
SECTION 7.8 Entire Agreement. This Agreement, including the Exhibits
attached hereto, and the Confidentiality Agreement sets forth the entire
understandings of the parties with respect to the subject matter hereof, and it
incorporates and merges any and all previous communications, understandings,
oral or written, as to the subject matter hereof, and cannot be amended or
changed except in writing, signed by the parties.
SECTION 7.9 Headings. The headings of the Sections of this Agreement,
where employed, are for the convenience of reference only and do not form a part
hereof and in no way modify, interpret or construe the meanings of the parties.
SECTION 7.10 Severability. To the extent that any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
hereof and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
SECTION 7.11 Governing Law. This agreement shall be construed and
enforced in accordance with and the laws of the state of Florida hereof shall
govern the validity and performance. The parties agree jurisdiction for any
action brought in connection with this agreement shall be in connection with
this agreement shall be in agreement shall be in Florida.
SECTION 7.12 Dispute: If Seller and Purchaser fail to resolve a Dispute
within a thirty day period, (the "Arbitration Deadline"), the parties hereby
agree to submit the Dispute to binding arbitration in Orange County, Orlando,
Florida, in accordance with the provisions of the American Arbitration
Association.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ENTERTAINMAX, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Chairman/CEO
GATEWAYS TO SPACE, INC.
By:___________________________
Name:
Title:
/s/ Xxxxx Xxxxxxxxxx
--------------------------------
Xxxxx Xxxxxxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxx Karabochos
--------------------------------
Xxxxx Xxxxxxx Xxxxxxxxxx
XXXX GROUP, INC.
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------
Name:
Title: President
KARA GROUP HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------
Name:
Title: President
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