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
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Due Date
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$907,500
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Closing Date
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$135,000
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December 15, 2008
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$619,250
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January 31, 2009
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$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 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.
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:
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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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executed copies
of their resignations in the form attached hereto as Exhibit
D ; and
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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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the sum of
$907,500, which is the first installment of the Purchase Price;
and
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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:
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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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executed copies
of the Employment Agreement;
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and executed
copy of the Gledhill Note; and
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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.
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.
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.
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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