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STOCK PURCHASE AGREEMENT

Purchase and Sale Agreement

STOCK PURCHASE AGREEMENT | Document Parties: GATEWAY INTERNATIONAL HOLDINGS INC | Money Line Capital, Inc You are currently viewing:
This Purchase and Sale Agreement involves

GATEWAY INTERNATIONAL HOLDINGS INC | Money Line Capital, Inc

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Title: STOCK PURCHASE AGREEMENT
Governing Law: California     Date: 12/15/2008

STOCK PURCHASE AGREEMENT, Parties: gateway international holdings inc , money line capital  inc
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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:

 

Installment Amount

Due Date

 

 

$907,500

Closing Date

$135,000

December 15, 2008

$619,250

January 31, 2009

$550,000

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 Timothy D. Consalvi 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 Onofrio Saputo and Christopher Frisco v. Gateway International Holdings, Inc., Lawrence Consalvi, Timothy Consalvi and Joe Gledhill, Court of the State of California, County of Orange, Case No. 30-2008-00110905, 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:

 

 

(1)

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;

 

(b)           The Shareholders shall deliver to MLCI:

 

 

(1)

executed copies of their resignations in the form attached hereto as Exhibit D ; and

 

 

(2)

executed copy of the Employment Agreement.

 

(c)           MLCI shall deliver to the Shareholders:

 

 

(1)

the sum of $907,500, which is the first installment of the Purchase Price; and

 

 

(2)

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)

a fully executed copy of the Gateway Board of Directors resolution approving the actions Gateway must take under this Agreement;

 

 

(2)

executed copies of the Employment Agreement;

 

 

(3)

and executed copy of the Gledhill Note; and

 

 

(4)

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.  

 

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 Stephen Kasprisin, 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,


 
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