MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is effective as of the 17th day of
March, 1997, between GATEWAY ENERGY CORPORATION ("Gateway") and ABTECH
RESOURCES, INC. ("Abtech") and is intended to memorialize the terms of an
arrangement by which XXXXXXX X. XXXXXX, ("Xxxxxx"), as principal and owner of
Abtech, will provide management, operating, consulting, and other services to
Gateway.
1. RESPONSIBILITIES. Xxxxxx'x primary responsibilities to Gateway will
include the following:
a. Work with Gateway management to resolve management, operation,
and ownership issues of the Joint Ventures between Gateway and
Shoreham Pipeline Company (the "Shoreham Issues"); such resolution
may include, in whole or in part, sale or exchange of ownership
interests, or assumption of management and operations of the Joint
Ventures. Any resolution of the Shoreham Issues as set forth in
this paragraph, or otherwise, which is acceptable to Gateway
management will be considered "Closing of the Shoreham Issues";
Gateway will notify Xxxxxx in writing when the Closing of the
Shoreham Issues occurs;
b. Work with Gateway management to locate, analyze, negotiate and
acquire gas gathering or gas processing assets;
c. Analyze all existing properties, review and evaluate the
operating managers and supervise their ongoing performance. To
ensure optimum performance of all assets, operations and operating
managers (to be mutually agreed upon by Gateway and Xxxxxx) will
report directly to Xxxxxx.
d. Design and implement a plan to allow Gateway to efficiently and
cost-effectively operate all properties;
e. Establish and enhance Gateway's capability to manage and operate
existing properties, and to analyze and acquire new properties.
f. Manage Gateway's Houston office in a cost-conscious manner; and
g. Perform such other responsibilities as are assigned to Xxxxxx by
Gateway from time to time and agreed to by Gateway and Xxxxxx.
2. FEE. From the date this Memorandum of Understanding is entered into
by the parties, through thirty (30) days following the Closing of the Shoreham
Issues, Gateway will pay Abtech for Xxxxxx'x services the sum of $6,875.00
per month (or an appropriately prorated amount for any portion of a month).
Thirty (30) days following the Closing of the Shoreham Issues, provided
Xxxxxx is then an officer of Gateway as set forth in paragraph 4 below,
Xxxxxx'x salary will be $10,000.00 per month (or an appropriately prorated
amount for any portion of a month).
As an inducement for Xxxxxx to undertake and to fulfill the
responsibilities of this Memorandum of Understanding between Gateway and
Abtech, Gateway will issue directly to Xxxxxx, warrants to purchase 50,000
shares of Gateway Common Stock, effective with the date of this Memorandum of
Understanding. The exercise price will be the market price on the effective
date of issue, and will be exercisable at any time during the ten (10) year
period beginning with the date of issue.
3. EXPENSES. Gateway will reimburse Abtech monthly for all reasonable
out of pocket expenses incurred for Gateway activities. Gateway will pay
Advanced Extraction Technologies, Inc. directly for certain office equipment
and expenses as set forth in Attachment 1. An imprest fund in the amount of
$10,000 will be established at Bank One in Houston for payment of expense
accounts, phone bills and incidental expenses. Xxxxxx will submit monthly
expense reports itemizing all expenses for which payment has been made during
the preceding thirty (30) day period, along with monthly bank statements for
the reimbursement account at Bank One.
4. OFFICER POSITION/STOCK WARRANTS. It is contemplated by the parties
that the Closing of the Shoreham Issues will take place within twelve (12)
months following the date this Memorandum of Understanding is entered into by
the parties. Immediately upon the Closing of the Shoreham Issues, Xxxxxx will
consider the option of becoming Gateway's Chief Operating Officer ("COO"). If
Xxxxxx accepts the option of becoming Gateway's COO within thirty (30) days
of the Closing of the Shoreham Issues, Xxxxxx, upon becoming COO, will
receive Common Stock Purchase Warrants or Incentive Stock Options, (such
options containing terms and conditions customary for qualified stock
options), in an amount equal to one and one-half percent (1.5%) (such 1.5%
shall be determined after taking into consideration the warrants issued under
Paragraph 2 above) of the common equity of Gateway as of said Closing. Such
one and one-half percent (1.5%) will be determined after giving effect to the
convertible securities, warrants, and options outstanding as of said Closing.
The exercise price will be the market price on the date of issue. All
warrants or Incentive Stock Options issued to Xxxxxx will be exercisable at
any time during the ten (10) year period beginning with the date of issue.
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If Xxxxxx declines the option of becoming Gateway's COO within thirty
(30) days of the Closing of the Shoreham Issues, or if at any time prior to
said Closing gives any indication in writing that he will not become COO of
Gateway following the Closing, and if Xxxxxx is not otherwise employed by
Gateway, the consulting arrangement memorialized in this Memorandum of
Understanding will terminate thirty (30) days after the Closing of the
Shoreham Issues. If the Closing of the Shoreham Issues does not occur within
twelve (12) months following the date of this Memorandum, as contemplated by
the parties, the parties agree that the terms of any further relationship
between Gateway and Abtech or Xxxxxx will have to be renegotiated.
5. TIME COMMITMENT/GATEWAY OPTION. Xxxxxx has advised Gateway that he
will have some additional time and travel requirements arising from his
presidency of Abtech, in which he has a significant time and monetary
interest. This will require no more than 10% to 15% of Xxxxxx'x time over the
next several months. Xxxxxx has also advised Gateway that in consideration of
Gateway allowing him to spend this time and for Gateway's financial support of
the development of this project through general and administrative
expenditures, Gateway will have the right, but not the obligation, to take up
to fifty percent (50%) of Abtech's ownership interest, on the same basis as
Abtech, in any gas gathering or gas processing plant project ("Project") in
which Abtech elects to participate ("Gateway's Right to Participate");
provided, however, that Gateway's Right to Participate will be in effect only
if:
a. the Closing of the Shoreham Issues occurs during the next twelve
(12) months, as contemplated by the parties; and
b. the agreement to undertake the Project is executed during the
term of this Memorandum of Understanding or during the twelve (12)
month period following termination of this Memorandum of
Understanding; and
x. Xxxxxx accepts the option of becoming COO as set forth above in
paragraph 4.
ABTECH RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
GATEWAY ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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