STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT
is entered into as of this 8th day of December, 2008 (this “Agreement”), by and
between Money Line Capital, Inc., a California corporation, (“MLCI”), on the one
hand, and the individuals listed on Exhibit A (the “Shareholders”), on the other
hand. Each of MLCI and the Shareholders may be referred to as a
“Party” and collectively as the “Parties.”
WHEREAS, the Shareholders own
the number of shares of Gateway International Holdings, Inc., a Nevada
corporation (“Gateway”) indicated on Exhibit A, which
constitutes a majority of the outstanding shares of Gateway common
stock;
WHEREAS, Gateway is a
reporting company under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and, as such, is subject to the Exchange Act reporting
requirements;
WHEREAS, in the future,
Gateway intends to file an application with FINRA to become re-listed on The OTC
Bulletin Board;
WHEREAS, MLCI desires to
purchase from the Shareholders the number of shares of Gateway common stock
indicated on Exhibit
A (the “Shares”), which equals approximately 43% of the outstanding
shares of common stock of Gateway;
WHEREAS, the Shareholders
desire to sell the Shares to MLCI in exchange for the Purchase Price listed in
Section 1.1, below;
NOW, THEREFORE, in
consideration of the promises and the mutual agreements contained in this
Agreement, the Parties hereby agree as follows:
ARTICLE
1
SALE
OF THE SHARES
Section
1.1 Sale of the
Shares. Subject to the terms and conditions set forth in this
Agreement, the Shareholders agree to sell, transfer and assign to MLCI and MLCI
agrees to purchase from the Shareholders, the Shares, for an aggregate purchase
price of $2,211,750 (the “Purchase Price”).
Section
1.2 Payment of the Purchase
Price. The Purchase Price will be paid in three installments
as follows:
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Installment Amount
|
Due Date
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$907,500
|
Closing
Date
|
|
$135,000
|
December
15, 2008
|
|
$619,250
|
January
31, 2009
|
|
$550,000
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March
31, 2009
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Section
1.3 Proceeds of the Purchase
Price. The Purchase Price will be paid to the Shareholders and
will be divided among the Shareholders as set forth on Exhibit
A. The Shares will be put in the name of MLCI at Closing, and
MLCI will have the right to vote the Shares for any matter that comes up before
a vote of the common stockholders of Gateway, but the certificates representing
the Shares in MLCI’s name will be held by The Lebrecht Group, APLC (the “Escrow
Agent”), until such time as the Purchase Price has been paid in full to the
Shareholders, as more fully set forth in that certain Escrow Agreement dated of
even date herewith.
Section
1.4 Resignations of
Shareholders. As further consideration for the purchase of the
Shares by MLCI, the Shareholders will terminate their current employment or
independent contractor agreements with Gateway and will resign from all officer
positions they hold with Gateway. The Shareholders also agree to
resign from their Board of Director positions, effective upon the appointment of
new Directors by Gateway post-Closing.
Section
1.5 Employment
Agreement. As further consideration for selling the Shares,
MLCI and Gateway agree that Gateway will enter into an employment agreement with
Xxxxxxx X. Xxxxxxxx in the form attached hereto as Exhibit B immediately
after the Closing (the “Employment Agreement”).
Section
1.6 Re-Listing on
OTCBB. As further consideration for selling the Shares, MLCI
agrees to use its best efforts to have Gateway file an application with FINRA to
become re-listed on The OTC Bulletin Board, and agrees to take all actions
within its power so that Gateway gets re-listed on The OTC Bulletin Board as
soon as possible, unless such re-listing becomes impossible due to regulatory
issues with FINRA and/or the Securities Exchange Commission.
Section
1.7 Voting
Proxies. As further consideration for the purchase of the
Shares by MLCI, the Shareholders agree that the shares of Gateway common stock
they own after the Closing (the “Proxy Shares”) will be subject to the following
additional restrictions:
(a) At
Closing, the Shareholders immediately and irrevocable grant to MLCI a proxy to
vote the Proxy Shares in any way that MLCI deems fit. The proxy
granted hereunder shall not be cancellable and shall be irrevocable until such
time as released in writing by MLCI. The proxy shall be in the form
attached hereto as Exhibit
C.
(b) The
Shareholders further agree that they will not sell, assign, transfer,
hypothecate, or otherwise transfer or encumber the Proxy Shares without first
providing a written offer to MLCI to purchase the Proxy Shares at least ten (10)
days prior to any Shareholder selling their Proxy Shares. MLCI shall
have three (3) business days to purchase the shares on the same terms as those
offered by any third party.
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Section
1.8 Saputo/Frisco
Lawsuit. As further consideration for selling the Shares, MLCI
agrees to indemnify and hold Gateway and the Shareholders harmless from any
damages, including damages for liability, attorney’s fees, and court costs, if
any, that Gateway and the Shareholders are ordered to pay to Plaintiffs as a
result from that certain lawsuit entitled Xxxxxxx Xxxxxx and Xxxxxxxxxxx
Xxxxxx v. Gateway International Holdings, Inc., Xxxxxxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx and Xxx Xxxxxxxx, Court of the State of California, County of
Orange, Case No. 00-0000-00000000, filed on August 21, 2008.
Section
1.9 Indemnification for
Transaction. As further consideration for selling the Shares,
MLCI agrees to indemnify and hold Gateway and the Shareholders harmless from any
damages, including damages for liability, attorney’s fees, and court costs, if
any, that Gateway and the Shareholders are ordered to pay to any third-party
plaintiffs (actions brought by individuals or entities that are not Parties to
this Agreement) as a result of the stock purchase transaction evidenced by this
Agreement.
ARTICLE
2
CLOSING
AND DELIVERY
Section
2.1 Closing
Date. Upon the terms and subject to the conditions set forth
herein, the consummation of the purchase and sale of the Shares (the “Closing”)
shall be held simultaneous with the execution of this Agreement, or at such
other time mutually agreed upon between the constituent parties (the “Closing
Date”). The Closing shall take place at the offices of the
Shareholders set forth in Section 7.1 hereof, or by the exchange of documents
and instruments by mail, courier, facsimile and wire transfer to the extent
mutually acceptable to the parties hereto.
Section
2.2 Delivery at Closing.
At the Closing:
(a) The
Shareholders shall deliver to the Escrow Agent:
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|
(1)
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the
Shares, in the name of MLCI, subject to no liens, security interests,
pledges, encumbrances, charges, restrictions, demands or claims in any
other party whatsoever;
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(b) The
Shareholders shall deliver to MLCI:
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|
(1)
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executed
copies of their resignations in the form attached hereto as Exhibit D;
and
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(2)
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executed
copy of the Employment
Agreement.
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(c) MLCI
shall deliver to the Shareholders:
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(1)
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the
sum of $907,500, which is the first installment of the Purchase Price;
and
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|
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(2)
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a
fully executed copy of the MLCI Board of Directors resolution approving
this Agreement and the transactions contemplated
hereby.
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(d) Gateway
shall deliver to the Shareholders:
|
|
(1)
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a
fully executed copy of the Gateway Board of Directors resolution approving
the actions Gateway must take under this
Agreement;
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|
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(2)
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executed
copies of the Employment Agreement;
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|
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(3)
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and
executed copy of the Xxxxxxxx Note;
and
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|
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(4)
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a
waiver or consent executed by Pacific Western Bank consenting to, or
waiving its right to approve, the transactions contemplated by this
Agreement, to the extent necessary under Gateway’s loan agreements with
Pacific Western Bank dated September 29,
2008.
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ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE SHAREHOLDERS
The
Shareholders represent and warrant to MLCI that as of the date
hereof:
Section
3.1 Authorization; No
Agreements. The execution, delivery and performance by the
Shareholders of this Agreement, the performance of its obligations hereunder,
and the consummation of the transactions contemplated hereby are within the
Shareholders’ powers. The Shareholders have full legal capacity to
execute and deliver this Agreement and perform its obligations
hereunder. This Agreement has been duly and validly executed and
delivered by the Shareholders and is a legal, valid and binding obligation of
the Shareholders, enforceable against the Shareholders in accordance with its
terms. The execution, delivery and performance by the Shareholders of
this Agreement do not violate any contractual restriction contained in any
agreement which binds or affects or purports to bind or affect the
Shareholders. The Shareholders are not a party to any agreement,
written or oral, creating rights in respect of any of the Shares on the part of
any third party or relating to the voting of the Shares. As of the
Closing, there will not be any outstanding or authorized options, warrants,
rights, calls, commitments, conversion rights, rights of exchange or other
agreements of any character, contingent or otherwise, providing for the
purchase, issuance or sale of any of the Shares, or any arrangements that
require or permit any of the Shares to be voted by or at the discretion of
anyone other than the lawful holder thereof, and there are no restrictions of
any kind on the transfer of any of the Shares other than (a) restrictions on
transfer imposed by the Securities Act of 1933, as amended (the “Securities
Act”) and (b) restrictions on transfer imposed by applicable state securities or
“blue sky” laws.
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Section
3.2 Capitalization.
(a) The
authorized capital stock of the Gateway consists of One Hundred Million
(100,000,000) shares of common stock, par value $0.001 per share, of which
27,611,956 shares will be issued and outstanding as of the Closing; and Ten
Million (10,000,000) shares of preferred stock, none of which is issued or
outstanding. All of the outstanding shares of capital stock of
Gateway have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. All of the issued and outstanding shares of capital stock of Gateway has
been offered, issued and sold by Gateway in compliance with all applicable
federal and state securities laws. No securities of Gateway are
entitled to preemptive or similar rights, and no person, natural or otherwise,
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated
hereby. Other than Gateway’s agreement with Xxxxxxx Xxxxxxxxx, as of
the Closing there are no outstanding options, warrants, script, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of the
common stock, or contracts, commitments, understandings or arrangements by which
Gateway is or may become bound to issue additional shares of the common stock,
or securities or rights convertible or exchangeable into shares of the common
stock. The sale of the Shares will not obligate Gateway to issue
shares of common stock or other securities to any Person and shall not result in
a right of any holder of Gateway securities to adjust the exercise, conversion,
exchange or reset price under such securities.
(b) There
are no stockholder agreements, voting trusts or other agreements or
understandings to which the Shareholders are a party or by which they are bound
relating to the voting of any the Shares.
(c) The
Shares, when delivered in accordance with the terms of this Agreement, shall be
validly issued, fully paid and non-assessable and the Shares shall not be
subject to any lien, charge, security interest or other encumbrance or
preemptive or other similar right.
Section
3.3 Subsidiary. “Subsidiary”
or “Subsidiaries” means all corporations, trusts, partnerships, associations,
joint ventures or other Persons, as defined below, of which a corporation or any
other Subsidiary of such corporation owns not less than twenty percent (20%) of
the voting securities or other equity or of which such corporation or any other
Subsidiary of such corporation possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies, whether through
ownership of voting shares, management contracts or
otherwise. “Person” means any individual, corporation, trust,
association, partnership, proprietorship, joint venture or other
entity. As of the Closing, Gateway has three subsidiaries, All
American CNC Sales, Inc., E.M. Tool Company, Inc., and Eran Engineering,
Inc. As of the Closing, Gateway owns 100% of the outstanding
securities of such Subsidiaries.
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Section
3.4 Liabilities or
Debts. As of the Closing, Gateway does not have any material
liabilities or debts, whether accrued, contingent or absolute, of the type
required to be disclosed in Gateway’s financial statements under generally
accepted accounting principles, other than those listed in Gateway’s periodic
filings filed with the Securities and Exchange Commission. Gateway
has 85 employees.
Section
3.5 Litigation. Except
as listed in Gateway’s periodic Exchange Act filings filed with the Securities
and Exchange Commission, there is no (a) action, suit, investigation, audit or
proceeding pending against, or, to the best knowledge of the Shareholders,
threatened or contemplated against or affecting, Gateway or any of its assets or
properties before or by any court or arbitrator or any governmental body, agency
or official or (b) injunction, outstanding judgment, restraining order, decree
or other order of any nature to which Gateway is subject or to which the
business, assets or property of Gateway is subject. Gateway is not in
default with respect to any order, writ, injunction, decree, ruling or decision
of any court, commission, board or any other government agency. The Securities
and Exchange Commission (the “Commission”) has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
Gateway under the Securities Exchange Act of 1934 (the “Exchange Act”) or the
Securities Act, except as set forth in Gateway’s Exchange Act and Securities Act
filings.
Section
3.6 Taxes. (a)
Gateway has (i) duly filed with the appropriate taxing authorities all tax
returns required to be filed by or with respect to its business, including with
respect to the Subsidiaries, and all such duly filed tax returns are true,
correct and complete in all material respects in relation to any and all
applicable taxes, fees, levies, duties, tariffs, imposts, and other charges of
any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers’ compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs’ duties, tariffs, and
similar charges, and (ii) paid in full or made adequate provisions for on its
balance sheet (in accordance with generally accepted accounting principles) all
taxes shown to be due on such tax returns. There are no liens for
taxes upon the assets of Gateway or any of its subsidiaries. Gateway
and its subsidiaries have not received any notice of audit, is not undergoing
any audit of its tax returns, and has not received any notice of deficiency or
assessment from any taxing authority with respect to liability for taxes which
has not been fully paid or finally settled. There have been no waivers of
statutes of limitations by Gateway with respect to any tax
returns. Gateway has not filed a request with the Internal Revenue
Service for changes in accounting methods within the last three years which
change would affect the accounting for tax purposes, directly or indirectly, of
its business. Gateway has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any taxes due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
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Section
3.7 No
Brokers. No brokerage or finder’s fees or commissions are or
will be payable by the Shareholders to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person
with respect to the transactions contemplated by this Agreement, and the
Shareholders have not taken any action that would cause MLCI to be liable for
any such fees or commissions. The Shareholders agree that MLCI shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of any Person, for fees of the type contemplated by this Section
and the Shareholders shall indemnify and hold MLCI harmless from any fees, costs
or liabilities of any kind incurred by MLCI in connection
therewith.
Section
3.8 Disclosure. All
disclosure provided to MLCI regarding Gateway, its business and the transactions
contemplated hereby, furnished by or on behalf of Gateway with respect to the
representations and warranties made herein, are true and correct in all material
respects with respect to such representations and warranties and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section
3.9 No Disagreements with
Accountants and Lawyers. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Shareholders to arise,
between the accountants and lawyers formerly or presently employed by Gateway
and Gateway is current with respect to any fees owed to its accountants and
lawyers.
Section
3.10 No
Conflicts. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not and will not: (i)
conflict with or violate any provision of Gateway’s Certificate of
Incorporation, Bylaws or other organizational or charter documents; (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of any agreement, credit facility, debt or other
instrument (evidencing a Gateway debt or otherwise) or other understanding to
which Gateway is a party or by which any property or asset of Gateway is bound
or affected; and (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which Gateway is subject (including federal and state
securities laws and regulations), or by which any property or asset of Gateway
is bound or affected.
Section
3.11 Filings, Consents and
Approvals. Gateway is not required to obtain any consent,
waiver, authorization or order of any court or other federal, state, local or
other governmental authority or other Person in connection with the execution,
delivery and performance of this Agreement.
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Section
3.12 Compliance. Other
than as set forth in Gateway’s Exchange Act and Securities Act filings, Gateway:
(i) is not in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in
a default by Gateway under), nor has Gateway received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other material agreement or instrument to which it is a party
or by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is not in violation of any order of any court,
arbitrator or governmental body and (iii) is not and has not been in violation
of any statute, rule or regulation of any governmental authority.
Section
3.13 Assets. All
Gateway leases for real or personal property are valid and effective in
accordance with their respective terms (in each case, as against Gateway), and
there is not under any of such leases, to the knowledge of the Shareholders, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default).
Section
3.14 Change of
Control. Other than this Agreement, the Shareholders and/or
Gateway are not a party to an agreement for, or involved in any discussions
concerning any transaction that would reasonably be expected to, result in any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), becoming the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 5% or more of the total voting
power of the outstanding common stock.
Section
3.15 Notice of
Developments. The Shareholders shall promptly notify MLCI in
writing of all events, circumstances, facts and occurrences arising subsequent
to the date of this Agreement which would reasonably be expected to result in
any breach of a representation or warranty or covenant of the Shareholders in
this Agreement or which would reasonably be expected to have the effect of
making any representation or warranty of the Shareholders in this Agreement
untrue or incorrect in any respect. Such notification shall not
affect or otherwise limit MLCI’s right to enforce the terms of this Agreement
hereto as they existed on the date hereof, without taking into account such
notification.
ARTICLE
4
REPRESENTATIONS
OF MLCI
MLCI
represents and warrants to the Shareholders, as follows:
Section
4.1 Existence and
Power. MLCI is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of California and has
all corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted.
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Section
4.2 Authorization; No
Agreements. The execution, delivery and performance by MLCI of
this Agreement, the performance of its obligations hereunder, and the
consummation of the transactions contemplated hereby are within MLCI’s
powers. MLCI has full legal capacity to execute and deliver this
Agreement and perform its obligations hereunder. This Agreement has
been duly and validly executed and delivered by MLCI and is a legal, valid and
binding obligation of MLCI, enforceable against MLCI in accordance with its
terms. The execution, delivery and performance by MLCI of this
Agreement do not violate any contractual restriction contained in any agreement
which binds or affects or purports to bind or affect MLCI.
Section
4.3 Execution and
Delivery. The execution, delivery and performance by MLCI of
this Agreement is within such MLCI’s powers and does not violate any contractual
restriction contained in any agreement which binds or affects or purports to
bind or affect MLCI.
Section
4.4 Binding
Effect. This Agreement, when executed and delivered by MLCI
shall be irrevocable and will constitute the legal, valid and binding obligation
of MLCI enforceable against MLCI in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally or
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section
4.5 Investment
Purpose. MLCI represents that it is purchasing the Shares for
its own account, with the intention of holding the Shares, with no present
intention of dividing or allowing others to participate in this investment or of
reselling or otherwise participating, directly or indirectly, in a distribution
of the Shares, and shall not make any sale, transfer, or pledge thereof without
registration under the Securities Act and any applicable securities laws of any
state unless an exemption from registration is available under those
laws.
Section
4.6 Investment
Experience. MLCI has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares.
Section
4.7 Further Limitations on
Disposition. MLCI further acknowledges that the Shares are
restricted securities under Rule 144 of the Securities Act and that the Shares
(and any securities issuable upon conversion) must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available, and, therefore, when transferred to MLCI will
contain a restrictive legend substantially similar to the
following:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“ACT”), AND MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II)
TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF COUNSEL,
LICENSED TO PRACTICE LAW WITHIN THE UNITED STATES, REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
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Section
4.8 No Public
Market. MLCI understands that no public market now exists for
any of the securities issued by Gateway and that the Shareholders have made no
assurances that a public market will ever exist for Gateway’s
securities.
Section
4.9 Exchange Act Reporting
Company. MLCI understands that Gateway is a reporting company
under the Exchange Act, and as such, has reporting obligations under the
Exchange Act. MLCI is aware of, and has read, Gateway’s Exchange Act
filings, including its 10-Q for the period ended September 30, 2008, as filed
with the Securities and Exchange Commission on November 13, 2008.
Section
4.10 Notice of
Developments. MLCI shall promptly notify the Shareholders in
writing of all events, circumstances, facts and occurrences arising subsequent
to the date of this Agreement which would reasonably be expected to result in
any breach of a representation or warranty or covenant of MLCI in this Agreement
or which would reasonably be expected to have the effect of making any
representation or warranty of MLCI in this Agreement untrue or incorrect in any
respect. Such notification shall not affect or otherwise limit the
Shareholders’ right to enforce the terms of this Agreement hereto as they
existed on the date hereof, without taking into account such
notification.
ARTICLE
5
COVENANTS
OF THE PARTIES
The
parties hereto agree that:
Section
5.1 Notices of Certain
Events. In addition to any other notice required to be given
by the terms of this Agreement, each of the Parties shall promptly notify the
other party hereto of:
(a) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with any of the transactions
contemplated by this Agreement;
(b) any
notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement;
and
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(c) any
actions, suits, claims, investigations or proceedings commenced or, to such
party’s knowledge, threatened against, relating to or involving or otherwise
affecting such party that, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 3 or Section 4 (as the
case may be) or that relate to the consummation of the transactions contemplated
by this Agreement.
Section
5.2 Access to
Information. The Shareholders will provide MLCI with any
relevant information related to Gateway that MLCI requests in writing, and
subject to that certain Confidentiality Agreement between the Parties dated
October 10, 2008.
Section
5.3 Reasonable
Efforts. Each Party agrees to use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to cooperate
with the other parties in connection with the foregoing. Each Party
further agrees not to undertake any course of action inconsistent with the
satisfaction of the conditions to Closing set forth herein, and to do all such
acts and take all such measures as may be reasonable to comply, and be in
compliance, with the representations, warranties, covenants and agreements
contained in this Agreement.
Section
5.4 Cooperation. In
the event that any investigation, inquiry, lawsuit, administrative proceeding or
any other proceeding is commenced with respect to Gateway, the Shareholders
shall reasonably cooperate with and provide all applicable documents to MLCI
immediately upon request of MLCI.
ARTICLE
6
CONDITIONS
PRECEDENT
Section
6.1 Conditions of Obligations of
MLCI. The obligations of MLCI are subject to the satisfaction
of the following conditions, any or all of which may be waived in whole or in
part by MLCI:
(a) Representations and
Warranties. Each of the representations and warranties of the
Shareholders set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement (except to the extent such
representations and warranties speak as of an earlier date).
(b) Company
Minutes. MLCI shall have received prior to the Closing Date
executed copies of all minutes, consents, resolutions of Gateway (for meetings
of or by stockholders and directors of Gateway).
(c) Board of Directors
Resolutions. MLCI shall have received executed resolutions of
the Board of Directors of Gateway approving the transactions contemplated
herein, as applicable.
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(d) Performance. The
Shareholders shall have performed and complied with all agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
(e) Filings. The
Shareholders shall have successfully filed Gateway’s quarterly report on Form
10-Q for the period ended September 30, 2008, and shall have received a “no
further comments” letter from the Commission regarding Gateway’s annual report
on Form 10-K for the year ended June 30, 2008.
Section
6.2 Conditions of Obligations of
the Shareholders. The obligations of the Shareholders to
consummate the sale of the Shares are subject to the following conditions, any
or all of which may be waived in whole or in part by the
Shareholders:
(a) Representations and
Warranties. Each of the representations and warranties of MLCI
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date.
(b) Performance. MLCI
shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it or him on or before the Closing.
(c) Consent of Pacific Western
Bank. Pacific Western Bank shall have consented, in writing,
to the transactions contemplated by this Agreement, to the extent necessary
under Gateway’s loan agreements with Pacific Western Bank dated September 29,
2008, or Pacific Western Bank shall have waived its right to approve the
transaction in writing.
(d) Guaranties. If
required by Pacific Western Bank, MLCI shall have provided signed personal
guaranties, acceptable to Pacific Western Bank, sufficient to replace Xxxxxxx X.
Xxxxxxxx and Xxxxxx X. Xxxxxxxx as personal guarantors under Gateway’s loan
agreements with Pacific Western Bank.
(e) Xxxxxxxx
Loan. Gateway shall have entered into a new promissory note in
favor of Xxxxxx Xxxxxxxx in the principal amount of $650,000, with the terms set
forth on Exhibit E
(the “Xxxxxxxx Note”), and MLCI shall have entered into a personal
guaranty guarantying Gateway’s obligations under the Xxxxxxxx Note, with the
terms set forth on Exhibit F (the
“Guaranty”).
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ARTICLE
7
MISCELLANEOUS
Section
7.1 Notices. All
notices, requests and other communications to any party hereunder shall be in
writing and either delivered personally, faxed or sent by overnight courier
to:
|
If to the
Shareholders:
|
Xxxxxxx X. Xxxxxxxx & Xxxxxxx
Xxxxxxxx
|
c/o
Gateway International Holdings, Inc.
0000 Xxx Xxxxxx
Xxxxxx,
XX 00000
Facsimile No.: (000)
000-0000
Xxxxxxxx X. Xxxxxxxx & Xxxx X.
Xxxxxxxx
c/o Gateway International Holdings,
Inc.
0000 Xxx Xxxxxx
Xxxxxx,
XX 00000
Facsimile No.: (000)
000-0000
Xxxxxx Xxxxxxxx
c/o Gateway International Holdings,
Inc.
0000 Xxx Xxxxxx
Xxxxxx,
XX 00000
Facsimile No.: (000)
000-0000
|
If
to MLCI:
|
Money
Line Capital, Inc.
|
0000 Xxxxxxxx Xxxx, Xxxxx
000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx,
__________
Facsimile No.:
________________
With a
copy of
|
all
notices to:
|
The
Lebrecht Group, APLC
|
0000
Xxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Attn: Xxxxx
X. Xxxxxx, Esq
Facsimile:
(000) 000-0000
or such
other address or fax number as such party may hereafter specify for the purpose
by notice to the other parties hereto. All such notices, requests and
other communications shall be deemed received on the date delivered personally
or by overnight delivery service or confirmed facsimile transmission if received
prior to 5 p.m. in the place of receipt and such day is a business day in the
place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
Section
7.2 Amendments; No
Waivers.
(a) Any
provision of this Agreement with respect to transactions contemplated hereby may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by the Shareholders and MLCI; or in the
case of a waiver, by the party against whom the waiver is to be
effective.
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(b) No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section
7.3 Fees and
Expenses. Each of the Shareholders and MLCI shall bear their
own costs and expenses incurred by them in connection with this
Agreement.
Section
7.4 Successors and
Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and assigns; provided, that MLCI shall have the right to assign this
Agreement to an affiliate of MLCI and no other party hereto may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, but any such transfer or
assignment will not relieve the appropriate Party of its obligations
hereunder.
Section
7.5 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the principles of conflicts of law thereof.
Section
7.6 Jurisdiction. Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in any federal or state court located in the
County of Orange, State of California, and each of the parties hereto consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such
court. Each party hereto (including its affiliates, agents, officers,
directors and employees) irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.
Section
7.7 Counterparts;
Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto has received
counterparts hereof signed by all of the other parties. No provision
of this Agreement is intended to confer upon any Person other than the parties
hereto any rights or remedies under this Agreement.
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Section
7.8 Entire
Agreement. This Agreement, along with the schedules and
exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement and supersedes and merges all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.
Section
7.9 Captions. The
captions are included for convenience of reference only and shall be ignored in
the construction or interpretation of this Agreement.
Section
7.10 Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any parties. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the fullest extent possible.
Section
7.11 Specific
Performance. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in
accordance with the its terms and that the parties shall be entitled to specific
performance of the terms of this Agreement in addition to any other remedy to
which they are entitled at law or in equity.
Section
7.12 Survival. The
representations and warranties contained in this Agreement shall survive the
Closing and delivery of the Shares.
Section
7.13 Representation. The
Parties acknowledge that The Lebrecht Group, APLC represents Gateway, in
connection with the negotiation and drafting of this Agreement. The
Lebrecht Group, APLC has not represented either MLCI or the Shareholders in
connection with the negotiation and drafting of this Agreement.
[signature
page follows]
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IN WITNESS WHEREOF, each of
the following individuals has caused this Agreement to be signed, and each Party
that is not an individual has caused this Agreement to be duly executed under
seal by its respective authorized officers, all as of the day and year first
above written.
|
“MLCI”
|
“Shareholders”
|
|
|
Money
Line Capital, Inc.,
|
||
|
a
California corporation
|
||
|
/s/
Xxxx Xxxxxx
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
|
By: Xxxx
Xxxxxx
|
Xxxxxxx
X. Xxxxxxxx, an individual
|
|
|
Its: President
|
||
|
/s/
Xxxxxxx Xxxxxxxx
|
||
|
Xxxxxxx
Xxxxxxxx, an individual
|
||
|
/s/
Xxxxxxxx X. Xxxxxxxx
|
||
|
Xxxxxxxx
X. Xxxxxxxx, an individual
|
||
|
/s/
Xxxx X. Xxxxxxxx
|
||
|
Xxxx
X. Xxxxxxxx, an individual
|
||
|
/s/
Xxxxxx X. Xxxxxxxx
|
||
|
Xxxxxx
X. Xxxxxxxx, an
individual
|
As
acknowledgment and/or confirmation of Sections 1.7, 3.2 –
3.15, only:
|
“Gateway”
|
||
|
Gateway
International Holdings, Inc.,
|
||
|
a
California corporation
|
||
|
/s/
Xxxxxxx X. Xxxxxxxx
|
||
|
By: Xxxxxxx
X. Xxxxxxxx
|
||
|
Its: Chief
Executive Officer
|
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Exhibit
A
The
Shareholders
|
Shareholder
|
No. of Gateway
Shares Owned
(Pre-Transaction)
|
No. of Gateway
Shares to be
Purchased by MLCI
|
Proceeds of the
Purchase
Price (1)
|
|||||||||
|
Xxxxxxx
& Xxxxxxx Xxxxxxxx
|
1,500,000 | 1,350,000 | $ | 270,000 | ||||||||
|
Xxxxxxxx
& Xxxx Xxxxxxxx
|
5,480,000 | 5,000,000 | $ | 841,750 | ||||||||
|
Xxxxxx
X. Xxxxxxxx
|
6,000,000 | 5,500,000 | $ | 1,100,000 | ||||||||
|
Total:
|
12,980,000 | 11,850,000 | $ | 2,211,750 | ||||||||
(1) Purchase
Price will be paid in four installments per Section 1.2. Of the first
installment ($907,500), Xxxxxxx X. Xxxxxxxx will receive $135,000, Xxxxxxxx X.
Xxxxxxxx will receive $272,500, and Xxxxxx X. Xxxxxxxx will receive
$500,000. Of the second installment ($135,000) Xxxxxxx X. Xxxxxxxx
will receive all $135,000, Xxxxxxxx X. Xxxxxxxx will receive $0, and Xxxxxx X.
Xxxxxxxx will receive $0. Of the third installment ($550,000),
Xxxxxxxx X. Xxxxxxxx will receive $319,250 and Xxxxxx X. Xxxxxxxx will receive
$300,000. Of the fourth installment ($550,000), Xxxxxxx X. Xxxxxxxx will receive
$0, Xxxxxxxx X. Xxxxxxxx will receive $250,000, and Xxxxxx X. Xxxxxxxx will
receive $300,000.
A-1
Exhibit
B
Form
Stock Power
B-1
Exhibit
B
Employment
Agreement
C-1
Exhibit
C
Form
of Proxy
C-1
Exhibit
D
Form
of Resignation
C-1
Exhibit
E
Xxxxxxxx
Note
C-1
Exhibit
F
Guaranty
C-1
