Exhibit 10(k)
June 21, 2004
Xxxx Xxxxxxx
Advanced Extraction Technologies, Inc.
0 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
RE: Small NRU - Gross Margin/Process Royalty
Dear Xxxx:
Pending a formal amendment to the First Amended and Restated Agreement to
Develop Natural Gas Treatment Projects using the Mehra Gas Treating Units dated
January 1, 2004, this will confirm the following agreement regarding Mehra
Process nitrogen rejection units (NRU) with an inlet capacity of 2,500 Mcf per
day or less.
Gateway will have the NRU fabricated by Process Recovery Systems (Xxxx
Xxxxx) based on a Process Design Basis Package prepared by AET at no cost to
Gateway or PRS. PRS will also ship to and install the NRU at the producer's
site. Gateway will quote the producer a turnkey price for the installed and
operational NRU to include the NRU, freight costs, installation charges and
technical support from AET through start-up and achievement of the performance
guarantees for the NRU. Gateway and AET will share equally the gross margin
realized on the installed NRU; provided, however, that AET will receive at least
$75,000 of the gross margin. The gross margin on the installed NRU is equal to
the turnkey price paid by the producer less the dollar amount invoice to Gateway
by Process Recovery Systems to design, purchase equipment components, fabricate,
ship, and install the NRU.
In addition, we expect to obligate the producer to pay a Project Fee, which
consists of a development fee payable to Gateway and a process royalty payable
to AET, of at least $0.05 per inlet Mcf starting no earlier than the beginning
of the fifth year of operation. This Project Fee, if any, will be shared equally
between Gateway and AET.
This letter agreement may be terminated by either party on thirty days
prior written notice to the other party; provided, however, that it shall remain
in effect with regard to each NRU with a capacity of 2,500 Mcf per day or less
for which a definitive agreement has been executed prior to the termination date
of this letter agreement by Gateway and a third party for the fabrication and
installation of the NRU.
Very truly yours,
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
President
Accepted and agreed to this 21st day of June 2004.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
