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                            SHARE EXCHANGE AGREEMENT

      This Share Exchange Agreement ("the Agreement"),  effective as of the 31st
day of January,  2005,  by and among  Gateway  International  Holdings,  Inc., a
Nevada  corporation  ("Gateway")  ,and  Spacecraft  Machine  Products,  Inc.,  a
California  corporation  ("Spacecraft"),  Lloyd R. Leavitt, III, ("LRL") and the
Leavitt   Family  Trust   ("LFT"),   sole   shareholders   of  Spacecraft   (the
"Shareholders"), with reference to the following:

                  A.  The   respective   Boards  of  Directors  of  Gateway  and
         Spacecraft  have  deemed  it  advisable  and in the best  interests  of
         Gateway and Spacecraft that Spacecraft be acquired by Gateway, pursuant
         to the terms and conditions set forth in this Agreement.

                  D. Gateway and Spacecraft propose to enter into this Agreement
         which provides,  among other things, that all of the outstanding shares
         of capital stock of  Spacecraft  be acquired by Gateway,  as more fully
         described in the Agreement.

                  E. The parties desire the transaction to qualify as a tax-free
         reorganization under Section 368 (a)(1)(B) of the Internal Revenue Code
         of 1986, as amended.

         NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I
                                 THE ACQUISITION

SECTION 1.1

         (a) At the  Closing,  a total of  100,000  shares of common  stock (the
"Spacecraft  Stock"),  which represents all of the issued and outstanding shares
of  Spacecraft's  capital  stock shall be  acquired  by Gateway in exchange  for
600,000  restricted shares of Gateway common stock (the "Initial  Shares").  The
Shares will be issued as follows:
                  500,000 shares or LRL
                  100,000 shares to LFT

         (b)  As  additional  contingent   consideration  to  be  paid  for  the
Spacecraft Stock, if earned, Gateway agrees to issue to LRL an additional 150,00
restricted  shares of Gateway common stock  following each of the next three (3)
calendar years, if Spacecraft's "net income before income taxes" in such year is
equal to or greater than the amount set forth below:

         ------------------------------------------ ----------------------------
         Year Ended                                 Target Profit
         ------------------------------------------ ----------------------------
         December 31, 2005                          $200,000
         ------------------------------------------ ----------------------------
         December 31, 2006                          $300,000
         ------------------------------------------ ----------------------------
         December 31, 2007                          $350,000
         ------------------------------------------ ----------------------------

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         "Net income  before  taxes"  shall be  determined  in  accordance  with
generally  accepted  accounting  principles  and shall be verified by  Gateway's
independent accountant. The shares of common stock to be issued pursuant to this
subsection  (b) are  hereinafter  referred  to as the  "Additional  Shares"  and
together with the Initial Shares, collectively the "Shares".

In the event that Gateway is purchased  or if Gateway  decides to terminate  the
employment  Agreement  (Exhibit  "B") of LRL,  all shares not issued  under this
profit for shares agreement would be issued to LRL immediately.

SECTION  1.2  At  the  Closing,  the  Shareholders  will  deliver  one  or  more
certificates  representing  the  Spacecraft  Stock,  duly endorsed so as to make
Gateway the sole holder thereof,  free and clear of all claims and  encumbrances
and Gateway shall deliver a transmittal letter directed to the transfer agent of
Gateway directing the issuance of the Shares to the Shareholders.

SECTION 1.3  Following  the  reorganization,  Spacecraft  will be a wholly owned
subsidiary of Gateway.  Gateway  agrees that,  following its  consummation  of a
capital  raise after the Closing (as defined  below) it will provide  Spacecraft
with  working  capital,  at such  time as  Gateway  may  determine  in its  sole
discretion.

                                   ARTICLE II
                                   THE CLOSING

SECTION 2.1 The consummation of the transactions  contemplated by this Agreement
(the "Closing")  shall take place at the offices of Gateway on or before January
15, 2004, (the "Closing Date") or at such other place or date and time as may be
agreed to in writing by the parties hereto.

SECTION 2.2 The following  conditions  are a part of this  Agreement and must be
completed on the Closing Date, or such other date specified by the parties:

                  (a) LRL shall be offered a one-year  employment  contract with
Spacecraft,  substantially  in the form of the  attached  Exhibit B, at a salary
equal to LRL's current salary.  The employment  agreement shall also provide for
benefits commensurate with those offered by Gateway to its employees,  including
health  insurance,  cell phone,  reasonable  automobile  expense  reimbursement,
including  repairs,  gas and  insurance,  and  other  reasonable  and  necessary
business expenses.

                  (b) Gateway agrees that LRL shall serve as its Chief Operating
Officer on a part-time basis during the six months  following the Closing.  Such
arrangement  shall be  reviewed  at that  time and the  parties  shall  consider
negotiating an employment contract with a salary and stock options.

                  (c) Gateway shall execute and deliver a note payable to LFT in
the  principal  amount of $220,000  (the  "Note").  The Note, a form of which is
attached  hereto as  Exhibit A, will not bear  interest  and shall be payable in
equal monthly installments over a period of sixty (60) months. The Note shall be
secured  for a period of three  (3) years by  Gateways'  pledge,  pursuant  to a
pledge  agreement,  of the Spacecraft  Stock. The foregoing shall be in complete
satisfaction  of  Spacecraft's  obligations  to repay to LFT the  $300,000  loan
previously made to Spacecraft.

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                                   ARTICLE III
                        REPRESENTATIONS AND WARRANTIES OF
                                THE SHAREHOLDERS

         The  Shareholders,  jointly  and  severally,  represent  and warrant to
Gateway as of the Closing Date as follows:

SECTION 3.1  Organization  and  Qualification.  Spacecraft is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
California  and has the requisite  power and authority to own, lease and operate
its  assets  and  properties  and to carry on its  business  as it is now  being
conducted.  Spacecraft  is qualified  to do business and is in good  standing in
each jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary. True,
Spacecraft and complete copies of  Spacecraft's  Articles of  Incorporation  and
By-laws,  including all amendments  thereto,  have  heretofore been delivered to
Gateway.

SECTION 3.2       Capitalization.

         (a) The  authorized  capital stock of Spacecraft  consists of 1,000,000
shares of common stock , no par value (the "Spacecraft Common Stock"). As of the
date hereof,  there were 100,000  shares of  Spacecraft  Common Stock issued and
outstanding. All of the issued and outstanding shares of Spacecraft Common Stock
are  duly  authorized,  validly  issued,  fully  paid,  non-assessable,  free of
preemptive  rights and were issued in  compliance  with  federal and  applicable
state  securities  laws. All of the issued and outstanding  shares of Spacecraft
Common Stock owned  beneficially  and of record by the  Shareholders,  are owned
free and clear of all  liens,  claims,  security  interests,  pledges  and other
encumbrances or restrictions on transfer.

         (b) As of the date  hereof  and  except as  Spacecraft  has  previously
advised  Gateway in writing,  there are no outstanding  subscriptions,  options,
calls,  contracts,  agreements,   commitments,   understandings,   restrictions,
arrangements,  rights or warrants, including any right of conversion or exchange
under  any  outstanding  security,  instrument  or other  agreement,  obligating
Spacecraft or any subsidiary of Spacecraft to issue,  deliver,  sell,  purchase,
redeem or acquire, or cause to be issued, delivered,  sold, purchased,  redeemed
or acquired,  shares of the capital stock of Spacecraft or obligating Spacecraft
or any  subsidiary of Spacecraft to grant,  or enter into any such  agreement or
commitment,  except for this  Agreement.  There are no outstanding or authorized
stock appreciation,  phantom stock, stock participation, or other similar rights
with  respect  to  Spacecraft.  There  are  no  voting  trusts,  proxies,  other
agreements or understandings  to which Spacecraft,  any subsidiary of Spacecraft
or the  Shareholders  are a party or are bound with respect to the voting of any
shares of capital stock of Spacecraft.

SECTION 3.3  Subsidiaries.  Spacecraft has no  subsidiaries  except those as set
forth on Schedule 3.3 attached hereto.

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SECTION 3.4       Authority; Non-Contravention; Approvals.

         (a) The Shareholders  have the power and authority to execute,  deliver
and perform this  Agreement  and to  consummate  the  transactions  contemplated
hereby and no other legal  proceedings  are necessary to authorize the execution
of this Agreement and the  consummation by the  Shareholders of the transactions
contemplated  hereby.  This  Agreement  has been duly and validly  executed  and
delivered by the Shareholders and, assuming the due authorization, execution and
delivery  hereof by Gateway,  constitutes  a valid and binding  agreement of the
Shareholders,  enforceable against him in accordance with its terms, except that
such enforcement may be subject to (a) bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws  affecting  or  relating to  enforcement  of
creditors' rights generally and (b) general equitable principles.

         (b) The  execution and delivery of this  Agreement by the  Shareholders
does  not,  and  the  consummation  by  the  Shareholders  of  the  transactions
contemplated  hereby will not,  violate,  conflict with or result in a breach of
any  provision  of, or  constitute a default (or an event which,  with notice or
lapse of time or both,  would  constitute  a  default)  under,  or result in the
termination of, or accelerate the performance  required by, or result in a right
of termination  or  acceleration  under,  or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Spacecraft or the Shareholders under any of the terms,  conditions or provisions
of (i) the Articles of Incorporation or by-laws of Spacecraft, (ii) any statute,
law, ordinance,  rule, regulation,  judgment,  decree, order, injunction,  writ,
permit  or  license  of  any  court  or  governmental  authority  applicable  to
Spacecraft or the Shareholders or any of their respective  properties or assets,
or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument, obligation or agreement
of any kind to which Spacecraft or either Shareholder is now a party or by which
Spacecraft or the Shareholders or any of their  respective  properties or assets
may be bound or affected.

         (c) No  declaration,  filing or  registration  with,  or notice  to, or
authorization,  consent or approval of, any  governmental  or regulatory body or
authority, including the probate court, is necessary for the execution, delivery
or performance of this Agreement by the  Shareholders or the consummation by the
Shareholders of the transactions contemplated hereby. No consent of any party to
any  contract,   agreement,   instrument,   lease,   license,   arrangement   or
understanding to which Spacecraft or the Shareholder is a party, or to which any
of them or any of their  properties  or assets are subject,  is required for the
execution, delivery or performance of this Agreement.

SECTION 3.5 Financial Statements.  Spacecraft shall deliver to Gateway copies of
its financial statements for the fiscal years ending December 31, 2004 and 2003,
and interim financial statements for the two months ended November 30, 2004 (the
"Spacecraft  Financial  Statements").  The Spacecraft  Financial Statements have
been  prepared  on a  consistent  basis and fairly and  accurately  present  the
financial  position  of  Spacecraft  as of the dates  thereof and the results of
operations and changes in financial position for the periods then ended.

SECTION 3.6 Absence of Undisclosed  Liabilities.  Except as expressly  disclosed
and described in Spacecraft Financial Statements,  neither Spacecraft nor any of
its  subsidiaries had at November 30, 2004, or has incurred since that date, any
liability, indebtedness,  expense, claim, deficiency, guarantee or obligation of

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any  type  (whether  absolute,  accrued,  contingent,   matured,  un-matured  or
otherwise)  or  of  any  nature,   except  (i)   liabilities,   obligations   or
contingencies  which are accrued or  reserved  against in  Spacecraft  Financial
Statements  or  reflected  in  the  notes  thereto,   and  (ii)  liabilities  or
obligations incurred in the ordinary course of business which, in the aggregate,
do not exceed $10,000.

SECTION 3.7 Absence of Certain Changes or Events. From November 30, 2004 through
the date hereof, there has not been any material adverse change in the business,
operations,  properties,  assets,  liabilities,  condition (financial or other),
results of  operations or prospects of  Spacecraft,  taken as a whole other than
those verbally disclosed to Gateway (Loss of the Delphi contract).

SECTION 3.8  Litigation.  There are no claims,  suits,  actions,  proceedings or
investigations  pending or, to the  knowledge  of the  Shareholders,  threatened
against,  relating to or affecting  Spacecraft,  before any court,  governmental
department, commission, agency, instrumentality or authority, or any arbitrator,
and there is no basis known to the Shareholders for any of the foregoing, except
as disclosed and attached hereto.  Neither  Spacecraft nor either Shareholder is
subject  to any  judgment,  decree,  injunction,  rule or  order  of any  court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator  which prohibits or restricts the  consummation  of the  transactions
contemplated  hereby or would have any material  adverse effect on the business,
operations,  properties,  assets,  condition  (financial  or other),  results of
operations or prospects of Spacecraft.

SECTION 3.9 Compliance  with Laws;  Permits.  Spacecraft is not in violation of,
nor has it been given notice of or been charged with any  violation of, any law,
statute,  order, rule, regulation,  ordinance,  or judgment (including,  without
limitation,  any applicable  environmental  law, ordinance or regulation) of any
governmental or regulatory body or authority.  As of the date of this Agreement,
no  investigation  or review by any governmental or regulatory body or authority
is pending or, to the  knowledge of the  Shareholders,  threatened,  nor has any
governmental or regulatory  body or authority  indicated an intention to conduct
the  same.  Spacecraft  holds  all  permits,  licenses,  certificates  and other
authorizations  of  foreign,  federal,  state  and local  governmental  agencies
required for the conduct of its business.

SECTION 3.10      Agreements, Contracts and Commitments.

         (a) Except as Spacecraft  has  previously  advised  Gateway in writing,
Spacecraft is not a party to nor is it bound by:

                  (i)  any  employment  or  consulting  agreement,  contract  or
         commitment with an employee or individual  consultant or salesperson or
         consulting or sales  agreement,  contract or commitment  with a firm or
         other organization;

                  (ii) any agreement or plan, including, without limitation, any
         stock option plan,  stock  appreciation  rights plan or stock  purchase
         plan, any of the benefits of which will be increased, or the vesting of
         benefits of which will be accelerated,  by the occurrence of any of the
         transactions  contemplated by this Agreement or the value of any of the
         benefits  of  which  will  be  calculated  on the  basis  of any of the
         transactions contemplated by this Agreement;

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                  (iii) any fidelity or surety bond or completion bond;

                  (iv) any lease of personal  property  with fixed annual rental
         payments in excess of $10,000;

                  (v) any agreement,  contract,  commitment or grant  containing
         any covenant  limiting the freedom of  Spacecraft to engage in any line
         of business or to compete with any person;

                  (vi) any agreement, contract or commitment relating to capital
         expenditures  and involving future payments in excess of $10,000 either
         individually or in the aggregate;

                  (vii) any  agreement,  contract or commitment  relating to the
         disposition  or  acquisition  of assets or any interest in any business
         enterprise outside the ordinary course of Spacecraft's business;

                  (viii)  any  mortgage,  indenture,  loan or credit  agreement,
         security  agreement or other  agreement or  instrument  relating to the
         borrowing of money,  the extension of credit or placing of liens on any
         assets of Spacecraft;

                  (ix) any  guaranty of any  obligation  for  borrowed  money or
         otherwise;

                  (x)  any  purchase  order  or  contract  for the  purchase  of
         materials  involving in excess of $10,000 either individually or in the
         aggregate;

                  (xi) any dealer, distribution,  joint marketing or development
         agreement;

                  (xii)   any   sales    representative,    original   equipment
         manufacturer,   value  added,   remarketing  or  other   agreement  for
         distribution of Spacecraft's products or services;

                  (xiii) any  collective  bargaining  agreement or contract with
         any labor union;

                  (xiv) any bonus, pension, profit sharing,  retirement or other
         form of deferred compensation plan;

                  (xv) any medical insurance or similar plan; or

                  (xvi)  any  other  agreement,  contract,  commitment  or grant
         pursuant to which the  obligations of any party thereto is in excess of
         $10,000.

(b) Spacecraft is in compliance with and has not breached, violated or defaulted
under, or received notice that it has breached, violated or defaulted under, any
of  the  terms  or  conditions  of any  agreement,  contract,  grant,  covenant,
instrument,  lease,  license or commitment to which  Spacecraft is a party or by
which  its  assets  are  bound  (collectively,  a  "Contract"),  nor  is  either
Shareholder aware of any event that would constitute such a breach, violation or

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default with the lapse of time,  giving of notice or both.  Each  Contract is in
full force and effect and is not subject to any default  thereunder by any party
obligated to Spacecraft  pursuant  thereto.  Spacecraft  has  obtained,  or will
obtain prior to the Closing Date, all necessary consents,  waivers and approvals
of parties to any  Contract as are  required  thereunder  for such  Contracts to
remain  in  effect  without  modification  or  termination  after  the  Closing.
Following the Closing Date,  Spacecraft will be permitted to exercise all of its
rights  under the  Contracts  without the payment of any  additional  amounts or
consideration  other than ongoing fees,  royalties or payments which  Spacecraft
would  otherwise be required to pay had the  transactions  contemplated  by this
Agreement not occurred.

SECTION 3.11      Tax Matters.

         (a) Definition of Taxes. For the purposes of this Agreement,  "Tax" or,
collectively,  "Taxes" means (i) any and all federal,  state,  local and foreign
taxes,  assessments  and other  governmental  charges,  duties,  impositions and
liabilities,  including taxes based upon or measured by gross receipts,  income,
profits,  sales,  use  and  occupation,   value  added,  ad  valorem,  transfer,
franchise,  withholding,  payroll,  recapture,  employment,  excise and property
taxes, together with all interest,  penalties and additions imposed with respect
to such  amounts;  (ii) any liability for the payment of any amounts of the type
described  in  clause  (i) as a  result  of  being a  member  of an  affiliated,
consolidated,  combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type  described in clause (i) or (ii) as a
result of any express or implied  obligation to indemnify any other person or as
a result of any obligations  under any agreements or arrangements with any other
person with respect to such amounts and  including  any liability for taxes of a
predecessor entity.

         (b) Tax Returns and Audits.

                  (i) Spacecraft has prepared and timely filed (or have properly
         filed  the  extensions  for) all  required  federal,  state,  local and
         foreign  returns,   estimates,   information   statements  and  reports
         ("Returns") relating to any and all Taxes concerning or attributable to
         Spacecraft, its subsidiaries or operations thereof and such Returns are
         true and correct and have been completed in accordance  with applicable
         law.

                  (ii)  Spacecraft  (A) has paid all Taxes it is required to pay
         and has withheld  with respect to its  employees  all federal and state
         income taxes,  Federal  Insurance  Contribution  Act ("FICA"),  Federal
         Unemployment  Tax Act ("FUTA") and other Taxes required to be withheld,
         and (B) has  accrued  on  Spacecraft  Financial  Statements  all  Taxes
         attributable to the periods covered by Spacecraft  Financial Statements
         and has not  incurred any  liability  for Taxes for the period prior to
         the Closing Date other than in the ordinary course of business.

                  (iii) Spacecraft has not been delinquent in the payment of any
         Tax nor is there any Tax deficiency  outstanding,  assessed or proposed
         against  Spacecraft by the Internal  Revenue Service (the "IRS") or any
         other governmental  taxing authority,  nor has Spacecraft  executed any
         waiver of any statute of limitations on or extending the period for the
         assessment or collection of any Tax.

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                  (iv) No audit or other examination of any Return of Spacecraft
         or any of its subsidiaries is presently in progress, nor has Spacecraft
         been notified of any request for such an audit or other examination.

                  (v) No adjustment  relating to any Returns filed by Spacecraft
         has been  proposed  formally  or  informally  by any Tax  authority  to
         Spacecraft or any representative thereof.

                  (vi)  Spacecraft  has made  available  to Gateway or its legal
         counsel, copies of all federal and state income and all state sales and
         use Returns for Spacecraft filed for the past five (5) years.

                  (vii) There are (and  immediately  following  the Closing Date
         there will be) no liens,  pledges,  charges,  claims,  restrictions  on
         transfer,  mortgages,  security  interests or other encumbrances of any
         sort (collectively, "Liens") on the assets of Spacecraft relating to or
         attributable  to Taxes  other  than  Liens  for  Taxes  not yet due and
         payable.

                  (viii) Neither  Shareholder has any knowledge of any basis for
         the assertion of any claim relating or attributable to Taxes, which, if
         adversely  determined,  would  result  in any  Lien  on the  assets  of
         Spacecraft.

                  (ix) None of  Spacecraft's  assets are treated as  "tax-exempt
         use  property"  within the  meaning of Section  168(h) of the  Internal
         Revenue Code of 1986, as amended (the "Code").

                  (x) There is no any contract,  agreement, plan or arrangement,
         including but not limited to the provisions of this Agreement, covering
         any employee or former  employee of Spacecraft  that,  individually  or
         collectively,  could give rise to the  payment of any amount that would
         not be deductible by Spacecraft or its subsidiaries as an expense under
         applicable law.

                  (xi)  Spacecraft  has not filed any  consent  agreement  under
         Section  341(f) of the Code or agreed to have Section  341(f)(4) of the
         Code apply to any  disposition of a subsection (f) asset (as defined in
         Section 341(f)(4) of the Code) owned by Spacecraft or its subsidiaries.

                  (xii)   Spacecraft   is  not  a  party  to  any  tax  sharing,
         indemnification  or allocation  agreement nor does  Spacecraft  owe any
         amount under any such agreement.

SECTION 3.12      Employment.

         (a)  Except as set  forth  and  attached  hereto,  at the date  hereof,
Spacecraft  does not maintain,  contribute  to or have any  liability  under any
employee benefit plans, programs,  arrangements or practices, including employee
benefit  plans  within the  meaning  set forth in Section  3(3) of the  Employee
Retirement  Income  Security  Act of 1974,  as amended  ("ERISA"),  any deferred
compensation  or retirement  plans or  arrangements,  or other similar  material

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arrangements for the provision of benefits (excluding any "Multi-employer  Plan"
within the  meaning  of Section  3(37) of ERISA or a  "Multiple  Employer  Plan"
within the meaning of Section 413(c) of the Code).  Spacecraft does not have any
obligation to create any such plan.

         (b) With  respect  to each  plan  listed  the  attached  schedule:  (i)
Spacecraft has performed in all material respects all obligations required to be
performed by it under each such plan and each such plan has been established and
maintained  in all  material  respects  in  accordance  with  its  terms  and in
compliance with all applicable laws, statutes, rules and regulations,  including
but not  limited to the Code and  ERISA;  (ii)  there are no  actions,  suits or
claims pending or, to the knowledge of the Shareholders,  threatened (other than
routine claims for benefits)  against any such plan; (iii) each such plan can be
amended or  terminated  after the  Closing  Date in  accordance  with its terms,
without liability to Spacecraft;  and (iv) there are no inquiries or proceedings
pending or, to the knowledge of either Shareholder, threatened by the IRS or the
Department of Labor with respect to any such plan.

         (c) At or prior to the Closing,  Spacecraft  shall provide to Gateway a
complete  list of the  employees for  Spacecraft,  including job title,  current
compensation,  vacation accrued and service credited for purposes of vesting and
eligibility  to  participate  under  any  pension,  retirement,  profit-sharing,
thrift-savings,  deferred  compensation,  stock bonus, stock option, cash bonus,
employee stock ownership, severance pay, insurance, medical, welfare or vacation
plan.  No employee of  Spacecraft  is a party to, or is otherwise  bound by, any
agreement or arrangement,  including any  confidentiality,  non-competition,  or
proprietary  rights  agreement,  between  such  employee and any other person or
entity that in any way adversely  affects or will affect (i) the  performance of
his or her  duties  as an  employee  of  Spacecraft,  or  (ii)  the  ability  of
Spacecraft to conduct its business. Neither Spacecraft nor the Shareholders have
received  verbal or  written  notice  that any of the  employees  listed in such
employee list will not continue their  employment  relationship  with Spacecraft
after the Closing Date.  All employees of Spacecraft  are  terminable at will by
Spacecraft.

SECTION 3.13 Labor Controversies. There are no significant controversies pending
or, to the knowledge of either  Shareholder,  threatened  between Spacecraft and
its employees. There are no material organizational efforts presently being made
involving any of the presently unorganized  employees of Spacecraft.  Spacecraft
has complied in all material  respects with all laws relating to the  employment
of labor,  including,  without  limitation,  any provisions  thereof relating to
wages,  hours,  and the payment of social  security  and similar  taxes,  and no
person has asserted  that  Spacecraft  is liable in any material  amount for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.

SECTION 3.14 Environmental  Matters.  Spacecraft (i) has obtained all applicable
permits,  licenses and other  authorizations  which are required  under federal,
state or local laws  relating to  pollution  or  protection  of the  environment
("Environmental  Laws"),  including  laws  relating  to  emissions,  discharges,
releases or  threatened  releases of  pollutants,  contaminants  or hazardous or
toxic materials or wastes into ambient air, surface water, ground water or land,
or  otherwise  relating  to  the  manufacture,  processing,  distribution,  use,
treatment, storage, disposal, transport or handling of pollutants,  contaminants
or hazardous or toxic materials or wastes by Spacecraft (or its agents); (ii) is
in full  compliance  with,  and not in violation of, any terms and conditions of
any required permits,  licenses and  authorizations,  and any other limitations,
restrictions,  conditions, standards, prohibitions,  requirements,  obligations,
schedules and timetables  contained in Environmental  Laws or in any regulation,
code, plan, order, decree,  judgment,  notice or demand letter issued,  entered,

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promulgated  or approved  thereunder;  (iii) is not aware of nor has it received
notice of any event,  condition,  circumstance,  activity,  practice,  incident,
action or plan which is reasonably likely to interfere with or prevent continued
compliance with or which would give rise to any  Environmental  Law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
based  on  or  resulting  from   Spacecraft's  (or  any  agent's)   manufacture,
processing,  distribution,  use, treatment,  storage,  disposal,  transport,  or
handling,  or the emission,  discharge or release into the  environment,  of any
pollutant,  contaminant, or hazardous or toxic material or waste; (iv) has taken
all actions necessary under applicable requirements of Environmental Laws, rules
or regulations  to register any products or materials  required to be registered
by Spacecraft (or its agents) thereunder;  and (v) has not transported,  stored,
used, manufactured,  released, disposed of or handled any hazardous substance or
any product  containing a hazardous  substance in violation of any Environmental
Law.

SECTION 3.15  Interested  Party  Transactions.  Spacecraft is not a party to any
oral or written (a)  consulting or similar  agreement with any present or former
director,  officer or employee or any entity controlled by any such person,  (b)
agreement  with any executive  officer or other key employee of  Spacecraft  the
benefits of which are contingent,  or the terms of which are materially altered,
upon  the  occurrence  of a  transaction  involving  Spacecraft  or  any  of its
subsidiaries of the nature  contemplated by this Agreement or (c) agreement with
respect to any executive  officer or other key employee of Spacecraft  providing
any term of employment or compensation  guarantee.  Spacecraft is not a party to
any agreement,  contract,  lease, license,  arrangement,  or other understanding
with  the  Shareholders  or  any  employee  of  Spacecraft   (except  employment
agreements  disclosed  to Gateway at or prior to the  Closing,  any  relative or
affiliate  of either  Shareholder  or any employee of  Spacecraft,  or any other
partnership  or  enterprise  in  which  the  Shareholders  or  any  employee  of
Spacecraft,  or any such relative or affiliate  thereof,  had or now has a 5% or
greater ownership interest, or other substantial interest,  other than contracts
or agreements provided to Gateway at or prior to the Closing.

SECTION 3.16 Insurance. At or prior to the Closing,  Spacecraft shall provide to
Gateway a list of all insurance policies and fidelity bonds covering the assets,
business, equipment, properties,  operations,  employees, officers and directors
of Spacecraft. All insurance policies listed are in full force and effect. There
is no claim by  Spacecraft  pending  under any of such  policies  or bonds as to
which coverage has been  questioned,  denied or disputed by the  underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and there is no retroactive  premium adjustment  obligation
of any kind, and the is otherwise in compliance  with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage).  The Shareholders have no knowledge of any threatened termination of,
or premium increase with respect to, any of such policies.

SECTION 3.17      Intellectual Property Rights.

         (a) If  applicable,  a  schedule  attached  lists  all of  Spacecraft's
federal,  state and foreign  patents,  inventions  and  discoveries  that may be
patentable,  copyrights, trade names, trademarks,  service marks and all pending
applications for any patents or other  intellectual  property rights or in which
Spacecraft has any interest  whatsoever  and all other trade secrets,  know-how,
confidential information, customer lists, software, technical information, data,
plans, drawings and blueprints and intellectual property rights,  whether or not

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<PAGE>

registered, created or used by or on behalf of Spacecraft, in each case relating
to its business (collectively, "Spacecraft Intellectual Property Rights").

         (b) No person has a right to  receive a royalty  or similar  payment in
respect of any Spacecraft Intellectual Property Rights. Spacecraft does not have
any  licenses  granted,  sold  or  otherwise  transferred  by or to it or  other
agreements  to  which  it is a  party,  relating  in  whole or in part to any of
Spacecraft Intellectual Property Rights.

         (c) Spacecraft Intellectual Property Rights are all those necessary for
the  operation  of the  business of  Spacecraft  as it is  currently  conducted.
Spacecraft is the owner of all right,  title,  and interest in and to Spacecraft
Intellectual  Property Rights, free and clear of all liens,  security interests,
charges, encumbrances and other adverse claims, and has the right to use without
payment to a third party all of Spacecraft  Intellectual  Property  Rights.  All
employees of Spacecraft that work with or have access to Spacecraft Intellectual
Property Rights have signed nondisclosure  agreements and intellectual  property
agreements.

         (d) None of Spacecraft  Intellectual Property Rights is involved in any
pending or threatened litigation,  nor has been the subject of any interference,
opposition or cancellation  proceedings.  Spacecraft has not received any notice
of invalidity or infringement of any rights of others with respect to Spacecraft
Intellectual  Property  Rights.  Spacecraft has taken all reasonable and prudent
steps to protect  Spacecraft  Intellectual  Property Rights from infringement by
any  other  firm,   corporation,   entity  or  person.  The  use  of  Spacecraft
Intellectual  Property  Rights by Spacecraft is not infringing upon or otherwise
violating  the rights of any third party in or to such  Spacecraft  Intellectual
Property Rights, nor has any third party alleged any such  infringement.  All of
Spacecraft  Intellectual  Property  Rights are valid and  enforceable  rights of
Spacecraft or a subsidiary  and will not cease to be valid and in full force and
effect by reason of the execution, delivery and performance of this Agreement or
the  consummation of the  transactions  contemplated  by this Agreement.  To the
knowledge of the  Shareholders,  there is no  infringement by any third party of
Spacecraft Intellectual Property Rights.

SECTION 3.18 Books and Records. The books of account, minute books, stock record
ledgers and other records of  Spacecraft,  all of which have been made available
to Gateway, are complete and correct and have been maintained in accordance with
sound business  practices,  including the  maintenance of an adequate  system of
internal controls.  The minute books of Spacecraft contain accurate and complete
records  of  all  meetings  held  of,  and   corporate   action  taken  by,  the
Shareholders, the Board of Directors and committees of the Board of Directors of
Spacecraft and no meeting of the Shareholders,  Board of Directors, or committee
has been held for which  minutes have not been prepared and are not contained in
such minute books.

SECTION 3.19      Title To and Condition of Properties.

         (a)  Spacecraft  owns good and  marketable  title to the properties and
assets reflected on Spacecraft  Financial  Statements or acquired since the date
thereof, free and clear of all liens and encumbrances,  except for (i) liens for
current taxes not yet due and payable, and (ii) assets disposed of since October
31, 2004, in the ordinary course of business.

                                       11
<PAGE>

         (b) (i)  Spacecraft  does not own any real estate;  (ii) the properties
subject to the real property leases  attached hereto  constitute all of the real
estate used or occupied by Spacecraft (the "Spacecraft Real Estate"),  and (iii)
Spacecraft  Real Estate has access,  sufficient for the conduct of  Spacecraft's
business, to public roads and to all utilities, including electricity,  sanitary
and storm sewer,  potable water,  natural gas and other  utilities,  used in the
operations of Spacecraft.

         (c) The real property leases attached are in full force and effect, and
Spacecraft has a valid and existing leasehold interest under each such lease for
the term set forth  therein.  Spacecraft  has delivered to Gateway  complete and
accurate  copies of each of the leases and none of such leases has been modified
in any  respect,  except to the  extent  that the  copies  delivered  to Gateway
disclose such modifications.  Spacecraft is not in default, and no circumstances
exist which could result in such default,  under any of such leases, nor, to the
knowledge  of either  Shareholder,  is any other  party to any of such leases in
default.

         (d) All of the  buildings,  machinery,  equipment  and  other  tangible
assets necessary for the conduct of Spacecraft's  business are in good condition
and repair,  ordinary  wear and tear  excepted,  and are usable in the  ordinary
course of business.  At or prior to the  Closing,  Spacecraft  shall  provide to
Gateway a complete  list of all items of  machinery  and  equipment  used in the
business  of  Spacecraft.  Spacecraft  owns or leases  under valid  leases,  all
buildings,  machinery,  equipment and other  tangible  assets  necessary for the
conduct of its  business.  At or prior the Closing  Spacecraft  shall deliver to
Gateway copies of all equipment  leases.  None of such equipment leases has been
modified  in any  respect,  except to the extent that the copies  disclose  such
modifications  delivered  to  Gateway.  Spacecraft  is  not in  default,  and no
circumstances  exist  which  could  result  in such  default,  under any of such
equipment leases,  nor, to the knowledge of the Shareholder,  is any other party
to any of such equipment leases in default.

         (e)  Spacecraft  is not in any  material  respect in  violation  of any
applicable zoning ordinance or other law, regulation or requirement  relating to
the  operation of any  properties  used in the  operation of its  business,  and
Spacecraft  has  not  received  any  notice  of any  such  violation,  or of the
existence of any condemnation proceeding with respect to any properties owned or
leased by Spacecraft.

SECTION 3.20 Accounts Receivable.  All Accounts Receivable that are reflected on
the balance sheet as of October 31, 2004,  contained in the Financial Statements
represent,  and all Accounts  Receivable from that date to the Closing date will
represent,  valid  obligations  arising  from sales  actually  made or  services
actually  performed by Spacecraft in the ordinary course of business.  Except to
the extent  collect prior to the Closing Date,  such Accounts  Receivable are or
will be as of the Closing Date  current and  collectible  net of the  respective
reserves shown on the balance sheet (which  reserves are adequate and calculated
consistent  with past  practice).  Subject to such reserves,  and any immaterial
amounts that are written off quarterly,  each of such Accounts Receivable either
has been or will be collected in full,  without any setoff,  within  ninety (90)
days  after  the day on which  it first  becomes  due and  payable.  There is no
contest,  claim,  defense or right of setoff, other than returns in the ordinary
course of business of Spacecraft,  under any Contract with any account debtor of
an  Account  Receivable  relating  to the  amount or  validity  of such  Account
Receivable.  Schedule 3.20 contains a complete and accurate list of all Accounts
Receivable  as of  October  31,  2004,  which  list sets forth the aging of each
Account Receivable.

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<PAGE>

SECTION 3.21. Inventories.  All items included in the inventories on the balance
sheet  contained in the Financial  Statements  consist of a quality and quantity
usable and, with respect to finished goods,  saleable, in the ordinary course of
business of  Spacecraft  except for obsolete  items and items of  below-standard
quality,  all of which have been written off or written  down to net  realizable
value  in such  balance  sheet  as of the  Closing  Date.  Spacecraft  is not in
possession of any inventory not owned by it,  including goods already sold other
than Divaricate  inventory  which is located at Spacecraft.  When the Divaricate
inventory is sold the proceeds are split _____. All of the inventories have been
valued at the lower costs or [market][net realizable] value on a [last in, first
out] [first in, first out] basis.  Inventories  now on hand that were  purchased
after the date of the balance  sheet were  purchased in the  ordinary  course of
business  at a cost  not  exceeding  market  prices  prevailing  at the  time of
purchase.  The  quantities of each item of  inventories  (whether raw materials,
work-in-process  or finished  goods) are not excessive but are reasonable in the
present circumstances of Spacecraft. Work-in-process inventories are now valued,
and  will be  valued  on the  Closing  Date,  according  to  generally  accepted
accounting principles.

SECTION 3.22 Representations Complete. None of the representations or warranties
nor any statement made by the  Shareholders in this Agreement or any Schedule or
certificate furnished by the Shareholders  pursuant to this Agreement,  contains
any untrue  statement of a material  fact,  or omits to state any material  fact
necessary in order to make the statements  contained  herein or therein,  in the
light of the circumstances under which made, not misleading.

                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES OF GATEWAY

         Gateway hereby  represents and warrants to the  Shareholders  as of the
Closing Date as follows:

SECTION  4.1  Organization  and  Qualification.  Gateway is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Nevada and has the requisite  power and authority to own,  lease and operate its
assets and properties and to carry on its business as it is now being conducted.
Gateway is qualified to do business and is in good standing in each jurisdiction
in which the  properties  owned,  leased or  operated by it or the nature of the
business conducted by it makes such qualification necessary.  True, accurate and
complete copies of Gateway's Articles of Incorporation and By-laws, in each case
as in  effect  on the  date  hereof,  including  all  amendments  thereto,  have
heretofore been delivered to Spacecraft.

SECTION 4.2 Capitalization.  The authorized capital stock of Gateway consists of
100,000,000  shares of  Gateway  Common  Stock and 0 shares of  preferred  stock
("Gateway  Preferred  Stock").  As of January 15,  2005,  there were  37,207,254
shares of Gateway Common Stock issued and  outstanding  and no shares of Gateway
Preferred Stock outstanding. All of the issued and outstanding shares of Gateway
Common Stock are duly authorized, validly issued, fully paid, non-assessable and
free of preemptive rights.

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<PAGE>

SECTION 4.3       Authority, Non-Contravention, and Approvals.

         (a) Gateway has full  corporate  power and authority to enter into this
Agreement and to consummate  the  transactions  contemplated  hereby.  Gateway's
Board of  Directors  has duly  authorized  the  execution  and  delivery of this
Agreement,  and the  consummation  by Gateway of the  transactions  contemplated
hereby, and no other corporate  proceedings on the part of Gateway are necessary
to authorize the execution and delivery of this  Agreement and the  consummation
by Gateway of the transactions contemplated hereby. This Agreement has been duly
and  validly   executed  and   delivered  by  Gateway  and,   assuming  the  due
authorization,  execution and delivery hereof by the Shareholders, constitutes a
valid  and  binding  agreement  of  Gateway,   enforceable  against  Gateway  in
accordance  with its terms,  except that such  enforcement may be subject to (a)
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting or relating to  enforcement  of  creditors'  rights  generally and (b)
general equitable principles.

         (b) The execution  and delivery of this  Agreement by Gateway does not,
and the  consummation by Gateway of the  transactions  contemplated  hereby will
not,  violate,  conflict  with or  result in a breach  of any  provision  of, or
constitute a default (or an event  which,  with notice or lapse of time or both,
would  constitute  a  default)  under,  or  result  in the  termination  of,  or
accelerate the  performance  required by, or result in a right of termination or
acceleration  under, or result in the creation of any lien,  security  interest,
charge or encumbrance  upon any of the properties or assets of Gateway under any
of the terms, conditions or provisions of (i) the charter or by-laws of Gateway,
(ii) any statute, law, ordinance,  rule,  regulation,  judgment,  decree, order,
injunction,  writ,  permit or  license  of any court or  governmental  authority
applicable  to Gateway or any of its  properties  or assets,  or (iii) any note,
bond,  mortgage,   indenture,  deed  of  trust,  license,   franchise,   permit,
concession, contract, lease or other instrument,  obligation or agreement of any
kind  to  which  Gateway  is  now a  party  or by  which  Gateway  or any of its
properties or assets may be bound or affected.

         (c) No  declaration,  filing or  registration  with,  or notice  to, or
authorization,  consent or approval of, any  governmental  or regulatory body or
authority  is necessary  for the  execution  and  delivery of this  Agreement by
Gateway or the consummation by Gateway of the transactions contemplated hereby.

SECTION  4.4  Absence of Certain  Changes or Events.  From  September  30,  2004
through the date hereof,  there has not been any material  adverse change in the
business, operations,  properties, assets, liabilities,  condition (financial or
other),  results of  operations  or prospects  of Gateway and its  subsidiaries,
taken as a whole.

SECTION 4.5  Litigation.  There are no claims,  suits,  actions,  proceedings or
investigations  pending or, to the  knowledge  of Gateway,  threatened  against,
relating to or affecting Gateway or any of its  subsidiaries,  before any court,
governmental department,  commission,  agency,  instrumentality or authority, or
any arbitrator, except as disclosed and attached hereto. Neither Gateway nor any
of its  subsidiaries  is subject to any judgment,  decree,  injunction,  rule or
order of any court, governmental department, commission, agency, instrumentality
or authority or any arbitrator  which prohibits or restricts the consummation of
the transactions  contemplated  hereby or would have any material adverse effect

                                       14
<PAGE>

on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Gateway and its subsidiaries.

SECTION 4.6 Compliance with Laws. Neither Gateway nor any of its subsidiaries is
in violation of, or has been given notice or been charged with any violation of,
any law, statute,  order, rule, regulation,  ordinance,  or judgment (including,
without limitation,  any applicable  environmental law, ordinance or regulation)
of any  governmental  or  regulatory  body or authority,  except for  violations
which, in the aggregate,  do not have a material adverse effect on the business,
operations,  properties,  assets,  condition  (financial  or other),  results of
operations or prospects of Gateway and its subsidiaries, taken as a whole. As of
the date of this Agreement,  to the knowledge of Gateway,  no  investigation  or
review by any  governmental  or  regulatory  body or  authority  is  pending  or
threatened,  nor has any governmental or regulatory body or authority  indicated
an intention to conduct the same.

                                    ARTICLE V
          ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
                              CONCERNING THE SHARES

         The  Shareholders  hereby  represents and warrants to Gateway as of the
Closing Date as follows:

SECTION 5.1       Purchase Entirely For Own Account.

         This  Agreement  is made with the  Shareholders  in reliance  upon such
Shareholder's  representation  to Gateway,  which by Shareholder's  execution of
this Agreement such Shareholders hereby confirm,  that the Shares to be acquired
by such Shareholder will be acquired for investment for such  Shareholder's  own
account,  not as a  nominee  or  agent,  and not  with a view to the  resale  or
distribution  of any part  thereof,  and that the  Shareholders  have no present
intention of selling,  granting any participation in, or otherwise  distributing
the same. By executing this Agreement,  the Shareholders further represents that
such Shareholder does not presently have any contract, undertaking, agreement or
arrangement with any person to sell,  transfer or grant  participations  to such
person or to any person, with respect to any of the Shares.

SECTION 5.2       Disclosure Of Information.

         The  Shareholders  believes they have  received all of the  information
they  consider  necessary or  appropriate  for  deciding  whether to acquire the
Shares.  The Shareholder  further represent that they have had an opportunity to
ask  questions  and receive  answers  from  Gateway  regarding  the Shares.  The
foregoing,  however, does not limit or modify the representations and warranties
of  Gateway  contained  in  Article 4 or the right of each  Shareholder  to rely
thereon.

SECTION 5.3       Restricted Securities.

         The  Shareholder  understand  that the Shares have not been  registered
under the Securities Act of 1933, as amended (the "Securities Act") by reason of
a specific  exemption  from the  registration  provisions of the  Securities Act
which depends upon,  among other things,  the bona fide nature of the investment
intent and the  accuracy  of such  Shareholder's  representations  as  expressed
herein.  The  Shareholders  understand  that such  unregistered  the  Shares are
"restricted  securities" under applicable U.S. federal and state securities laws
and that,  pursuant to these laws, the Shareholders  must hold the Shares unless
and until they are registered  with the  Securities and Exchange  Commission and

                                       15
<PAGE>

qualified by state  authorities,  or an  exemption  from such  registration  and
qualification  requirements  is available.  The  Shareholders  acknowledge  that
Gateway has no  obligation  to register or qualify any of the Shares for resale.
Each Shareholder further  acknowledges that if an exemption from registration or
qualification  is  available,  such as that under Rule 144 under the  Securities
Act, it may be conditioned on various  requirements  including,  but not limited
to, the time and manner of sale, the one (1) year holding period for the Shares,
and on requirements  relating to Gateway which are outside of such Shareholder's
control.

SECTION 5.4       Legends.

         (a) Each Shareholder understands that the certificates representing the
Shares,  and any securities issued in respect of or exchange for the Shares, may
bear one or all of the following legends:

                  (i) "THE SHARES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AND  HAVE  BEEN  ACQUIRED  FOR
INVESTMENT  AND  NOT  WITH A  VIEW  TO,  OR IN  CONNECTION  WITH,  THE  SALE  OR
DISTRIBUTION  THEREOF.  NO SUCH SALE OR DISTRIBUTION  MAY BE EFFECTED WITHOUT AN
EFFECTIVE  REGISTRATION  STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM  REASONABLY  SATISFACTORY  TO THE PURCHASER THAT SUCH  REGISTRATION  IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933"; and

                  (ii)  Any  legends  required  by  the  laws  of the  State  of
California,  including  any legend  required  by the  California  Department  of
Corporations.

                                   ARTICLE VI
                              CONDITIONS TO CLOSING

SECTION  6.1  Conditions  to  Obligations  of  Spacecraft.   The  obligation  of
Spacecraft  to perform  this  Agreement  is subject to the  satisfaction  of the
following  conditions  on or before  the  Closing  unless  waived in  writing by
Spacecraft.

                  (a)  Representations   and  Warranties.   There  shall  be  no
information  disclosed  in the  schedules  delivered  by  Gateway,  which in the
opinion of Spacecraft would materially adversely affect the proposed transaction
and intent of the parties as set forth in this  Agreement.  The  representations
and  warranties  of  Gateway  set forth in  Article  4 hereof  shall be true and
correct in all material  respects as of the date of this Agreement and as of the
Closing as though made on and as of the Closing,  except as otherwise  permitted
by this Agreement.

                  (b)  Performance  of  Obligations.  Gateway  shall have in all
material respects performed all agreements  required to be performed by it under
this  Agreement  and shall have  performed in all material  respects any actions
contemplated by this Agreement prior to or on the Closing and Gateway shall have
complied in all material  respects  with the course of conduct  required by this
Agreement.

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<PAGE>

                  (c) Consents.  Execution of this Agreement by the shareholders
of Spacecraft and any consents  necessary for or approval of any party listed on
any Schedule delivered by Gateway whose consent or approval is required pursuant
thereto shall have been obtained.

SECTION 6.2 Conditions to  Obligations of Gateway.  The obligation of Gateway to
perform  this  Agreement  is  subject  to  the  satisfaction  of  the  following
conditions on or before the Closing unless waived in writing by Gateway.

                  (a)  Representations   and  Warranties.   There  shall  be  no
information  disclosed in the schedules delivered by the Shareholders,  which in
the  opinion  of  Gateway,   would  materially  adversely  affect  the  proposed
transaction  and  intent  of the  parties  as set forth in this  Agreement.  The
representations and warranties of the Shareholders set forth in Articles 3 and 5
hereof shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing as though made on and as of the Closing,  except
as otherwise permitted by this Agreement.

         (b)  Performance of  Obligations.  The  Shareholders  shall have in all
material  respects  performed  all  agreements  required to be performed by them
under this  Agreement  and shall have  performed  in all  material  respects any
actions contemplated by this Agreement prior to or on the Closing and Spacecraft
shall have complied in all respects with the course of conduct  required by this
Agreement.

                  (c)  Consents.  Any consents  necessary for or approval of any
party listed on any Schedule  delivered by the  Shareholders,  whose  consent or
approval is required pursuant thereto, shall have been obtained.

                  (d) Statutory Requirements. All statutory requirements for the
valid consummation by the Shareholders of the transactions  contemplated by this
Agreement shall have been fulfilled.

                  (e)  Governmental  Approval.  All  authorizations,   consents,
approvals,  permits and orders of all federal  and state  governmental  agencies
required to be obtained  by  Spacecraft  for  consummation  of the  transactions
contemplated by this Agreement shall have been obtained.

                                   ARTICLE VII
                          MATTERS SUBSEQUENT TO CLOSING

SECTION 7.1 Covenant of Further  Assurance.  The parties covenant and agree that
they shall,  from time to time,  execute and deliver or cause to be executed and
delivered all such further  instruments  of conveyance,  transfer,  assignments,
receipts and other instruments, and shall take or cause to be taken such further
or other actions as the other party or parties to this  Agreement may reasonably
deem necessary in order to carry out the purposes and intent of this Agreement.

SECTION 7.2 Repayment of Shareholder Loan. Following the Closing, Gateway agrees
that the LRL's loan to  Spacecraft  in the  principal  amount of $75,000 will be
repaid to the Shareholder in twelve (12) equal monthly installments.

                                       17
<PAGE>

SECTION 7.3 Life Insurance. Following the Closing, the $1,000,000 life insurance
policy  maintained  by  Spacecraft  on the life of the  Lloyd R.  Leavitt  shall
thereafter be paid by the LFT.  Notwithstanding the foregoing, in the event that
any  benefits  are paid out from the policy,  the first  amount so paid shall be
deemed to be full  satisfaction  of the any  amount  due under the Note (in full
satisfaction of Gateway's obligations  thereunder),  with the balance to be paid
to the Shareholder's heirs in accordance with the policy.

SECTION 7.4 Conduct of Business.  Following the Closing,  LRL shall  continue to
have  responsibility for making day-to-day  management decision on behalf of the
Spacecraft.  Gateway  agrees that Mr.  Gledhill  will make himself  available to
assist in the operations of Spacecraft.  The  Shareholders  and other authorized
Spacecraft   individuals   will  continue  to  be  authorized   signatories   on
Spacecraft's  bank  accounts,  and will continue to be  responsible  for monthly
accounting  and budget  controls.  Spacecraft  and the  Shareholders  agree that
Spacecraft will provide timely monthly  financial  statements for  consolidation
with Gateway's and its other subsidiaries' financial statements, and Gateway and
its  representatives  shall have access to Spacecraft's books and records at any
time upon request.

                                  ARTICLE VIII
                     NATURE AND SURVIVAL OF REPRESENTATIONS

SECTION  8.1 All  statements  contained  in any written  certificate,  schedule,
exhibit or other written  instrument  delivered by Gateway,  the Shareholders or
Spacecraft  pursuant  hereto,  or otherwise  adopted by Gateway,  by its written
approval, or by Shareholders or Spacecraft by his or its written approval, or in
connection  with  the  transactions   contemplated   hereby,   shall  be  deemed
representations  and warranties by Gateway or Spacecraft as the case may be. All
representations,  warranties and  agreements  made by either party shall survive
for the period of the applicable  statute of limitations and until the discovery
of any claim, loss, liability or other matter based on fraud, if longer.

                                   ARTICLE IX
                          SHAREHOLDERS INDEMNIFICATION

         Following the Closing, each of the Shareholders, jointly and severally,
agrees to protect,  defend,  indemnify and hold Gateway harmless with respect to
any and all claims, demands, suits, actions, administrative proceedings, losses,
damages,  obligations,   liabilities,  costs  and  expenses,  including  without
limitation  reasonable legal and other costs and expenses of  investigating  and
defending any actions or threatened  actions which arise as a result of or which
are  related  to any  active or  passive  act,  omission,  occurrence,  event or
condition  that  occurred  prior  to the  Closing  Date in  connection  with any
misrepresentation  or  breach  of  any  of  the  representations,  covenants  or
warranties of the Shareholders contained herein.

                                    ARTICLE X
                                  MISCELLANEOUS

SECTION 10.1  Construction.  This  Agreement  shall be construed and enforced in
accordance  with the laws of the State of California  excluding the conflicts of
laws.

                                       18
<PAGE>

SECTION 10.2 Notices.  All notices necessary or appropriate under this Agreement
shall be effective when  personally  delivered or deposited in the United States
mail, postage prepaid,  certified or registered,  return receipt requested,  and
addressed to the parties last known  address  which  addresses  are currently as
follows:

        If to Gateway                          If to the Shareholders

        Mr. Larry Consalvi                     Mr. Lloyd R. Leavitt, III
        Gateway International Holdings, Inc.   Spacecraft Machine Products, Inc.
        3840 East Eagle Drive                  23880 Madison Street
        Anaheim, CA 92807                      Torrance, CA 92505

SECTION 10.3 Amendment and Waiver.  The parties hereby may, by mutual  agreement
in writing signed by each party,  amend this Agreement in any respect.  Any term
or provision of this  Agreement may be waived in writing signed by an authorized
officer at any time by the party which is entitled to the benefits thereof, such
waiver right shall include, but not be limited to, the right of either party to:

                  (a)  Extend  the  time  for  the  performance  of  any  of the
         obligations of the other;

                  (b) Waive any  inaccuracies  in  representations  by the other
         contained  in this  Agreement  or in any  document  delivered  pursuant
         hereto;

                  (c) Waive  compliance  by the other with any of the  covenants
         contained in this Agreement,  and performance of any obligations by the
         other; and

                  (d) Waive the  fulfillment  of any condition that is precedent
         to the  performance  by the party so waiving of any of its  obligations
         under this Agreement.

         Any  writing  on the  part  of a  party  relating  to  such  amendment,
extension  or  waiver  as  provided  in this  Section  10.3  shall  be  valid if
authorized or ratified by the Board of Directors of such party.

SECTION 10.4 Remedies not Exclusive.  No remedy conferred by any of the specific
provisions  of this  Agreement is intended to be exclusive of any other  remedy,
and each and every remedy shall be cumulative  and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.  The election of any one or more remedies by Gateway or
Spacecraft  shall not constitute a waiver of the right to pursue other available
remedies.

SECTION  10.5  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

                                       19
<PAGE>

SECTION 10.6 Benefit.  This  Agreement  shall be binding upon,  and inure to the
benefit of, the respective  successors and assigns of Gateway and Spacecraft and
its shareholders.

SECTION 10.7 Entire  Agreement.  This  Agreement  and the Schedules and Exhibits
attached hereto, represent the entire agreement of the undersigned regarding the
subject matter hereof,  and supersedes all prior written or oral  understandings
or agreements between the parties.

SECTION 10.8 Cost and Expenses.  Spacecraft shall bear all expenses  incurred in
connection with the  negotiation,  execution,  closing,  and performance of this
Agreement, including counsel fees and accountant fees.

SECTION 10.9 Captions and Section  Headings.  Captions and section headings used
herein are for  convenience  only and shall not control or affect the meaning or
construction of any provision of this Agreement.

         Executed as of the date first written above.

<TABLE>
<S>                                                    <C>
         Gateway International Holdings, Inc.          Spacecraft Machine Products, Inc.

         By:               // S //                     By:         // S //
             -----------------------------------           -----------------------------------
              Larry Consalvi, President                      Lloyd R. Leavitt, III, President
</TABLE>

         The  undersigned  hereby  approves the Share  Exchange  Agreement  with
Gateway  International  Holdings,  Inc. The  undersigned  hereby  represent  and
warrant  that  the  undersigned  have  read the  Share  Exchange  Agreement  and
understand its terms and conditions.

Sole Shareholders of Spacecraft Machine Products, Inc.

                           // S //                       Date: January 28, 2005
         ----------------------------------------
         Lloyd R. Leavitt, III

                           // S //                       Date: January 22, 2005
         ----------------------------------------
         The Leavitt Family Trust
         By Lloyd R. Leavitt

                  // S //                                Date: January 22, 2005
         ----------------------------------------
         The Leavitt Family Trust
         By Anne S. Leavitt

                                       20
<PAGE>

SPOUSAL CONSENT TO SHARE EXCHANGE AGREEMENT

The undersigned  spouses of the  Shareholders  hereby represent and warrant that
the undersigned have read the Share Exchange  Agreement and understand its terms
and condition.  Each of the undersigned  hereby consents to her spouses transfer
of his Shares pursuant to the terms thereof.

                  // S //                               Date: January 26, 2005
         --------------------------------------
         Jo. L. Leavitt

                                       21CONFORMED COPY

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT  AGREEMENT (the  "Agreement") is made as of January 31,
2005, between Spacecraft Machine Products,  Inc., a corporation  organized under
the laws of the State of California (the "Company"),  and Lloyd R. Leavitt,  III
(the "Executive").

         WHEREAS,  in connection  with the acquisition of all of the outstanding
capital stock of the Company by Gateway International  Holdings,  Inc., a Nevada
Corporation,  from the Executive and his  co-shareholder  the parties  desire to
formalize the terms and conditions of Executive's employment with the Company.

         NOW, THEREFORE, the Company and Executive hereby agree as follows:

1.       EMPLOYMENT.

         1.1 General.  The Company hereby  employs  Executive in the capacity of
President  of the  Company  commencing  with the  Effective  Date (as defined in
Section 2). Executive hereby accepts such employment, upon the terms and subject
to the conditions herein contained.

         1.2 Duties. During Executive's  employment with the Company,  Executive
shall report  directly to the  Company's  Chief  Executive  Officer and shall be
responsible  for  performing  those  duties  consistent  with  the  position  of
President,  and as may from time to time be reasonably  assigned to or requested
of Executive by the Company's Chief Executive  Officer.  Executive shall use his
reasonable efforts to perform faithfully and effectively such  responsibilities.
Executive  shall conduct all of his activities in a manner so as to maintain and
promote the business and reputation of the Company.

         1.3  Full-Time  Position.  Executive,  during his  employment  with the
Company,  shall devote all of his  business  time,  attention  and skills to the
business and affairs of the  Company.  Executive  shall not,  during the term of
this  Agreement,  be engaged in any other  business  activity  without the prior
consent of the Chief Executive Officer of the Company;  provided,  however, that
this restriction  shall not be construed as preventing  Executive from investing
his personal assets in passive investments in business entities which are not in
competition with the Company or its affiliates.

         1.4  Business  Opportunity.  Executive  hereby  agrees to  promote  and
develop  all  business  opportunities  that come to his  attention  relating  to
current or anticipated  future business of the Company,  in a manner  consistent
with the best interests of the Company and with his duties under this Agreement.
Should  Executive  discover a business  opportunity  that does not relate to the
current or anticipated future business of the Company, he shall first offer such
opportunity  to the  Company.  Should the Board of  Directors of the Company not
exercise  its right to pursue  this  business  opportunity  within a  reasonable
period of time, not to exceed sixty (60) days, then Executive,  with the consent
of the Board of  Directors,  may develop the business  opportunity  for himself;
provided,  however,  that such  development  may in no way conflict or interfere
with the duties owed by Executive to the Company under this Agreement.  Further,
Executive may develop such business  opportunities only on his own time, and may
not use any service, personnel,  equipment, supplies, facility, or trade secrets

<PAGE>

of the  Company  in  their  development.  As used  herein,  the  term  "business
opportunity" shall not include business  opportunities  involving  investment in
publicly traded stocks,  bonds or other  securities,  or other  investments of a
personal nature.

         1.5  Representations of Executive.  To induce the Company to enter into
this Agreement,  Executive represents and warrants to the Company that as of the
Effective  Date (a) Executive  will not be a party or subject to any  employment
agreement or arrangement with any other person,  firm,  company,  corporation or
other  business  entity,  (b)  Executive  will  not  be  subject  to  restraint,
limitation  or  restriction  by virtue of any  agreement or  arrangement,  or by
virtue of any law or rule of law or  otherwise  which would  impair  Executive's
right or ability to (i) enter the employ of the Company,  or (ii) perform  fully
his duties and obligations  pursuant to this  Agreement,  and (c) to the best of
Executive's  knowledge no material  litigation is pending or threatened  against
any  business or  business  entity  owned or  controlled  or  formerly  owned or
controlled by Executive.

         1.6 Location of Employment.  Executive's  principal place of employment
during his employment with the Company shall be in Torrance, California.

2. TERM.  The term of this  Agreement  shall  commence  on January 31, 2005 (the
"Effective Date"). The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the Effective Date and shall continue for a period
of one (1) year from the date hereof,  unless  sooner  terminated as provided in
Section 4.1. Thereafter, this Agreement shall automatically renew for successive
one year terms unless either party shall have given written  notice to the other
party not less than 60 days prior to the  expiration  of the Initial Term or any
successive  term of its intent not to renew this  Agreement  (the Initial  Term,
together with any  subsequent  employment  period or periods,  being referred to
herein as the "Term").

3.       COMPENSATION AND BENEFITS.

         3.1 Salary.  The Company  shall pay to Executive,  and Executive  shall
accept,  as  full  compensation  for any and  all  services  rendered  and to be
rendered  by  him to the  Company  in all  capacities  during  the  Term  of his
employment  under this  Agreement,  a base salary at the annual rate of $115,050
("Base Salary"), payable in accordance with the regular payroll practices of the
Company.

         3.2 Employee  Benefits.  The Executive shall be entitled to participate
in tax-qualified  and nonqualified  deferred  compensation and retirement plans,
group term life  insurance  plans,  short-term and long-term  disability  plans,
employee benefit plans,  practices,  and programs  maintained by the company and
made  available to similarly  situated  executives  generally,  and as may be in
effect from time to time.  Executive also shall be entitled to  reimbursement of
reasonable  automobile  expenses,  including  repairs,  gas  and  insurance  and
cellular phone bills.

         3.3  Vacation.   Executive  shall  be  entitled  to  paid  vacation  in
accordance with the Company's standard vacation policies,  with such vacation to
be  scheduled  and taken in  accordance  with the  Company's  standard  vacation
policies.

                                       2
<PAGE>

         3.4 Business  Expenses.  The Company shall reimburse  Executive for any
and all necessary,  customary and usual business expenses, properly receipted in
accordance with Company policies  reasonably  incurred by Executive on behalf of
the Company.

         3.5  Withholding.  All  compensation  shall  be  subject  to  customary
withholding  tax and other  employment  taxes as are  required  with  respect to
compensation paid by a corporation to an employee.

4.       TERMINATION OF EMPLOYMENT.

         4.1 Events of  Termination.  Executive's  employment  with the  Company
shall terminate upon the occurrence of any one or more of the following events:

                  4.1.1 Death.  In the event of Executive's  death,  Executive's
employment shall terminate on the date of death.

                  4.1.2 Disability.  In the event of Executive's  Disability (as
hereinafter defined), the Company shall have the option to terminate Executive's
employment  by  giving a notice  of  termination  to  Executive.  The  notice of
termination  shall  specify  the date of  termination,  which  date shall not be
earlier  than thirty  (30) days after the notice of  termination  is given.  For
purposes  of this  Agreement,  "Disability"  shall  mean a  physical  or  mental
impairment  which  substantially  limits a major life  activity of Executive and
which  renders  Executive  unable to  perform  the  essential  functions  of his
position,  even with  reasonable  accommodation  which  does not impose an undue
hardship on the Company, which condition continues for more than 120 consecutive
days or more than 180 days out of 365  consecutive  days. The Board of Directors
shall have the right,  in good faith,  to make the  determination  of Disability
under this Agreement  based upon  information  supplied by Executive  and/or his
medical  personnel,  as well as information  from medical  personnel (or others)
selected by the Company or its insurers.

                  4.1.3  Termination by the Company for Cause.  The Company may,
at its  option,  terminate  Executive's  employment  for Cause  (as  hereinafter
defined),  based on objective factors  determined in good faith by a majority of
the  Board of  Directors,  by  giving  a  notice  of  termination  to  Executive
specifying the reasons for termination and, if Executive shall fail to cure same
within ten (10) days of his receiving the notice of termination,  his Employment
shall terminate at the end of such 10-day period; provided that in the event the
Board of Directors in good faith  determines that the underlying  reasons giving
rise to such  determination  cannot be cured,  then said cure  period  shall not
apply and  Executive's  employment  shall  terminate on the date of  Executive's
receipt  of the  notice  of  termination.  "Cause"  shall  mean (a)  Executive's
conviction  of,  guilty or "no  contest"  plea to, or  confession  of guilt of a
felony, or (b) a willful act by Executive which constitutes gross misconduct and
which is  materially  injurious to the Company,  including,  but not limited to,
theft, fraud or other illegal conduct.

                  4.1.4    Reserved.

                  4.1.5  Termination  by  Executive.   Executive  may  terminate
Executive's  employment  for any reason  whatsoever by giving  written notice of
termination  to the  Company.  Executive's  employment  shall  terminate  on the
earlier of (a) the date,  following the date of the notice of termination,  upon

                                       3
<PAGE>

which a suitable  replacement for Executive is found by the Company or (b) sixty
(60) days after the date of receipt by the Company of the notice of termination.

         4.2  Certain  Obligations  of  the  Company  Following  Termination  of
Executive's  Employment.  Following the  termination of  Executive's  employment
under the  circumstances  described below, the Company shall pay to Executive in
accordance with its regular  payroll  practices the following  compensation  and
provide the following benefits:

                  4.2.1  Death.  In the event  that  Executive's  employment  is
terminated by reason of Executive's death,  Executive's estate shall be entitled
to the following payments:

                           (a)  Base  Salary   through   the  date   Executive's
         employment is terminated;

                           (b) Any additional  compensation prorated to the date
         of death of Executive; and

                           (c) The Company shall pay to  Executive's  estate the
         amounts,  and shall provide all benefits generally  available under the
         employee  benefit  plans,   policies  and  practices  of  the  Company,
         determined in accordance  with the  applicable  terms and provisions of
         such plans, policies and practices in each case, as accrued to the date
         of  termination  or otherwise  payable as a consequence  of Executive's
         death.

                  4.2.2 Disability.  In the event that Executive's employment is
terminated by reason of Executive's  Disability,  Executive shall be entitled to
the following payments:

                           (a)  Base  Salary   through   the  date   Executive's
         employment is terminated;

                           (b) Any additional compensation, prorated to the date
         of Executive's termination due to Executive's Disability; and

                           (c) The Company  shall pay to  Executive  the amounts
         and shall provide all benefits  generally  available under the employee
         benefit  plans,  policies and  practices of the Company,  determined in
         accordance  with the  applicable  terms and  provisions  of such plans,
         policies  and  practices  in  each  case,  as  accrued  to the  date of
         termination  or  otherwise  payable  as a  consequence  of  Executive's
         Disability.

                  4.2.3    Reserved.

                  4.2.4 Termination by Executive or by the Company for Cause. In
the event Executive's  employment is terminated by Executive pursuant to Section
4.1.5 hereof  ("Termination by Executive") or by the Company pursuant to Section
4.1.3  hereof  ("Termination  by the Company  for  Cause"),  Executive  shall be
entitled  to no further  compensation  or other  benefits  under this  Agreement
except as to that portion of any unpaid Base Salary and other  benefits  accrued
and earned by him  hereunder,  up to and including  the  effective  date of such
termination. In addition,  Executive shall be entitled to receive any additional
compensation  earned but not yet paid with respect only to any fiscal year prior
to the fiscal year of termination.

         4.3  Nature of  Payments.  All  amounts  to be paid by the  Company  to
Executive  pursuant  to this  Section  4 are  considered  by the  parties  to be
severance  payments.  In the event such  payments are treated as damages,  it is

                                       4
<PAGE>

expressly  acknowledged by the parties that damages to Executive for termination
of  employment  would be  difficult  to  ascertain  and the  above  amounts  are
reasonable estimates thereof.

         4.4 Duties Upon Termination. Upon termination of Executive's employment
with the  Company  pursuant  to  Sections  4.1.1  through  4.1.5  hereof or upon
expiration  of the  Term,  Executive  shall  be  released  from any  duties  and
obligations  hereunder (except those duties and obligations set forth in Section
5). Upon  termination of  Executive's  employment  with the Company  pursuant to
Sections 4.1.1 through 4.1.5 hereof, the obligations of the Company to Executive
shall be as set forth in Section 4.2 hereof.

5.       RESTRICTIVE COVENANTS.

         5.1 Executive  acknowledges that (i) he has a major  responsibility for
the operation, administration, development and growth of the Company's business,
(ii) his work for the Company  has  brought  him and will  continue to bring him
into  close  contact  with  confidential  information  of the  Company  and  its
customers,  and (iii) the agreements  and covenants  contained in this Section 5
are  essential  to protect  the  business  interest  of the Company and that the
Company  will  not  enter  into  this  Agreement  but for  such  agreements  and
covenants. Accordingly, the Executive covenants and agrees as follows:

                  5.1.1  Except as  otherwise  provided  for in this  Agreement,
during  the  Term of this  Agreement  and for a period  of  twelve  (12)  months
following  the  termination  of  this  Agreement  (the  "Termination   Period"),
Executive  shall  not,  directly  or  indirectly,  compete  with  respect to any
services  or  products  of the  Company  which are  either  offered or are being
developed by the Company;  or, without limiting the generality of the foregoing,
be or become, or agree to be or become, interested in or associated with, in any
capacity  (whether  as  a  partner,   shareholder,   owner,  officer,  director,
executive,  principal,  agent,  creditor,  trustee,  consultant,  co-venturer or
otherwise) with any individual,  corporation,  firm,  association,  partnership,
joint  venture or other  business  entity,  which  competes  with respect to any
services  or  products  of the  Company  which are  either  offered or are being
developed by the Company;  provided,  however, that Executive may own, solely as
an investment,  not more than one percent (1%) of any class of securities of any
publicly held  corporation in competition  with the Company whose securities are
traded on any national securities exchange in the United States of America.

                  5.1.2  During  the  Term  of this  Agreement  and  during  the
Termination Period,  Executive shall not, directly or indirectly,  (i) induce or
attempt to influence  any employee of the Company to leave its employ,  (ii) aid
or agree to aid any  competitor,  customer  or  supplier  of the  Company in any
attempt to hire any person who shall have been  employed by the  Company  within
the twelve (12) month period  preceding  such  requested aid, or (iii) induce or
attempt to  influence  any  person or  business  entity  who was a  customer  or
supplier of the Company  during any portion of said period to transact  business
with a competitor of the Company in Company's business.

                  5.1.3  During  the  Term of this  Agreement,  the  Termination
Period,  if applicable,  and  thereafter,  Executive shall not other than in the
performance of his duties disclose to anyone any  information  about the affairs
of the Company, including,  without limitation, trade secrets, trade "know-how",
inventions,   customer  lists,  business  plans,  operational  methods,  pricing

                                       5
<PAGE>

policies,  marketing  plans,  sales plans,  identity of suppliers or  customers,
sales,  profits or other  financial  information,  which is  confidential to the
Company or is not generally  known in the relevant  trade,  nor shall  Executive
make use of any such  information  for his own benefit.  Any technique,  method,
process or technology  used by the Company shall be considered a "trade  secret"
for the purposes of this Agreement.

                  5.1.4  Executive  hereby agrees that all know-how,  documents,
reports, plans, proposals, marketing and sales plans, client lists, client files
and materials  made by him or by the Company are the property of the Company and
shall  not be  used  by  him in any  way  adverse  to the  Company's  interests.
Executive  shall not deliver,  reproduce  or in any way allow such  documents or
things to be delivered or used by any third party without specific  direction or
consent of the Board of Directors of the Company.  Executive  hereby  assigns to
the Company any rights that he may have in any such trade secret or  proprietary
information.

         5.2 If Executive  breaches,  or threatens to commit a breach of Section
5.1 (the "Restrictive  Covenants"),  the Company shall have the following rights
and  remedies,  each of  which  shall  be  enforceable,  and each of which is in
addition to, and not in lieu of, any other rights and remedies  available to the
Company at law or in equity.

                  5.2.1  Executive shall account for and pay over to the Company
all  compensation,  profits,  and other  benefits,  after taxes,  which inure to
Executive's  benefit which are derived or received by Executive or any person or
business   entity   controlled  by  Executive   resulting  from  any  action  or
transactions constituting a breach of any of the Restrictive Covenants.

                  5.2.2  Notwithstanding  the  provisions  of  subsection  5.2.1
above,  Executive  acknowledges  and agrees that in the event of a violation  or
threatened  violation of any of the  provisions  of Section 5, the Company shall
have no adequate  remedy at law and shall  therefore be entitled to enforce each
such provision by temporary or permanent injunctive or mandatory relief obtained
in any court of competent jurisdiction without the necessity of proving damages,
posting any bond or other  security,  and without  prejudice to any other rights
and remedies which may be available at law or in equity.

         5.3 If any of the Restrictive  Covenants,  or any part thereof, is held
to be invalid or  unenforceable,  the same shall not affect the remainder of the
covenant or covenants,  which shall be given full effect,  without regard to the
invalid or  unenforceable  portions.  Without  limiting  the  generality  of the
foregoing,  if any of the Restrictive Covenants, or any part thereof, is held to
be  unenforceable  because of the duration of such provision or the area covered
thereby,  the parties hereto agree that the court making such termination  shall
have the power to reduce the duration  and/or area of such provision and, in its
reduced form, such provision shall then be enforceable.

         5.4 The parties  hereto  intend to and hereby  confer  jurisdiction  to
enforce the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive  Covenants.  In the event that the courts
of any one or more of such jurisdictions  shall hold such Restrictive  Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise,  it is
the intention of the parties  hereto that such  determination  not bar or in any

                                       6
<PAGE>

way affect the Company's right to the relief provided above in the courts of any
other jurisdictions within the geographical scope of such Restrictive Covenants,
as to breaches of such  covenants in such other  respective  jurisdictions,  the
above  covenants as they relate to each  jurisdiction  being,  for this purpose,
severable into diverse and independent covenants.

6.       MISCELLANEOUS PROVISIONS.

         6.1  Severability.  If in any jurisdiction any term or provision hereof
is  determined  to be  invalid or  unenforceable,  (a) the  remaining  terms and
provisions   hereof   shall  be   unimpaired,   (b)  any  such   invalidity   or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable  such provision in any other  jurisdiction  and (c) the invalid or
unenforceable  term or provision  shall, for purposes of such  jurisdiction,  be
deemed  replaced by a term or provision that is valid and  enforceable  and that
comes closest to expressing the intention of the invalid or  unenforceable  term
or provision.

         6.2 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken  together
shall constitute one and the same agreement.

         6.3 Notices.  All notices,  requests,  demands and other communications
hereunder  shall be in writing and shall be deemed duly given when  delivered by
hand, or when  delivered if mailed by  registered  or certified  mail or private
courier  service,  postage  prepaid,  return receipt  requested or via facsimile
(with written confirmation of receipt) as follows:

                  If to Executive:  Lloyd R. Leavitt III
                                    2025 Santa Rena Drive
                                    Rancho Palos Verdez, CA 90275
                                    Facsimile: 310/373-8988

         If to the Company:         Spacecraft Machine Products, Inc.
                                    23880 Madison Street
                                    Torrance, CA 92505
                                    Attn:    Mr. Lloyd R. Leavitt, III
                                             President

or to such other address as a party hereto shall have  designated by like notice
to the other party hereto.

         6.4 Amendment. No provision of this Agreement may be modified, amended,
waived or discharged in any manner  except by a written  instrument  executed by
the Company and Executive.

         6.5 Entire Agreement.  This Agreement  constitutes the entire agreement
of the parties  hereto with respect to the subject  matter hereof and supersedes
all prior agreements and understandings of the parties hereto,  oral or written,
with respect to the subject matter hereof.

                                       7
<PAGE>

         6.6 Applicable  Law. This Agreement  shall be governed by and construed
in accordance  with the laws of the State of California  applicable to contracts
made and to be wholly  performed  therein  without  regard to its  conflicts  or
choice of law provisions.

         6.7 Headings. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.

         6.8 Binding Effect; Successors and Assigns.  Executive may not delegate
his duties or assign his rights  hereunder.  This  Agreement  shall inure to the
benefit of, and be binding upon, the parties hereto and their respective  heirs,
legal representatives, successors and permitted assigns.

         6.9 Waiver,  etc. The failure of either of the parties hereto to at any
time  enforce any of the  provisions  of this  Agreement  shall not be deemed or
construed  to be a waiver of any such  provision,  nor to in any way  affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any  breach of any of the  provisions  of this  Agreement  shall be
effective unless set forth in a written instrument executed by the party against
whom or which  enforcement  of such waiver is sought,  and no waiver of any such
breach shall be  construed  or deemed to be a waiver of any other or  subsequent
breach.

         6.10  Representations and Warranties.  Executive and the Company hereby
represent and warrant to the other that: (a) he or it has full power,  authority
and  capacity to execute and deliver  this  Agreement  and to perform his or its
obligations  hereunder,  (b) such execution,  delivery and performance  will not
(and with the giving of notice or lapse of time or both would not) result in the
breach of any agreements or other obligations to which he or it is a party or he
or it is otherwise  bound and (c) this Agreement is his or its valid and binding
obligation in accordance with its terms.

         6.11  Enforcement.  Except as otherwise  provided herein,  if any party
institutes  legal action or other dispute  resolution  proceedings to enforce or
interpret the terms and conditions of this Agreement, the prevailing party shall
be awarded reasonable  attorneys' fees at all levels of the proceeding,  and the
expenses and costs incurred by such prevailing party in connection therewith.

         6.12  Arbitration.  The parties agree to arbitrate any disputes arising
under  this  Agreement  in as  expeditious  a manner  as  possible  through  the
commercial  rules of the  American  Arbitration  Association  in the  County  of
Orange,  California,  or such other  place that is  mutually  agreed upon by the
parties.  Further,  the parties  hereby  waive any  objection  based on personal
jurisdiction, venue or forum non-conveniens in any arbitration or action brought
under this Agreement.  The decision and award rendered by the arbitrators  shall
be final and binding. Judgment upon the award may be entered in any court having
jurisdiction thereof.

         6.13 Continuing Effect.  Where the context of this Agreement  requires,
the  respective  rights  and  obligations  of  the  parties  shall  survive  any
termination or expiration of the term of this Agreement.

                                       8
<PAGE>

         6.14  Construction.  Both parties have  cooperated  in the drafting and
preparation of this  Agreement.  Hence,  in any  construction to be made of this
Agreement,  the same shall not be construed  against any party on the basis that
the party was the drafter.

         6.15 Expenses.  Each party to this Agreement  agrees to bear his or its
own expenses in connection with the negotiation and execution of this Agreement.

         IN WITNESS  WHEREOF,  this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

                                    "COMPANY"

                                    SPACECRAFT MACHINE PRODUCTS, INC.,
                                    a California corporation

                                    By:              / S /
                                       -----------------------------------------
                                    Name:  Lloyd R. Leavitt
                                    Title: President

                                    "EXECUTIVE"
                                                      / S /
                                    --------------------------------------------
                                    Lloyd R. Leavitt

                                       9

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