EXHIBIT (2)(b)
AMENDED AND RESTATED
AGREEMENT PROVIDING FOR SALE AND EXCHANGE
OF CAPITAL STOCK
By and Among
Gateway American Properties Corporation,
a Florida corporation; Gateway American
Properties Corporation, a Colorado
corporation; Gateway American Properties,
L.L.C., a Colorado limited liability
company and the Holders of all Outstanding
Membership Interest of Gateway American
Properties, L.L.C.
As of January 27, 1997
TABLE OF CONTENTS
Page
ARTICLE I - Sale and Exchange of GAPC Shares........................... 6
1.1 With Respect to GAPC............................................. 6
1.2 With the Holders................................................. 7
1.3 With the Public.................................................. 8
ARTICLE II - Certain Matters Affecting GAPC Shares..................... 8
2.1 Certain Shares Restricted........................................ 8
2.2 Registration of GAPC Shares and Public Warrants.................. 9
ARTICLE III - Action Prior to Closing Date............................. 10
3.1 Corporate Action of GAPC......................................... 10
3.2 Corporate Action of GAPC-Florida................................. 10
3.3 Action by Gateway and Holders.................................... 10
3.4 Public Offering of GAPC Shares and Public Warrants............... 11
3.5 Allocation and Responsibility of Transaction Costs and Expenses.. 12
ARTICLE IV - Representations of Gateway and the Holders................ 13
4.1 Entity Status.................................................... 13
4.2 Business Activities.............................................. 13
4.3 Capitalization - Outstanding Membership Interests................ 14
4.4 Material Contracts............................................... 14
4.5 Financial Condition.............................................. 14
4.6 Environmental Matters............................................ 15
4.7 Taxes - Returns.................................................. 16
4.8 Sale of Gateway Securities....................................... 16
4.9 Litigation....................................................... 16
4.10 Finder's Fees.................................................... 17
4.11 Accuracy of Provided Information................................. 17
ARTICLE V - Representations of GAPC-Florida............................ 17
5.1 Corporate Status................................................. 17
5.2 Corporation Action............................................... 18
5.3 Subsidiaries..................................................... 18
5.4 Financial Condition.............................................. 18
5.5 Capitalization of GAPC-Florida................................... 20
5.6 Title to Properties.............................................. 20
5.7 Business Activities of Apollo and GAPC-Florida................... 20
5.8 Taxes and Tax Returns............................................ 21
5.9 Litigation....................................................... 21
5.10 Material Contracts............................................... 21
5.11 Registration Statement on Form SB-2.............................. 22
5.12 Environmental Matters............................................ 22
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Page
ARTICLE VI - Representations of GAPC................................... 23
6.1 Corporate Status................................................. 23
6.2 Corporate Action................................................. 23
6.3 Subsidiaries..................................................... 23
6.4 Financial Condition.............................................. 23
6.5 Capitalization of GAPC........................................... 25
6.6 Title to Properties.............................................. 25
6.7 Business Activities of GAPC...................................... 25
6.8 Taxes and Tax Returns............................................ 25
6.9 Litigation....................................................... 26
6.10 Material Contracts............................................... 26
6.11 Registration Statement on Form SB-2.............................. 26
6.12 Environmental Matters............................................ 27
ARTICLE VII - Pre-Closing Covenants of Gateway and Holders............. 27
7.1 No Change in Business............................................ 27
7.2 No Contracts..................................................... 28
7.3 Issuance of Additional Membership Interest....................... 28
7.4 In General....................................................... 28
7.5 Action Contemplated by Article III, Section 3.4.................. 29
ARTICLE VIII - Pre and Post-Closing Covenants of GAPC.................. 29
8.1 Action Contemplated by Article III, Section 3.5.................. 29
8.2 Basic Documents.................................................. 29
8.3 No Contracts..................................................... 29
8.4 Composition of Board of Directors of GAPC........................ 30
8.5 Officers of GAPC................................................. 31
8.6 Remuneration to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇............................... 31
8.7 Stock Option Plan of GAPC........................................ 31
ARTICLE IX - Closing of Agreement Transactions and Public Offering..... 32
9.1 Concurrent Closing of Sale, Exchange and Public Offering......... 32
9.2 Time and Place of Closing........................................ 33
9.3 Deliveries at Closing............................................ 33
ARTICLE X - Conditions Precedent to Obligations of GAPC-Florida
and GAPC................................................... 35
10.1 Execution by all Holders......................................... 35
10.2 No Adverse Development........................................... 35
10.3 No Breach of Representations, Warranties or Covenants of the
Agreement....................................................... 35
10.4 Accomplishment of Action Described in Article III, Section 3.4... 36
10.5 Opinion of Counsel............................................... 36
10.6 Employment Agreements............................................ 36
10.7 Certificate Required by Representative of the Underwriters....... 36
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Page
ARTICLE XI - Conditions Precedent to Obligation of Gateway and Holders. 37
11.1 No Adverse Development........................................... 37
11.2 Time of Consummation............................................. 37
11.3 No Breach of Representations, Warranties and Covenants........... 37
11.4 Matters Relating to the Public Offering.......................... 38
11.5 Treatment of Transaction......................................... 38
11.6 Opinion of Counsel............................................... 39
11.7 Deliveries in Connection with the Public Offering................ 39
11.8 Appointment to GAPC Board of Directors........................... 39
11.9 Assumption of Gateway Liabilities................................ 39
ARTICLE XII - Indemnification, Survival of Representations and
Warranties............................................... 40
12.1 Indemnification by Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇................... 40
12.2 Indemnification by GAPC-Florida and GAPC......................... 40
12.3 Limitations Regarding Indemnification............................ 40
12.4 Procedures for Third Party Indemnification....................... 41
12.5 Survival of Representations, Warranties and Indemnities.......... 42
ARTICLE XIII - Miscellaneous Provisions................................ 42
13.1 Notices.......................................................... 42
13.2 Successors and Assigns........................................... 42
13.3 Execution in Counterparts........................................ 43
13.4 Background Statement, Schedules and Exhibits..................... 43
13.5 Entire Agreement................................................. 43
13.6 Publicity........................................................ 43
13.7 Attorneys' Fees in Connection with Litigation.................... 43
13.8 Cooperation...................................................... 43
13.9 Applicable Law................................................... 43
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EXHIBIT (2)(b)
AMENDED AND RESTATED
AGREEMENT PROVIDING FOR THE SALE AND
EXCHANGE OF CAPITAL STOCK
THIS AMENDED AND RESTATED AGREEMENT PROVIDING FOR THE SALE AND EXCHANGE
OF CAPITAL STOCK (the "Agreement") is made as of the 27th day of January, 1997
by and between the following entities and natural persons:
Agreement Party and Reference General Description of Agreement Party
------------------------------ -----------------------------------------
GATEWAY AMERICAN PROPERTIES A Florida corporation presently having its
CORPORATION ("GAPC-Florida") sole office in Sarasota, Florida
GATEWAY AMERICAN PROPERTIES A Colorado corporation with its principal
CORPORATION ("GAPC-Colorado") office in Denver, Colorado
GATEWAY AMERICAN PROPERTIES, LLC A limited liability
company formed and ex- ("Gateway")isting
under Colorado law having its principal
office at Denver, Colorado
▇▇▇▇▇▇ ▇. DEUTSCH, ▇▇▇▇ ▇. ▇▇▇▇▇▇, The holders of all outstanding membership
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and all other interest (an "Interest or collectively the
signatories to this Agreement "Interests") of Gateway on the date of the
("Deutsch", "▇▇▇▇▇▇" and "Mes- consummation of all of the transactions
sina", respectively or a "Holder" governed or contemplated by this Agreement
individually or "Holders" collec-
tively)
The foregoing-described entities and natural persons are sometimes described
herein collectively as the "Agreement Parties".
B A C K G R O U N D
This Agreement is being made and entered into as of the 27th day of
January 1997 and is intended by the Agreement Parties to completely and
absolutely replace and supersede that agreement styled "Amended and Restated
Agreement Providing for the Sale and Exchange of Common Stock' which was made
between and among all of the Agreement Parties except GAPC-Colorado as of
January 27, 1995 with a First Addendum thereto which was made as of the first
day of March 1996 (collectively the "Prior Agreement"). With respect to such
Prior Agreement, the Agreement Parties acknowledge that:
(i)Their respective obligations under the Prior Agreement
have extinguished and are no longer binding as of the date of this
Agreement; and
(ii)The Agreement Parties to the Prior Agreement included the
corporate entity APOLLO III, INC. ("Apollo"), an affiliate of GAPC,
but that Apollo has been consolidated and merged with and into
GAPC-Florida prior to the execution of this Agreement.
The Prior Agreement provided that Deutsch, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and any other
Holders of Membership Interest of Gateway would, in accordance with the Prior
Agreement, become the record and beneficial Holders of a certain number of
shares of Common Stock of GAPC-Florida (the "GAPC-Florida Shares") as specified
in the Prior Agreement. The Prior Agreement also contemplated that GAPC-Florida,
contemporaneous to such business combination between GAPC-Florida and Gateway,
would utilize the investment banking services of ▇▇▇▇▇▇ ▇▇▇▇▇ Securities, Inc.
(the "Underwriter") in accordance with the terms of an intended public offering
(the "Underwriting Arrangements") as were set forth in a certain Letter of
Intent dated April 10, 1995 (the "Prior Letter of Intent").
In connection with the business combination transaction and the intended
public offering, GAPC-Florida proceeded to prepare and file with the United
States Securities and Exchange Commission a Registration Statement on Form SB-2,
Commission File No. 33-98054-A (the "Prior Registration Statement"), which Prior
Registration Statement contained a prospectus which set forth the offer of the
Common Stock and Common Stock Purchase Warrants of GAPC-Florida. During the
latter half of calendar 1995, the Underwriter suggested that the terms of the
underwriting be changed and that the number of shares of Common Stock of
GAPC-Florida issuable to the shareholders of Apollo and GAPC-Florida and the
2
Members of Gateway be altered. Additionally, the Underwriter suggested that the
number of shares of GAPC-Florida Common Stock and Common Stock Purchase Warrants
providing for the purchase of GAPC-Florida Common Stock be altered. Negotiations
with respect to such proposed changes were conducted between GAPC-Florida and
the Underwriter with monitoring by the legal counsel to Gateway and the Members
and as a result, a new Letter of Intent was entered between GAPC-Florida and the
Underwriter which is dated January 27, 1997 and which was amended in certain
respects on May 29, 1997 (which letter, as amended, is hereinafter referred to
as the "New Letter of Intent"). A copy of the New Letter of Intent is included
herewith as Exhibit A hereto for informational purposes. After the execution of
the New Letter of Intent, the Agreement Parties were advised that, since all of
the assets and operations of Gateway are located in Colorado and there are no
operations presently contemplated to be conducted in Florida, it would be
advantageous from a taxation standpoint to redomesticate GAPC-Florida in
Colorado. Accordingly, GAPC-Colorado was organized as a Colorado corporation on
March 21, 1997 with an authorized capital of 20,000,000 shares of $.01 par value
Common Stock. GAPC-Florida and GAPC-Colorado have entered into a Plan and
Agreement of Merger dated as of June 30, 1997 pursuant to which GAPC-Florida
will be merged into GAPC-Colorado with GAPC-Colorado being the surviving
corporation. In this merger, GAPC-Colorado will acquire all of the assets and
will assume all of the liabilities and obligations of GAPC-Florida. The
Underwriter has consented to the merger of GAPC-Florida into GAPC-Colorado and
has agreed that GAPC-Colorado shall, upon completion of the merger, be fully
substituted for GAPC-Florida in the New Letter of Intent. (Accordingly, all
references in this Agreement to "GAPC" set forth herein subsequent to this
sentence shall be to GAPC-Colorado unless otherwise indicated.) The parties to
the New Letter of Intent and GAPC-Colorado (which has joined therein) have also
amended it to replace all June 30, 1997 references thereto to November 12, 1997.
The New Letter of Intent governs the intended public offering of the shares of
Common Stock and Common Stock Purchase Warrants of GAPC and, in connection with
such intended public offering as now structured, GAPC, GAPC-Florida, Gateway and
the Members desire to set forth the terms and conditions relative to the
business combination between GAPC, GAPC-Florida and Gateway and matters relating
to the public offering of the shares of Common Stock and the Common Stock
Purchase Warrants of GAPC. The New Letter of Intent refers to this Agreement as
the Amended and Restated Agreement Providing for the Sale and Exchange of
Capital Stock with First and Second Addendums.
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In acknowledging the restructure of the business combination and the
intended public offering of the shares of Common Stock and the Common Stock
Purchase Warrants of GAPC, the Agreement Parties acknowledge that at the
conclusion of the business combination between GAPC, GAPC-Florida and Gateway
and the public offering of the Common Stock and Common Stock Purchase Warrants
of GAPC (herein sometimes collectively referred to as the "Securities"), the
shares of Common Stock and Common Stock Purchase Warrants of GAPC will be held
by the following categories of holders:
4
Shares of Number of Common
GAPC Common Stock Purchase
Stock to be Warrants to be
Held of Record Held of Record
Category of Holder and Beneficially and Beneficially
-------------------- ------------------ ------------------
Holders of GAPC-Florida Common
Stock as of the date of this
Agreement 327,000 300,000
Holders of outstanding Member-
ship Interests of Gateway 2,025,000 ---
The Public 1,500,000 3,000,000
The Underwriter 150,000*
------------------
*The Underwriter will also hold 300,000 Warrants under which it may
acquire an additional 300,000 Common Stock Purchase Warrants. The shares
of Common Stock and Common Stock Purchase Warrants to be held by the
Public and by the Underwriter will be increased to the extent the
Underwriter exercises its over-allotment right set forth in the New Letter
of Intent.
The terms and conditions of the Common Stock Purchase Warrants to be held by the
category of Holder indicated above will be as described in the New Letter of
Intent, which New Letter of Intent is included with this Agreement for
informational purposes and, where appropriate, incorporated herein.
Accordingly, the Agreement Parties wish to set forth by means of this
Agreement the terms and conditions of the business combination which shall occur
between GAPC, GAPC-Florida, Gateway and the Members, as well as the respective
entitlements of the various category of Holders, as such entitlements relate to
the number of shares of GAPC Common Stock to be issued to such category of
Holder and the number of Common Stock Purchase Warrants to be issued to such
category of Holder. Gateway is a party to this Agreement for the purpose of
facilitating the transactions herein described and in connection with certain
representations and warranties of Gateway as set forth in this Agreement.
5
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Agreement Parties hereby agree
as follows:
ARTICLE I
Sale and Exchange of GAPC Securities
Prior to or on the Closing Date established pursuant to Article VIII
hereof, the following sale and/or exchange transactions involving the Securities
shall be consummated in conformance to the terms, conditions and provisions of
this Agreement.
1.1 With Respect to GAPC. Before the filing of the Registration Statement
for the public offering of Common Stock and Common Stock Purchase Warrants of
GAPC, GAPC shall complete the consummation of the combination and merger of
GAPC-Florida with and into GAPC and as a result, the former holders of the
outstanding Common Stock of GAPC-Florida shall hold of record and beneficially
327,000 shares of the Common Stock and 300,000 Common Stock Purchase Warrants of
GAPC having the characteristics set forth in the New Letter of Intent. Of those
327,000 shares, 27,000 shares shall be held of record and beneficially by ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ who has served as the sole director and officer of GAPC-Florida.
Such 27,000 shares are also subject to the terms and conditions attributable to
such shares in the New Letter of Intent. It is acknowledged by the Agreement
Parties that Messrs. Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall constitute the members of
the Board of Directors of GAPC and the officers thereof as hereinafter
specified. GAPC, Gateway and the Members acknowledge that, as a result of the
combination and merger of GAPC-Florida with and into GAPC, GAPC shall have
acquired all of the assets of every kind and character of GAPC-Florida free and
7
clear of any and all liabilities, liens and other encumbrances except those
liabilities described herein, which assets shall have a value sufficient to
permit GAPC-Florida to have been a property transferor for purposes of Section
351 of the Internal Revenue Code, as amended, as such cited Section is
applicable to the business combination between GAPC-Florida, GAPC, the Holders
of Gateway and the purchasers in the public offering. The shares of GAPC Common
Stock, the Common Stock Purchase Warrants of GAPC and the shares of GAPC Common
Stock issuable upon exercise of such Warrants shall be subject to the terms and
conditions, including, without limitation, the holding periods set forth in the
New Letter of Intent. However, the foregoing notwithstanding, such 327,000 GAPC
Shares, the 300,000 Common Stock Purchase Warrants of GAPC and the 300,000
shares of Common Stock of GAPC issuable upon exercise of such Warrants shall be
registered simultaneous to the registration of the Common Stock and Common Stock
Purchase Warrants of GAPC to be registered in connection with the public
offering described and contemplated by this Agreement.
1.2 With the Holders. On or before the Closing Date, as hereinafter
defined, GAPC shall issue to the Holders 2,025,000 GAPC Shares in consideration
for the conveyance by the Holders of all of the outstanding Membership Interest
of Gateway as issued and outstanding on the Closing Date. The 2,025,000 GAPC
Shares shall be issued to the Holders in the proportion as such Holders hold the
Membership Interest of Gateway on the Closing Date. The 2,025,000 GAPC Shares to
be issued to the Holders shall constitute "Restricted Securities" as that term
is defined in the Act. To the extent that any of the 2,025,000 GAPC Shares are
conveyed to Holders who are other than Deutsch, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, such GAPC
Shares shall be registered under the Securities Act of 1933, as amended (the
"Act") and the securities laws of the several states in which the Securities are
qualified for sale (collectively, the "Blue Sky Statutes") in the same manner as
provided herein subject to any applicable provisions of the New Letter of Intent
and Underwriting Arrangements.
1.3 With the Public. On the Closing Date and concurrently but subsequent
to the transactions called for by Sections 1.1 and 1.2 above, GAPC shall
consummate with the Underwriter the sale to the public, on a firm commitment
underwriting basis, of 1,500,000 GAPC Shares at a per Share price to the public
of $4.00 and 3,000,000 Common Stock Purchase Warrants (the "Public Warrants") at
a per Warrant price of $.17, subject to the over-allotment provisions set forth
in the New Letter of Intent and Underwriting Arrangements, less applicable
underwriting discounts and commissions. The consummation of such public offering
shall be conducted pursuant to the terms and provisions of the governing
documents relating to such public offering, including, without limitation, an
underwriting agreement which shall supersede the New Letter of Intent described
earlier in this Agreement (the "Governing Documents"). The Governing Documents
shall be subject to approval, when in final definitive form, by Messrs. Deutsch,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and legal counsel to Gateway. The approval of the Underwriter
and the Governing Documents by Messrs. Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall be on
the basis of the majority vote of such Members and shall not be unreasonably
withheld.
ARTICLE II
Certain Matters Affecting GAPC Shares
2.1 Certain Shares Restricted. Messrs. Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
acknowledge and agree that the GAPC Shares received by them pursuant to the
provisions of this Agreement will, at the time of issuance and receipt thereof,
8
constitute Restricted Securities pursuant to the provisions of the Act and Rule
144 promulgated thereunder in that such GAPC Shares will not have been
registered pursuant to the Act and any Blue Sky Statutes and as a result of the
affiliate status of Messrs. Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ with Gateway prior to
the Closing Date and as a result of the service of Messrs. Deutsch, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ as directors and officers of GAPC on and subsequent to the Closing Date.
The 327,000 GAPC Shares issued in connection with the organization of GAPC and
the combination and merger of GAPC-Florida with and into GAPC also constitute
Restricted Securities.
2.2 Registration of GAPC Shares and Public Warrants. Except for the GAPC
Shares issued to Messrs. Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ in accordance with the
provisions of Section 1.2 of this Agreement, all Securities of GAPC issued under
the terms and provisions of this Agreement and the Underwriting Arrangements as
embodied by the New Letter of Intent and the Governing Documents shall be
registered under the Act and the Blue Sky Statutes simultaneously with the
registration of the 1,725,000 GAPC Shares and 3,450,000 Public Warrants to be
offered and sold to the public on the Closing Date, which number of GAPC Shares
and Pubic Warrants takes into account the over-allotment option afforded to the
Underwriting pursuant to the New Letter of Intent. Such Securities shall
constitute, on and after the Closing Date, freely tradeable securities which
may, subject to any sale restrictions as set forth in the New Letter of Intent,
be sold in any market which comes into being subsequent to the completion of the
public offering of the GAPC Shares and Public Warrants to the public. In that
regard, the New Letter of Intent provides that, with the exception of 27,000
GAPC Shares which are beneficially held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the GAPC Shares,
Common Stock Purchase Warrants and the GAPC Shares issuable upon the exercise of
such Common Stock Purchase Warrants and held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and the
previous holders of the Common Stock of GAPC-Florida shall be subject to the
restrictions on transfer as imposed by the New Letter of Intent. Such is the
case also for the 27,000 GAPC Shares beneficially held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
Such Securities, however, shall not be included in the GAPC Shares which are
included in the public offering of GAPC Shares and Public Warrants.
9
ARTICLE III
Action Prior to Closing Date
3.1 Corporate Action of GAPC. From the date of this Agreement to the
Closing Date, GAPC shall undertake and complete all requisite action, including
all action required pursuant to the Colorado Business Corporation Act, the Act
and applicable Blue Sky Statutes including, without limitation, the securities
laws of Florida and Colorado, in order to permit GAPC to prepare for and to
consummate the transactions called for by this Agreement, including the public
offering of the GAPC Shares and Public Warrants as described in Section 3.4 of
this Article III.
3.2 Corporate Action of GAPC-Florida. From the date of this Agreement to
the Closing Date, GAPC-Florida shall undertake and complete all requisite
action, including all action required pursuant to the Florida Business
Corporation Act, the Act and applicable Blue Sky Statutes including, without
limitation, the securities laws of Florida and Colorado, in order to permit
GAPC-Florida and GAPC to prepare for and to consummate the transactions called
for by this Agreement, including the public offering of the GAPC Shares and
Public Warrants as described in Section 3.4 of this Article III.
3.3 Action by Gateway and Holders. From the date of this Agreement to the
Closing Date, Gateway and the Holders shall undertake all action as may be
required under applicable law, including the laws of the State of Colorado, in
order to permit Gateway and the Holders to consummate the transactions called
for by this Agreement including, without limitation, the conveyance of all of
the Membership Interest of Gateway which is outstanding on the Closing Date in
accordance with Section 1.2 of Article I of this Agreement. Such action on the
part of Gateway shall include the providing by Gateway, through the action of
the Members, of all necessary cooperation with respect to the public offering of
the GAPC Shares and Public Warrants in the public offering described in Section
3.4 of this Article III. Such cooperation by Gateway with respect to such public
offering shall be subject to the provisions of Section 3.5 of this Article III.
Such cooperation shall include but not be limited to the participation by the
Holders and other employees and agents of Gateway in the providing of necessary
information and the preparation of any necessary documentation for inclusion in
the Registration Statement on Form SB-2 (the "Registration Statement") to be
filed by GAPC in connection with such public offering and the timely preparation
and delivery by Gateway of audited/unaudited financial statements required to be
included in such Registration Statement, in accordance with the appropriate form
instructions relating thereto and the rules and regulations of the United States
Securities and Exchange Commission (the "SEC").
10
3.4 Public Offering of GAPC Shares and Public Warrants. As indicated in
the foregoing and subsequent provisions of this Agreement, GAPC, concurrently
with, but immediately subsequent to, the exchange of GAPC Shares for the entire
Membership Interest of Gateway outstanding on the Closing Date, shall consummate
a public offering, on a firm commitment underwriting basis, of 1,500,000 GAPC
Shares and 3,000,000 Public Warrants at a per Share public offering price of
$4.00 and a per Public Warrant price of $.17 (to be increased to 1,725,000 GAPC
Shares and 3,450,000 Public Warrants in the event that the over-allotment option
of the Underwriter is utilized) before deduction of any underwriting discounts
and commissions and subject to the provisions of Article I and Article VIII of
this Agreement. Gateway, GAPC and the Holders acknowledge that the principal and
primary responsibility for the undertaking and completion of such public
offering will be that of GAPC with the assistance of Gateway, the Members and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. In that regard, GAPC shall promptly and continuously
advise the Holders and their counsel as to the progress occurring with respect
to the public offering and the Registration Statement.
11
3.5 Allocation and Responsibility of Transaction Costs and Expenses.
GAPC-Florida, GAPC, Gateway and the Holders, to the extent of their respective
resources, shall bear their respective costs and expenses in connection with the
preparation for consummation of the transactions provided for in this Agreement.
With respect to the processes involved in the public offering of the GAPC Shares
and Public Warrants, costs and other expenses (including accounting and legal
fees, filing fees and printing costs and expenses) shall be borne by
GAPC-Florida, GAPC and Gateway as shall be determined by GAPC, Gateway and the
Members during the period commencing with the date of this Agreement through the
Closing Date. GAPC-Colorado has agreed to pay $20,000 for the audit fee for the
financial statements of GAPC-Florida to be included in the Registration
Statement. In such regard, GAPC-Florida, GAPC, Gateway and the Holders
acknowledge that GAPC, GAPC-Florida (together with Apollo now combined with and
merged into GAPC-Florida) expended substantial sums on behalf of GAPC-Florida,
GAPC, Gateway and the Holders with respect to the initial efforts to initiate
and consummate the business combination of GAPC-Florida, GAPC and Gateway and
the related public offering as contemplated by the Prior Letter of Intent.
Accordingly, it is anticipated that the consummation of the combination of
GAPC-Florida, GAPC and Gateway and the completion of the public offering
attendant costs and expenses will substantially be borne by GAPC or Gateway.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, counsel to GAPC-Florida has agreed to defer payment of fees
accrued and to be accrued until the consummation of the public offering.
12
ARTICLE IV
Representations of Gateway and the Holders
4.1 Entity Status. Gateway and the Holders represent and warrant to
GAPC-Florida and GAPC that Gateway is a validly formed and existing limited
liability company under the laws of the State of Colorado as of the date of this
Agreement and such will also be the case on the Closing Date; and as of the date
of this Agreement and as of the Closing Date, Gateway has and will have all
necessary authority and power to conduct its business and to own its properties,
possesses all necessary permits, licenses and other documents or authorities
required in connection with the conduct of its business, and the consummation of
the transactions contemplated by this Agreement will not constitute a breach or
event of default under the terms of any contract or agreement to which Gateway
is a party or pursuant to which it is bound or under which its assets are
subject or be in violation of its basic governing documents. The consummation of
the transactions contemplated and called for by this Agreement will not
invalidate any required permit, license or other document issued or to be issued
to Gateway and necessary for the conduct of its business as currently conducted
or as such business is contemplated to be conducted during the future time.
Gateway is not an affiliate (as said term is defined in the Securities Exchange
Act of 1934, as amended) of any other entity, except as reflected in Schedule I
hereto.
4.2 Business Activities. The business activities of Gateway, as presently
conducted and as contemplated to be conducted, are in all material respects as
described and set forth in that certain private placement memorandum of Gateway
dated September 20, 1994, this Agreement, the section captioned "Business of
Gateway" as set forth in the Business Plan of Gateway and the Prior Registration
Statement, all of which documents have been previously provided to GAPC-Florida
or are being updated at times contemporaneous to the date of this Agreement.
13
4.3 Capitalization - Outstanding Membership Interests. As of December 31,
1997, the capitalization of Gateway is constituted by the capital contributed by
its present members (which includes a merger of an affiliated entity), Deutsch,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and four additional Members in the amount of approximately
$182,250 and retained earnings of approximately $212,048. The Membership
Interest outstanding as of the date of this Agreement is held in its entirety by
Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and four additional Holders. As of the date of this
Agreement and as of the Closing Date, there are not and there will not be any
outstanding rights or options to acquire authorized but unissued Membership
Interest of Gateway except as reflected in Schedule II hereto.
4.4 Material Contracts. Listed and described on Schedule III to this
Agreement are all material contracts to which Gateway is a party, excluding this
Agreement. The term "material contract" means a contract to which Gateway is a
party and which has been entered into by Gateway other than in connection with
the conduct of the ordinary course of business of Gateway.
4.5 Financial Condition. Gateway has, with the assistance of its
independent certified public accountants, prepared its audited financial
statements reflecting the financial condition of Gateway, the operations of
Gateway, as well as other related financial statements and schedules for the two
fiscal years ended December 31, 1996. It is in the process of preparing such
financial statements for the interim financial reporting periods which are
required to be included in the Registration Statement (the "Financial
Statements), which Financial Statements will be delivered to GAPC for
utilization and inclusion in the preparation of the Registration Statement to be
prepared, filed and processed to effectiveness in connection with the Public
Offering. With respect to such Financial Statements, Gateway and the Holders
represent and warrant that such Financial Statements will fairly present in all
material respects the financial condition of Gateway as of the date of such
Financial Statements and its results of operations for the periods indicated,
all to the best of the knowledge of the Holders and such Financial Statements
will have been prepared in accordance with generally accepted accounting
principles consistently applied except as may be indicated in such Financial
Statements, the related notes thereto and other information relating thereto.
14
Except as set forth in Schedule IV to this Agreement, Gateway has no liabilities
or obligations of any nature which, in accordance with generally accepted
accounting principles, must be set forth in the Financial Statements except
those liabilities which are incurred as a result of the conduct of the ordinary
course of business of Gateway after the date of the most recent such Financial
Statements furnished or those liabilities which would not either singularly or
in the aggregate have a material adverse affect on the financial condition of
Gateway and the conduct of its business in the ordinary course. The referenced
Schedule IV shall reflect any material liabilities not identified on the
Financial Statements which exist on the Closing Date.
4.6 Environmental Matters. Gateway, in connection with its properties and
the conduct of its business in the ordinary course, to the best of the knowledge
of the Holders, is in compliance with all governmental guidelines, laws and
ordinances concerning the use and storage of hazardous materials including,
without limitation, fuel or similar oils. To the best of the Holders' knowledge,
no hazardous materials contamination is present on any property owned or to be
acquired by Gateway.
4.7 Taxes - Returns. Except as set forth on Schedule V, Gateway has filed
in a timely fashion all federal, state, county and local tax returns which it is
obligated to file pursuant to any taxing authority and all taxes reflected on
any such returns filed have been paid in their entirety by Gateway, except in
the instance of a validly asserted contest with respect to any such tax, as such
contest may be identified on Schedule V to this Agreement.
4.8 Sale of Gateway Securities. All Notes previously sold by Gateway were
privately offered and sold to suitable and Accredited Investors as such latter
term is defined under the Act and the offer and sale of such Gateway Note, to
the best of the knowledge and belief of the Holders, constituted a transaction
exempt from the registration requirements of the Act and any applicable Blue Sky
Statute. In the event that, in the sole discretion of Deutsch, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, additional Membership Interests or other securities of Gateway are sold
subsequent to the date of this Agreement and prior to the Closing Date, such
sale of additional Membership Interest or other securities shall also be made to
suitable and Accredited Investors as such latter term is defined in the Act and
in a transaction or transactions which are reasonably claimed exempt from the
registration requirements of the Act and Blue Sky Statutes.
15
4.9 Litigation. Except as disclosed on Schedule VI to this Agreement,
Gateway and the Holders are not involved as a party to, nor are any of the
assets of Gateway the subject of, any judicial or administrative proceedings
before any court or governmental agency. Except as set forth in such Schedule
VI, the Holders are not aware of any factual circumstances or situations which
might reasonably be expected to result in the assertion of a claim or the
commencement of litigation or any administrative proceeding at any time between
the date of this Agreement and the Closing Date.
4.10 Finder's Fees. Gateway and the Holders are not obligated to pay any
finder's fee or commission to any person or persons as a result of the execution
of this Agreement and the consummation of the transactions provided for herein.
4.11 Accuracy of Provided Information. No representation or warranty given
or made by Gateway or the Holders pursuant to this Agreement or in any
statement, certificate or other document required to be furnished by Gateway or
the Holders to GAPC-Florida or GAPC pursuant to the terms of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
16
ARTICLE V
Representations of GAPC-Florida
GAPC-Florida represents to GAPC, Gateway and the Holders as follows:
5.1 Corporate Status. As of the date of this Agreement and on the Closing
Date, GAPC-Florida is and will be a validly existing corporation organized
pursuant to the laws of the State of Florida and has and will have all legal
corporate authority and power to conduct its business activities, to own its
properties and possesses all necessary permits, licenses and other documents or
authorities required in connection with its business activities and, assuming
that the requisite corporate action contemplated by this Agreement has been
accomplished prior to the Closing Date, the consummation of the transactions
provided for by this Agreement will not constitute a breach or event of default
under the terms of any contract or agreement to which GAPC-Florida is a party or
pursuant to which GAPC-Florida is bound or by which its assets are subject or be
in violation of its respective Articles of Incorporation as amended to date and
their respective Bylaws. The consummation of the transactions contemplated and
called for by this Agreement will not invalidate any required permit, license or
other document issued or to be issued to GAPC-Florida and necessary for the
conduct of its business activities as currently conducted or as such business is
contemplated to be conducted during the future time.
17
5.2 Corporate Action. Prior to the Closing Date, GAPC-Florida will
undertake and complete all required corporate action which may be required in
order to permit the consummation of the transactions called for by this
Agreement. With respect to the combination and merger of Apollo with and into
GAPC-Florida, all corporate action has been taken with respect to such
transaction as is set forth in the Florida Business Corporation Act and in such
regard, the previous holders of the outstanding Preferred Stock - First Series
of Apollo have agreed to the exchange of such shares of Preferred Stock - First
Series of Apollo for a like number of GAPC-Florida shares of Common Stock. With
respect to the holders of the outstanding Common Stock of Apollo, such holders
are not entitled to any rights of dissent or appraisal as such may be provided
under the Florida Business Corporation Act due to the nature of the business of
GAPC-Florida which, in summary, was to identify, negotiate and consummate a
combination transaction with an entity actively engaged in the conduct of one or
more lines of business and that such business objective is being realized and
accomplished by reason of the consummation of the combination of GAPC-Florida,
GAPC and Gateway.
5.3 Subsidiaries. GAPC-Florida has no corporate subsidiaries.
5.4 Financial Condition. GAPC-Florida is a Florida corporation formed
for the purpose of consolidating with Apollo and merging with GAPC which was
formed to acquire all of the outstanding Membership Interest of Gateway from the
Holders and for the purpose of continuing the business activities of Gateway.
Consequently, GAPC-Florida, as of the date of this Agreement and immediately
prior to the Closing Date, does not have and will not have significant assets,
stockholders' equity or liabilities (other than the liabilities incurred and to
18
be incurred in connection with the transactions called for by this Agreement and
the Prior Agreement, including, without limitation, the public offering of GAPC
Shares and Public Warrants). The financial statements of GAPC-Florida, and to
the extent required, of Apollo, as certified by ▇▇▇▇▇▇ & Company, P.A.,
independent certified public accountants or any successor accountants, furnished
to Gateway and the Holders pursuant to the terms of this Agreement or which may
be furnished to Gateway and the Holders in accordance with the terms of this
Agreement or for utilization in the Registration Statement to be prepared, filed
and processed to effectiveness with respect to the public offering of the GAPC
Shares and Public Warrants and reflecting the financial conditions and results
of operations of GAPC-Florida (and to the extent required, Apollo) at and for
the fiscal years indicated or for such other periods indicated, fairly present
or will fairly present in all material respects the financial condition of
GAPC-Florida (and to the extent required, Apollo) as of the date of such
Financial Statements (whether audited or unaudited), all to the best of the
knowledge of GAPC-Florida in accordance with generally accepted accounting
principles consistently applied except as may be indicated in such Financial
Statements, the related notes thereto and other information relating thereto.
Except as set forth in Schedule VII hereto, GAPC-Florida has no liabilities or
obligations of any nature which, in accordance with generally accepted
accounting principles, must be set forth in the described financial statements
except those liabilities which are incurred as a result of the ordinary course
of business of GAPC-Florida after the date of the most recent financial
statements (which liabilities will be reflected in an amendment to Schedule VII
on the Closing Date), which are incurred by GAPC-Florida in connection with the
preparation, filing and processing to effectiveness of the Registration
Statement relating to the described public offering of the GAPC Shares and
Public Warrants or are liabilities which would not either singularly or in the
aggregate have a material adverse affect on GAPC-Florida.
19
5.5 Capitalization of GAPC-Florida. Set forth as Schedule VIII to this
Agreement are the Articles of Incorporation of GAPC-Florida (as amended to date
and which include the Agreement, Plan and Articles of Merger relating to the
combination and merger of Apollo with and into GAPC-Florida) which reflect the
capital structure of GAPC-Florida as of the date of this Agreement.
5.6 Title to Properties. Except as indicated in the financial statements
described in Section 5.4 above, or in Schedule IX to this Agreement,
GAPC-Florida has good and valid title to the assets reflected in the financial
statements of GAPC-Florida at the periods indicated therein, as described in
Section 5.4 of this Agreement.
5.7 Business Activities of Apollo and GAPC- Florida. Apollo conducted no
business activities during its corporate existence other than to seek and
consummate an appropriate business combination. Its amended business plan
provided for the investigation of various lines of business to be initiated and
conducted and/or the combination of Apollo with one or more other business
entities such as GAPC and Gateway. GAPC-Florida and GAPC have been specifically
formed in order to facilitate the transactions called for by this Agreement and
as of the date of this Agreement and as of the Closing Date, GAPC-Florida has
not and will not have conducted any business activities other than those
relating to the consolidation and merger of Apollo with and into GAPC-Florida,
the combination with GAPC, Gateway and those activities relating to the conduct
of the public offering of GAPC Shares and Public Warrants.
20
5.8 Taxes and Tax Returns. Except as set forth in Schedule X to this
Agreement, GAPC-Florida and Apollo have filed in a timely fashion all federal,
state, county and local tax returns relative to any taxes required to be paid by
GAPC-Florida and Apollo and have timely paid any such taxes due pursuant to such
returns. GAPC-Florida and Apollo, as of the date of this Agreement and on the
Closing Date, are not and will not be involved in any asserted contest with
respect to any tax.
5.9 Litigation. Except as described on Schedule XI hereto, GAPC-Florida
and the members of the Board of Directors of GAPC-Florida are not, as of the
time of the full execution of this Agreement by the Agreement Parties, involved
as a party to, nor are its assets the subject of, any judicial or administrative
proceedings before any court or governmental agency. Except as set forth and
described in such Schedule XI, GAPC-Florida is not aware of any factual
circumstances or situations which might reasonably be expected to result in the
assertion of any claim by way of litigation or administrative proceeding at any
time on and subsequent to the date of this Agreement and as of the Closing Date.
5.10 Material Contracts. Except as set forth in Schedule XII to this
Agreement, GAPC-Florida is not, with the exception of this Agreement, a party to
any material contract. The term "material contract" means any contract which
involves the future payment of a consideration by GAPC-Florida in an amount in
excess of $25,000 and a term of performance concluding 12 or more months from
the date of this Agreement. The Agreement parties acknowledge that GAPC-Florida
has or is expected to enter into one or more material contracts which will
govern and relate to the public offering of the GAPC Shares and Public Warrants.
Other than those contracts described on Schedule XII hereto and except as
provided in Article VIII, any material contract intended to be created and of
which GAPC-Florida shall be a party, including those contracts which will govern
and relate to the public offering of the GAPC Shares and Public Warrants shall
be subject to the approval of Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (such approval being
accomplished by a majority vote of such Members).
21
5.11 Registration Statement on Form SB-2. GAPC-Florida will participate
and cooperate in the preparation of the Registration Statement for GAPC on Form
SB-2 which relates to the public offering of 1,725,000 GAPC Shares and 3,450,000
Public Warrants (which includes the over-allotment GAPC Shares and Public
Warrants as well as additional securities being registered pursuant to the
Underwriting Arrangements) and will use its best diligent efforts to cause such
Registration Statement to be filed and processed to effectiveness with the SEC
and such blue sky authorities as appropriate. Such described Registration
Statement will be meticulously and carefully prepared in compliance with the Act
and rules and regulations thereunder, as well as Blue Sky Statutes and rules and
regulations thereunder. Such Registration Statement will set forth all material
information which may reasonably be required in connection with any investment
decision to purchase the offered GAPC Shares and Public Warrants and such
Registration Statement will, prior to the filing thereof, be furnished to GAPC,
Gateway, the Holders and their counsel and other experts for examination,
comment and amendment. In connection with the preparation, filing and processing
to effectiveness of such Registration Statement with the SEC and the several
blue sky authorities, GAPC-Florida, Gateway and the Members acknowledge that
GAPC and its counsel will be materially assisted by counsel for GAPC-Florida.
Counsel for GAPC-Florida with respect to such undertaking shall be ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
5.12 Environmental Matters. GAPC-Florida is not subject to any
governmental guidelines, laws or ordinances relating to hazardous materials as
of the date of this Agreement.
▇▇
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇ represents to GAPC-Florida, Gateway and the Holders as follows:
6.1 Corporate Status. As of the date of this Agreement and on the Closing
Date, GAPC is and will be a validly existing corporation organized pursuant to
the laws of the State of Colorado and has and will have all legal corporate
authority and power to conduct its business activities, to own its properties
and possesses all necessary permits, licenses and other documents or authorities
required in connection with its business activities and, assuming that the
requisite corporate action contemplated by this Agreement has been accomplished
prior to the Closing Date, the consummation of the transactions provided for by
this Agreement will not constitute a breach or event of default under the terms
of any contract or agreement to which GAPC is a party or pursuant to which GAPC
is bound or by which its assets are subject or be in violation of its respective
Articles of Incorporation as amended to date and their respective Bylaws. The
consummation of the transactions contemplated and called for by this Agreement
will not invalidate any required permit, license or other document issued or to
be issued to Gateway and necessary for the conduct of its business activities as
currently conducted or as such business is contemplated to be conducted during
the future time.
6.2 Corporate Action. Prior to the Closing Date, GAPC will undertake and
complete all required corporate action which may be required in order to permit
the consummation of the transactions called for by this Agreement.
6.3 Subsidiaries. GAPC has no corporate subsidiaries.
6.4 Financial Condition. GAPC is a Colorado corporation formed for the
purpose of merging with GAPC-Florida, acquiring all of the outstanding
Membership Interest of Gateway from the Members and for the purpose of
continuing the business activities of Gateway. Consequently, GAPC, as of the
date of this Agreement and immediately prior to the Closing Date, does not have
and will not have significant assets, stockholders' equity or liabilities (other
23
than the liabilities incurred and to be incurred in connection with the
transactions called for by this Agreement and the Prior Agreement, including,
without limitation, the public offering of GAPC Shares and Public Warrants). The
financial statements of GAPC, as certified by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.,
independent certified public accountants, furnished to GAPC-Florida, Gateway and
the Holders pursuant to the terms of this Agreement or which may be furnished to
Gateway and the Holders in accordance with the terms of this Agreement or for
utilization in the Registration Statement to be prepared, filed and processed to
effectiveness with respect to the public offering of the GAPC Shares and Public
Warrants and reflecting the financial conditions and results of operations of
GAPC at and for the fiscal years indicated or for such other periods indicated,
fairly present or will fairly present in all material respects the financial
condition of GAPC as of the date of such Financial Statements (whether audited
or unaudited), all to the best of the knowledge of GAPC in accordance with
generally accepted accounting principles consistently applied except as may be
indicated in such Financial Statements, the related notes thereto and other
information relating thereto. Except as set forth in Schedule VII hereto, GAPC
has no liabilities or obligations of any nature which, in accordance with
generally accepted accounting principles, must be set forth in the described
financial statements except those liabilities which are incurred as a result of
the ordinary course of business of GAPC after the date of the most recent
financial statements (which liabilities will be reflected in an amendment to
Schedule VII on the Closing Date), which are incurred by GAPC in connection with
the preparation, filing and processing to effectiveness of the Registration
Statement relating to the described public offering of the GAPC Shares and
Public Warrants or are liabilities which would not either singularly or in the
aggregate have a material adverse affect on GAPC.
24
6.5 Capitalization of GAPC. Set forth as Schedule VIII to this Agreement
are the Articles of Incorporation of GAPC (as amended to date and which include
the Agreement, Plan and Articles of Merger relating to the combination and
merger of GAPC-Florida with and into GAPC) which reflect the capital structure
of GAPC as of the date of this Agreement. On and after the Closing Date, the
capitalization of GAPC shall be constituted by the GAPC Shares to be in the
merger with GAPC-Florida and to be outstanding in the amount of 327,000 GAPC
Shares, and the GAPC Shares to be issued to the Holders and to the public as a
result of the public offering.
6.6 Title to Properties. Except as indicated in the financial statements
described in Section 6.4 above, or in Schedule IX to this Agreement, GAPC has
good and valid title to the assets reflected in the financial statements of GAPC
at the periods indicated therein, as described in Section 6.4 of this Agreement.
6.7 Business Activities of GAPC. GAPC has been specifically formed in
order to facilitate the transactions called for by this Agreement and as of the
date of this Agreement and as of the Closing Date, GAPC has not and will not
have conducted any business activities other than those relating to the
consolidation and merger of GAPC-Florida with and into GAPC, the combination
with Gateway and those activities relating to the conduct of the public offering
of GAPC Shares and Public Warrants.
6.8 Taxes and Tax Returns. Except as set forth in Schedule X to this
Agreement, GAPC has filed in a timely fashion all federal, state, county and
local tax returns relative to any taxes required to be paid by GAPC and has
timely paid any such taxes due pursuant to such returns. GAPC, as of the date of
this Agreement and on the Closing Date, is not and will not be involved in any
asserted contest with respect to any tax.
25
6.9 Litigation. Except as described on Schedule XI hereto, GAPC and the
members of the Board of Directors of GAPC are not, as of the time of the full
execution of this Agreement by the Agreement Parties, involved as a party to,
nor are its assets the subject of, any judicial or administrative proceedings
before any court or governmental agency. Except as set forth and described in
such Schedule XI, GAPC is not aware of any factual circumstances or situations
which might reasonably be expected to result in the assertion of any claim by
way of litigation or administrative proceeding at any time on and subsequent to
the date of this Agreement and as of the Closing Date.
6.10 Material Contracts. Except as set forth in Schedule XII to this
Agreement, GAPC is not, with the exception of this Agreement, a party to any
material contract. The term "material contract" means any contract which
involves the future payment of a consideration by GAPC in an amount in excess of
$25,000 and a term of performance concluding 12 or more months from the date of
this Agreement. The Agreement parties acknowledge that GAPC has or is expected
to enter into one or more material contracts which will govern and relate to the
public offering of the GAPC Shares and Public Warrants. Other than those
contracts described on Schedule XII hereto and except as provided in Article IX,
any material contract intended to be created and of which GAPC shall be a party,
including those contracts which will govern and relate to the public offering of
the GAPC Shares and Public Warrants shall be subject to the approval of Deutsch,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (such approval being accomplished by a majority vote of such
Members).
6.11 Registration Statement on Form SB-2. GAPC will undertake the
preparation of the Registration Statement on Form SB-2 which relates to the
public offering of 1,725,000 GAPC Shares and 3,450,000 Public Warrants (which
includes the over-allotment GAPC Shares and Public Warrants as well as
26
additional securities being registered pursuant to the Underwriting
Arrangements) and will use its best diligent efforts to cause such Registration
Statement to be filed and processed to effectiveness with the SEC and such blue
sky authorities as appropriate. Such described Registration Statement will be
meticulously and carefully prepared in compliance with the Act and rules and
regulations thereunder, as well as Blue Sky Statutes and rules and regulations
thereunder. Such Registration Statement will set forth all material information
which may reasonably be required in connection with any investment decision to
purchase the offered GAPC Shares and Public Warrants and such Registration
Statement will, prior to the filing thereof, be furnished to GAPC-Florida,
Gateway, the Holders and their counsel and other experts for examination,
comment and amendment. In connection with the preparation, filing and processing
to effectiveness of such Registration Statement with the SEC and the several
blue sky authorities, GAPC-Florida acknowledges that GAPC-Florida and its
counsel will materially assist counsel to GAPC and Gateway. Counsel for
GAPC-Florida with respect to such undertaking shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
6.12 Environmental Matters. GAPC is not subject to any governmental
guidelines, laws or ordinances relating to hazardous materials as of the date of
this Agreement.
ARTICLE VII
Pre-Closing Covenants of Gateway and Holders
7.1 No Change in Business. Gateway and the Holders shall not
materially modify or change the operations or business as conducted by Gateway
as of the date hereof except as such changes are presently contemplated in the
ordinary course of business of Gateway and as such will be described in the
Registration Statement.
27
7.2 No Contracts. Except as contemplated and described herein, any
Schedule hereto or the Registration Statement, Gateway shall not enter into any
material agreement or contract or make any material modifications to existing
contracts or agreements.
7.3 Issuance of Additional Membership Interest. Except as determined in
the sole discretion of Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, Gateway shall not from the
date of this Agreement to the Closing Date cause to be issued any new Membership
Interest except in accordance with the circumstances contemplated by this
Agreement. The issuance of such additional Membership Interest shall not result
in any increase in the number of shares to be issued to the members of Gateway
on the Closing Date, that number of shares being established at 2,025,000 GAPC
Shares. Additionally, at the conclusion of the issuance of any Membership
Interest by Gateway, Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall own at least 80% of such
outstanding Membership Interest unless a lesser percentage of ownership of such
Membership Interest is agreed to by Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (by unanimous
vote of such Members).
7.4 In General. Except as otherwise provided for in this Agreement:
a. No change will be made in the basic documents which provide for the
formation and existence of Gateway;
b. No distributions shall be effected by Gateway to the Holders except
as may be contemplated by this Agreement and as is set forth in a schedule
hereto; and
c. Gateway and the Holders shall use their respective best efforts to
preserve intact the business organization of Gateway, its business and goodwill,
as well as the availability to it of its managing members and other key
employees and the goodwill of persons having business relations with Gateway.
28
7.5 Action Contemplated by Article III, Section 3.4. Gateway and the
Holders shall use their best diligent efforts to undertake and complete the
action contemplated by Article III, Section 3.4, which relates to the
preparation and providing of audited and unaudited financial statements
reflecting the financial condition and results of operations of Gateway at and
for the periods required in connection with the preparation, filing and
processing to effectiveness of the Registration Statement which relates to the
public offering of the GAPC Shares and Public Warrants.
ARTICLE VIII
Pre and Post-Closing Covenants of GAPC
8.1 Action Contemplated by Article III, Section 3.5. On and subsequent to
the date of this Agreement, GAPC, as assisted by GAPC-Florida, Gateway, the
Holders and their respective legal counsel, shall use its best diligent efforts
in connection with the preparation, filing and processing to effectiveness of
the Registration Statement on Form SB-2, which relates to the public offering of
1,725,000 GAPC Shares and 3,450,000 Public Warrants (which includes the
over-allotment GAPC Shares and Public Warrants in the amounts of 225,000 GAPC
Shares and 450,000 Public Warrants, respectively).
8.2 Basic Documents. Included herewith as Schedule XIII are the Articles
of Incorporation (as amended to date) and Bylaws of GAPC. GAPC, by action of its
Board of Directors and shareholder, shall not effect any amendments to such
Articles of Incorporation or Bylaws from the date of this Agreement to the
Closing Date without the express written consent of all of the Holders.
8.3 No Contracts. With the exception of this Agreement and those
contractual arrangements which must be established in order to facilitate and
conclude the conduct of the public offer of the GAPC Shares and Public Warrants,
GAPC shall not enter into any material contract as the term "material contract"
29
is described elsewhere in this Agreement. Excepted from this Section 8.3 will be
any contractual arrangements existing between GAPC and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A.
with respect to legal representation and services provided in connection with
the Prior Registration Statement and the Registration Statement or with other
service providers who provide services relating to such Prior Registration
Statement and the Registration Statement. With respect to material contracts
which may be entered into by GAPC with various service and professional service
providers relating to the public offering of the GAPC Shares and Public
Warrants, including any contractual arrangements established with ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, P.A., relating to the public offering, GAPC shall use its best diligent
efforts to obtain the most reasonable prices and level of fees possible in
connection with such service and professional service providers, including
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A., and shall inform Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of the
import of any such contracts and shall provide copies of same to Deutsch, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇. Deutsch, a Member, and the Managing Partner of Gateway, has
received information from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A.,
Sarasota, Florida with respect to the outstanding fees which are accrued and
unpaid with respect to the combination transaction and the public offering of
the GAPC Shares and Public Warrants, as well as the estimate of additional fees
to be accrued, which outstanding and accrued fees and additional fees shall be
paid on the Closing Date by GAPC to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, P.A.
8.4 Composition of Board of Directors of GAPC. As of the date of this
Agreement, the Board of Directors of GAPC is constituted by three members namely
Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇. It is acknowledged that the New Letter of Intent
contemplates that two additional persons shall serve as members of the Board of
Directors of GAPC together with Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ on and subsequent to
the Closing Date, which two additional members shall be approved by the
Underwriter.
30
8.5 Officers of GAPC. During the period from the date of this Agreement to
the Closing Date, the officers of GAPC shall be comprised of: ▇▇▇▇▇▇ ▇. Deutsch,
President and Chief Executive Officer; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President -
Development; and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President - Finance, Treasurer and
Secretary.
8.6 Remuneration to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. The Agreement Parties acknowledge
that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ has served as President and Chief Executive Officer of
Apollo from the time of its formation and until the merger and consolidation of
Apollo with and into GAPC-Florida and that ▇▇▇▇▇▇▇▇▇ has also served as the sole
director, President and Treasurer of GAPC-Florida. As a result of such service,
compensation is accrued and is owing by GAPC-Florida to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ which
GAPC has agreed to assume at the closing. In that regard, on the Closing Date
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall be paid in cash the amount of $37,500 by GAPC. The
payment of such $37,500 amount shall completely discharge and eliminate any
obligation of GAPC-Florida, GAPC, Apollo, Gateway or any Member or collectively
the Members with respect to any financial obligations owing by such entities or
persons to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall acknowledge the import
of this Section 8.6 by executing this Agreement or a counterpart thereof in his
individual capacity.
8.7 Stock Option Plan of GAPC. On and subsequent to the Closing Date, it
is anticipated that the Board of Directors of GAPC, as constituted on and
subsequent to the Closing Date, will develop, create and adopt a Stock Option
Plan providing for the issuance upon exercise of options granted thereunder, of
a number of GAPC Shares as determined by the Board of Directors of GAPC (subject
to the terms of the Underwriting Arrangements) from time to time or by any
committee created by such Board of Directors for such purpose. As determined in
accordance with such procedure, Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ may be optionees
under such Stock Option Plan with respect to the grant of options at such
exercise price, period of exercise, vesting requirements and other terms as may
subsequently be determined by the Board of Directors of GAPC or any committee
empowered by such Board of Directors.
31
ARTICLE IX
Closing of Agreement Transactions and Public Offering
9.1 Concurrent Closing of Sale, Exchange and Public Offering.
GAPC-Florida, GAPC, Gateway and the Holders agree that the exchange and sale of
the GAPC Shares contemplated by Article I of this Agreement shall be consummated
concurrently and simultaneously at a closing, the time of which is established
by Section 9.2 of this Article IX. Such closing with respect to the exchange of
the GAPC Shares shall be concluded immediately prior to the Effective Date of
the Registration Statement covering the GAPC Shares and Public Warrants
described elsewhere in this Agreement. With respect to the consummation of such
exchange transaction, GAPC-Florida, GAPC, Gateway and the Members agree that an
escrow procedure may be utilized which, among other things, shall utilize the
services of an Escrow Agent, the appointment of which shall be mutually
determined by GAPC-Florida, GAPC and Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇. Assuming a
willingness to serve as Escrow Agent, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., an attorney
practicing in Denver, Colorado, is deemed a satisfactory Escrow Agent for such
purpose. The Agreement Parties acknowledge that the closing of the public
offering of the GAPC Shares and the Public Warrants will occur immediately
subsequent to the closing of the exchange of the GAPC Shares. Subject to the
foregoing, unless the transactions called for by Article I of this Agreement can
be consummated concurrently and in a simultaneous manner on or before the
32
Closing Date as defined in Section 9.2, none of such transactions called for by
Article I of this Agreement shall be consummated, this Agreement shall be null
and void and of no effect, and the parties shall be released from any further
obligations to each other hereunder. In the event of any such failure to
consummate concurrently and in a simultaneous manner on or before the Closing
Date, the business combination of GAPC-Florida, GAPC and Gateway and the public
offering of the GAPC Shares and Public Warrants, the Escrow Agent is anticipated
to be empowered to take such action as is appropriate and necessary to nullify
the transaction relating to the combination of GAPC-Florida, GAPC and Gateway,
thereby restoring GAPC-Florida, GAPC, Gateway and the Members to the status held
by them immediately prior to the execution and delivery of this Agreement.
9.2 Time and Place of Closing. GAPC-Florida, GAPC and the Holders, with
consultation from the Underwriter, shall mutually determine the date and time of
closing for the transactions called for by this Agreement (the "Closing Date").
The place at which such closing and consummation of the transactions called for
by this Agreement shall be conducted shall also be determined by the mutual
agreement of GAPC-Florida, GAPC and the Holders, with consultation from the
Underwriter. In no event shall the Closing Date be established on a date
subsequent to November 12, 1997 unless this Agreement is amended by an Addendum
executed and delivered by GAPC-Florida, GAPC, Gateway and the Holders. The
facilities of the United States mail or other acceptable, publicly available
means of delivery, may be utilized to effect the closing of the transactions
called for by this Agreement.
9.3 Deliveries at Closing.
a. On the Closing Date, the Holders shall deliver instruments of
conveyance in form and content satisfactory to counsel for GAPC conveying to
GAPC good and valid title to all of the outstanding Membership Interest of
Gateway, as such Membership Interest is outstanding on the Closing Date. The
Holders shall make such additional deliveries and provide such additional
documents as may be reasonably required in order to facilitate the consummation
of the transactions called for by this Agreement.
33
b. On the Closing Date, Gateway shall deliver to GAPC all of its records,
files and entity paraphernalia which is required in connection with the entity
existence and conduct of the business of GAPC. Gateway shall also deliver the
opinion of counsel as required by Article X, Section 10.5 of this Agreement.
c. On the Closing Date, GAPC shall deliver an aggregate 2,025,000 GAPC
Shares in such individual Share amounts and certificates as shall be instructed
by the Holders and Gateway in writing immediately prior to the Closing Date.
With respect to share certificates evidencing GAPC Shares delivered to Deutsch,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, such certificates shall bear an appropriate restrictive
endorsement indicating that such shares have not been registered under the Act
or applicable Blue Sky Statutes. With respect to the consummation of the public
offering of the GAPC Shares and the Public Warrants, GAPC shall effect the
delivery of those documents required by the Governing Documents existing between
GAPC and the Underwriter on the Closing Date specified in the Governing
Documents. GAPC shall also deliver the opinion of its counsel as required by
Article XI, Section 11.6 of this Agreement, as well as the required certificates
of the officers of GAPC as provided by Article XI, Section 11.3 hereof.
34
ARTICLE X
Conditions Precedent to Obligations of GAPC-Florida and GAPC
The obligations of GAPC-Florida and GAPC under the terms and provisions
of this Agreement and the consummation of the transactions called for by this
Agreement are subject to the following conditions:
10.1 Execution by all Holders. To the extent that additional Membership
Interest is issued and sold by Gateway, such additional Holders shall also
become signatories to this Agreement within five days of the issuance of such
additional Membership Interest.
10.2 No Adverse Development. There shall have occurred no material,
adverse change in the business, financial condition or composition of the assets
of Gateway since the date of this Agreement and Gateway shall not have sustained
since the date of this Agreement any loss on account of fire, flood, accident,
strike or other calamity of such a character as to interfere materially with the
continuous operation of Gateway's business or which materially adversely affects
the financial position or business of Gateway, regardless of whether any such
loss shall have been insured.
10.3 No Breach of Representations, Warranties or Covenants of the
Agreement. The representations and warranties made by Gateway and the Holders,
as set forth in this Agreement, shall be correct and complete in all material
respects when made and shall be deemed to have been made again on and as of the
Closing Date and shall then be true and correct in all material respects on and
as of the Closing Date. With respect to the representations and warranties made
by the Holders in this Agreement, such Holders shall have delivered to GAPC a
certificate to the foregoing effect dated as of the Closing Date. Additionally,
each of the Holders and Gateway shall have performed all of the obligations
required to be performed by them under this Agreement prior to and as of the
Closing Date.
35
10.4 Accomplishment of Action Described in Article III, Section 3.4.
Gateway and the Holders shall have effectively accomplished, on a diligent and
timely basis, all action required of Gateway and the Holders with respect to the
preparation, filing and processing to effectiveness of the Registration
Statement relating to the public offer of the GAPC Shares and Public Warrants as
is contemplated by Article III, Section 3.4 of this Agreement and elsewhere
herein.
10.5 Opinion of Counsel. On the Closing Date, GAPC-Florida and GAPC shall
receive the opinion of counsel of Gateway substantially in the form of Schedule
XIV hereto.
10.6 Employment Agreements. On or before the Closing Date, Deutsch, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ shall have entered into appropriate written employment agreements
with GAPC providing for the services of such Holders in the capacity as
President, one or more Vice Presidents, Secretary and Treasurer-Chief Financial
Officer. Such written employment agreements shall have such terms as may be
determined by Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and as are described in the New Letter
of Intent and shall be approved by the Board of Directors of GAPC as constituted
on and subsequent to the Closing Date and shall be effective as of the Closing
Date. The form of such proposed Employment Agreements shall be included as an
Exhibit to the Registration Statement relating to the public offering of the
GAPC Shares and Public Warrants. Such employment agreements may be the three
employment agreements presently existing between Deutsch, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
Gateway and GAPC shall assume the obligations and duties of Gateway arising from
such employment agreements.
10.7 Certificates Required by Representative of the Underwriters. GAPC
shall have prepared the GAPC Share and Public Warrant certificates required by
the Underwriter in connection with the consummation of the public offering of
the 1,500,000 GAPC Shares and 3,000,000 Public Warrants or such greater number
of GAPC Shares and Public Warrants as may be sold to the public pursuant to
over-allotment option which is set forth in the New Letter of Intent and shall
have satisfied such further conditions as may be imposed by the Underwriter with
respect to any lock-up provisions as is set forth in the New Letter of Intent.
36
ARTICLE XI
Conditions Precedent to Obligation of Gateway and Holders
The obligations of Gateway and each of the Holders to convey their
Membership Interest in Gateway are, in each of their discretion, subject to the
following conditions:
11.1 No Adverse Development. There shall have occurred no material,
adverse change in the status, financial condition or asset composition of
GAPC-Florida or GAPC since the date of this Agreement except as contemplated by
this Agreement.
11.2 Time of Consummation. The transactions called for by this Agreement,
specifically those transactions enumerated in Article I hereof, shall be
scheduled for consummation and closing and shall be consummated and closed no
later than November 12, 1997.
11.3 No Breach of Representations, Warranties and Covenants. The
representations and warranties made by GAPC-Florida or GAPC in this Agreement
shall be correct and complete in all material respects when made and shall be
deemed to have been made again at and as of the Closing Date and shall then be
true and correct in all material respects on and as of that date. GAPC-Florida
and GAPC shall have performed in all material respects the obligations required
to be performed by them under this Agreement prior to and as of the Closing Date
37
including, without limitation, the obligation of GAPC-Florida and GAPC to
diligently use its best efforts to prepare, file and process to effectiveness
the Registration Statement relating to the public offer of the GAPC Shares and
Public Warrants. GAPC-Florida and GAPC shall each have delivered to the Holders
a certificate to the effect contemplated by this Section 11.3 signed by the
Chief Executive Officers of GAPC-Florida and GAPC and dated immediately prior to
the Closing Date.
11.4 Matters Relating to the Public Offering. Unless otherwise agreed to
by the Holders, upon the consummation of the transactions called for by Article
I of this Agreement, the record ownership of the GAPC Shares sold, issued and
exchanged pursuant to the provisions of Article I of this Agreement, shall be
held by the categories of Holders as set forth in the Agreement section
captioned BACKGROUND on and after the Closing Date without taking into account
the utilization of any over-allotment provisions by the Underwriter as provided
in the Governing Documents or the exercise of any Public Warrant or any other
warrant which may be outstanding on and immediately subsequent to the Closing
Date.
11.5 Treatment of Transaction. On or before the Closing Date, Deutsch,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall receive the advisement of their counsel in form and
content satisfactory to them that the transactions called for by this Agreement
will satisfy the conditions and will be eligible for the treatment afforded
pursuant to Section 351 of the Internal Revenue Code of 1986, as amended to
date. Such opinion may be conditioned upon the consummation of the public
offering of the GAPC Shares and Public Warrants as described herein and in the
Governing Documents.
38
11.6 Opinion of Counsel. The Holders shall, on the Closing Date, be in
receipt of the opinion of counsel for GAPC-Florida and GAPC substantially in the
form of Schedule XV hereto.
11.7 Deliveries in Connection with the Public Offering. GAPC shall, on the
Closing Date, have or be capable of performing all required acts and effecting
the delivery of all required documents as are required by the terms of the
Underwriting Agreement existing between GAPC and the Underwriter and other
governing and binding agreements relating to the public offering of the GAPC
Shares and Public Warrants and all other conditions and requirements imposed in
connection with the public offering of the GAPC Shares and Public Warrants shall
have been met or shall be capable of being complied with.
11.8 Appointment to GAPC Board of Directors. Immediately prior to the
Closing Date and subject to the Governing Documents, corporate and board of
Director action of GAPC shall be in place appointing Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
as members of the Board of Directors of GAPC to serve until the next subsequent
meeting of the shareholders of GAPC at which directors are to be elected is
convened or until the successors of such persons are elected or appointed.
11.9 Assumption of Gateway Liabilities. On the Closing Date, GAPC shall
assume and agree to pay in accordance with its terms the obligation constituted
by the Gateway Note to the extent that such obligation remains unpaid and shall
agree to indemnify Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ with respect to their joint and
several obligation to guarantee the obligation constituted by the Gateway Note
and the additional indebtedness of Gateway herein-described, if any, and
existing on the Closing Date. Such undertaking of GAPC shall be by written
instrument in form and content satisfactory to counsel to Gateway and the
Holders.
39
ARTICLE XII
Indemnification, Survival of Representations and Warranties
12.1 Indemnification by Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇. Deutsch, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, jointly and severally, agree to and do hereby indemnify and hold
GAPC-Florida and GAPC and persons controlling GAPC-Florida and GAPC harmless
from and against any and all liability, loss, damage, expense, cost or injury,
including, without limitation, those resulting from and an all actions, suits,
proceedings, and judgments, together with reasonable costs and expenses,
including, without imitation, reasonable legal expenses relating thereto
(collectively "Losses") arising out of resulting from any breach of the
representations, warranties and covenants made by Gateway, Deutsch, ▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇ in this Agreement.
12.2 Indemnification by GAPC-Florida and GAPC. GAPC-Florida and GAPC agree
to and do hereby indemnify and hold Gateway, Deutsch, ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇
harmless from and against Losses arising out of or resulting from any breach of
the representations, warranties and covenants made by GAPC-Florida and GAPC in
this Agreement.
12.3 Limitations Regarding Indemnification. GAPC-Florida and GAPC shall
not be entitled to recover any Loss in respect of the representations and
warranties made by Gateway, Deutsch, ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ in Article IV, unless
the aggregate of all such Losses arising out of Article IV exceed $50,000, in
which case recovery shall be limited to the amount of all such Losses in excess
of $50,000. Any recovery for breaches under Article IV shall be subject to
offset to the extent that Gateway and its financial condition was better than as
represented in Article IV. Alternatively, GAPC may elect as the sole recourse
for a breach by Gateway, Deutsch, ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ of the representations
and warranties contained in Article IV the recovery and return to GAPC of the
GAPC Shares received by Gateway, Deutsch, ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ pursuant to
Article I hereof and not otherwise transferred by them.
40
12.4 Procedures for Third Party Indemnification. If any action, suit or
proceeding shall be commenced against, or any claim or demand be asserted
against GAPC-Florida, GAPC or its controlling persons or Gateway, Deutsch,
▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇, as the case may be, in respect of which such party
proposes to demand indemnification under this Section 12.4, as a condition
precedent thereto, the party seeking indemnification ("Indemnitee") shall
promptly notify the other party ("Indemnitor") in writing to that effect, and
with reasonable particularity containing a reference to the provisions of this
Agreement. The Indemnitor shall have the right to assume the entire control of,
including the selection of counsel, subject to the right of the Indemnitee to
participate (at its expense and with the counsel of its choice) in, the defense,
compromise or settlement thereof, and in connection therewith, the Indemnitee
shall cooperate fully in all respects with the Indemnitor in any such defense,
compromise or settlement thereof, and Indemnitee shall make available to
Indemnitor all pertinent information and documents under the control of the
Indemnitee. So long as the Indemnitor is defending in good faith any such claim
or demand asserted by a third party against the Indemnitee, the Indemnitee shall
not settle or compromise such claim or demand without the prior written consent
of the Indemnitor, which consent will not be unreasonably withheld or delayed.
If the Indemnitor shall fail to defend any such action, suit, proceeding, claim
or demand, then the Indemnitee may defend, through counsel of its own choosing,
such action, suit, proceeding, claim or demand and (so long as Indemnitee gives
the Indemnitor at least five (5) days written notice of the terms of the
proposed settlement thereof and permits the Indemnitor to then undertake the
defense thereof if Indemnitor objects to the proposed settlement) to settle such
action, suit, proceeding, claim or demand and to recover from the Indemnitor the
amount of such losses.
41
12.5 Survival of Representations, Warranties and Indemnities. The
representations and warranties of this Agreement, and indemnification in respect
of the same, shall survive the Closing Date for a period of three (3) years,
after which time such representations and warranties, and indemnification in
respect thereof, shall be of no further force and effect unless prior to such
time, the party claiming a breach has served on the other written notice of such
claim or breach.
ARTICLE XIII
Miscellaneous Provisions
13.1 Notices. All notices or other communications required or permitted
under this Agreement shall be in writing and shall be given by mail or by
facsimile transmission (in the event of facsimile transmission, a conforming
copy shall be mailed postage prepaid simultaneously therewith). If notice is to
be given to GAPC, Gateway or any Holder, such notice shall be deemed given when
provided in the manner provided herein to such Holder in care of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
facsimile number 303/758-9203 with a copy to ▇▇▇▇▇▇ ▇. Deutsch, Esq., Gateway
American Properties, L.L.C., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number: 303/694-3831; and if to GAPC-Florida, c/o
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number: 941/955-4027.
13.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and representatives.
42
13.3 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original of this Agreement,
but all of which together shall constitute one and the same instrument.
13.4 Background Statement, Schedules and Exhibits. The BACKGROUND
statement of the Agreement, the annexed Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if such Background statement, Exhibits and Schedules had been set forth verbatim
herein.
13.5 Entire Agreement. This Agreement constitutes the entire understanding
on the part of the parties hereto, and all previous agreements and
understandings are superseded by this Agreement.
13.6 Publicity. No publicity, release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by GAPC-Florida, GAPC and
Deutsch, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (by the majority vote of such Members), which
approval shall not be unreasonably withheld, provided that this restriction
shall not apply to normal communications of the parties with their employees.
13.7 Attorneys' Fees in Connection with Litigation. In the event of any
litigation arising out of or in connection with this Agreement, the prevailing
party shall be entitled to recover from the other its reasonable attorney's fees
and costs.
13.8 Cooperation. GAPC-Florida, GAPC, Gateway and the Holders agree to
execute such instruments and take such other actions as contemplated by this
Agreement to effectuate closing.
13.9 Applicable Law. This Agreement shall be governed by the laws of the
State of Florida except in those instances where the laws of Colorado are
applicable to circumstances relating to GAPC, Gateway or with respect to the
public offering of the GAPC Shares and Public Warrants as to which the
applicable provisions of the Act or any Blue Sky Statute are applicable.
43
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
GATEWAY AMERICAN PROPERTIES CORPORA-
TION, a Florida corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
GATEWAY AMERICAN PROPERTIES CORPORA-
TION, a Colorado corporation
By /s/ ▇▇▇▇▇▇ ▇. Deutsch
----------------------------
▇▇▇▇▇▇ ▇. Deutsch, President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
GATEWAY AMERICAN PROPERTIES, L.L.C.
By /s/ ▇▇▇▇▇▇ ▇. Deutsch
----------------------------
▇▇▇▇▇▇ ▇. Deutsch, Managing Partner
HOLDERS OF OUTSTANDING MEMBERSHIP
INTEREST
/s/ ▇▇▇▇▇▇ ▇. Deutsch
----------------------------
▇▇▇▇▇▇ ▇. Deutsch
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
44
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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