EXHIBIT 10.1
MEMBER INTEREST PURCHASE AGREEMENT
THIS MEMBER INTEREST PURCHASE AGREEMENT ("Agreement") is dated as of
the 1ST day of July, 2008, and entered into by and between Gateway Processing
Company, a Texas corporation ("Buyer"), and ▇▇▇▇▇ Drilling Acquisition Company,
a Nebraska corporation ("Seller").
W I T N E S S E T H
WHEREAS, Buyer and Seller are parties to that certain Regulations of
Gateway-ADAC Pipeline, LLC, dated August 29, 2005 (the "Operating Agreement"),
whereby Buyer and Seller formed Gateway-ADAC Pipeline, LLC, a Texas limited
liability company (the "Company") (capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Operating Agreement); and
WHEREAS, Seller desires to sell all of its Interest in the Company to
the Buyer, and the Buyer is willing to purchase such Interest from Seller, for
the consideration and on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements made herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, represent, warrant and agree as follows:
1. Sale and Purchase of Interest.
1.1 Purchase of Interest. Seller shall sell, assign and transfer to
Buyer, and Buyer shall purchase from Seller all of Seller's right, title and
interest in and to Seller's Interest in the Company, the Transportation System
and any other assets of the Company for a purchase price consisting of the
following:
(a) Five Hundred Thirty-Nine Thousand One Hundred Sixty-Six and
67/100 Dollars ($539,166.67), of which, Seventeen Thousand
and No/100 Dollars ($17,000.00) shall be paid to Seller as
reimbursement of Seller's attorneys' fees and costs related
to this Agreement; and
(b) One Hundred Thousand (100,000) shares of common stock
("Common Stock"), par value $0.25 per share, of Gateway
Energy Corporation, a Delaware corporation ("Gateway").
1.2 Purchase Price. On the date hereof, Buyer will deliver to the
Seller (i) a certified or cashiers check payable in an amount equal to the cash
purchase price indicated above to the order of the Seller, and (ii) a stock
certificate evidencing 100,000 shares of Common Stock issued to Seller. At the
Closing, Seller shall deliver to Buyer a fully executed transfer document
directing the Company to transfer the Interest to Buyer.
1.3 Distributions. Buyer shall cause the Company to make
distributions to Seller for the month ending on June 30, 2008 consistent with
past practices and in accordance with the Operating Agreement of the Company. At
the Closing, Buyer shall cause the Company to pay Seller an estimated amount
determined by Buyer to approximate the distribution for the month of June 2008
(the "Estimated Distribution"). Prior to August 1, 2008, the Board of Directors
of the Company shall make a final determination of the Net Cash Flow (as defined
in the Operating Agreement) distributable pursuant to the Operating Agreement
and consistent with past practices (the "Final Distribution"). If the Estimated
Distribution is less than the Final Distribution, Buyer shall cause the Company
to pay to Seller the difference within five (5) business days. If the Estimated
Distribution is more than the Final Distribution, Seller shall pay the Company
the difference within five (5) business days.
2. The Closing.
2.1 Closing Date. The closing of the purchase of the Interest
provided for in this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLP at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, commencing at 10:00 a.m., on July 1, 2008, or on such other date or at
such other time or place as the parties may mutually agree (such date is herein
called the "Closing Date"), provided that the effective date and time for the
redemption and purchase of the Shares shall be 7:00 a.m. Houston, Texas time,
July 1, 2008.
2.2 Deliverables by the Buyers. At the Closing, the Buyer shall
deliver to Seller the following:
(a) the cash purchase price set forth in Section 1.1 payable in
the form of two (2) certified or cashiers' checks to the
order of Seller in the amounts of $522,166.67 and
$17,000.00; and
(b) a stock certificate evidencing the Common Stock set forth in
Section 1.1.
2.3 Deliverables by the Seller. At the Closing, the Seller shall
deliver to the Buyer and the Company the following:
(a) a transfer document transferring the Interests to Buyer; and
(b) the resignation of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as a director of
the Company.
3. Seller's Representations and Warranties. Seller hereby makes the
following representations and warranties to Buyer, each of which is true and
correct on the date hereof and will be true and correct at the Closing on the
Closing Date, each of which shall be unaffected by any investigation heretofore
or hereafter made by Buyer and each of which shall survive the Closing and the
transactions contemplated hereby:
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3.1 Ownership of Shares. Seller is the sole record and beneficial
owner of the Interest to be sold to Buyer as set forth in Section 1.1 of this
Agreement. Upon the delivery of and payment for such Interest as herein
contemplated, the Buyer will receive good, valid and marketable title to the
Interest purchased by the Buyer from Seller, free and clear of all liens,
encumbrances, claims, charges, security interests, restrictions on transfer,
shareholders' agreements, voting trusts and other defects in title whatsoever.
3.2 Authority and Validity. Seller has full legal right, power,
authority and capacity to execute, deliver and perform this Agreement and the
transactions contemplated hereby. This Agreement constitutes the legal, valid
and binding obligations of the Seller, enforceable against Seller in accordance
with its terms, except to the extent that the enforcement hereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, readjustment of debts, fraudulent conveyance or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.
3.3 Conflicts and Violations. The execution, delivery and
performance of this Agreement by Seller and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in the breach of any of
the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) or require consent
under, or result in the creation or imposition of any lien, encumbrance, claim,
charge, security interest or restriction on transfer upon any property or assets
of Seller pursuant to the terms of any agreement, instrument, franchise, license
or permit to which Seller is a party or by which Seller or any of Seller's
property or assets may be bound, or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over Seller or
Seller's properties or assets. Neither the execution, delivery or performance by
Seller of this Agreement, nor the consummation of the transactions contemplated
by this Agreement, requires the consent, approval of, authorization by, or the
giving of notice by Seller to, or the registration or the making of any filing
by Seller with, or the taking of any other action by Seller in respect of, any
court or any public, governmental or regulatory agency or body having
jurisdiction over Seller or Seller's properties or assets, or any third party.
3.4 Investment Intent. The Seller is acquiring the shares of Common
Stock for its own account with the present intention of holding the shares for
purposes of investment, and not with the intention of selling such shares in a
public distribution in violation of the federal securities laws or any
applicable state securities laws. The Seller understands that the shares are
"restricted securities" as defined in Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), and have not been registered pursuant to the
provisions of the Securities Act, inasmuch as the shares are being acquired from
the Buyer and Gateway in a transaction not involving a public offering and the
purchase of the shares pursuant to this Agreement is taking place in a
transaction not involving any public offering. The Seller is able to bear the
economic risk of its investment in the shares for an indefinite period of time
because the shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.
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3.5 Reliance. Seller is actively involved in the management of the
Company and, in connection with his decision to sell the Shares pursuant to this
Agreement, is not relying upon any representation or warranty of Buyer or the
Company regarding the Company or its business, financial condition or results of
operations, except as expressly set forth herein.
4. Representations and Warranties by Buyer. Buyer hereby makes the
following representations and warranties to Seller, each of which is true and
correct on the date hereof and will be true and correct at the Closing on the
Closing Date, each of which shall be unaffected by any investigation heretofore
or hereafter made by Seller and each of which shall survive the Closing and the
transactions contemplated hereby:
4.1 Authority and Validity. The Buyer has the full legal right,
power, authority and capacity to execute, deliver and perform this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes a legal, valid and binding obligation of
the Buyer and is enforceable against the Buyer in accordance with its terms,
except to the extent that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship, readjustment of debts, fraudulent conveyance or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.
4.2 Conflicts and Violations. The execution, delivery and
performance of this Agreement by the Buyer and the consummation of the
transactions contemplated hereby will not (i) conflict with or result in the
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
or require consent under, or result in the creation or imposition of any lien,
encumbrance, claim, charge, security interest or restriction on transfer upon
any property or assets of the Buyer pursuant to the terms of any agreement,
instrument, franchise, license or permit to which the Buyer is a party or by
which the Buyer or any of his or her property or assets may be bound, or (ii)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Buyer or his or her properties or assets. Neither
the execution, delivery or performance by the Buyer of this Agreement, nor the
consummation of the transactions contemplated by this Agreement, requires the
consent, approval of, authorization by, or the giving of notice by the Buyer to,
or the registration or the making of any filing by the Buyer with, or the taking
of any other action by the Buyer in respect of, any court or any public,
governmental or regulatory agency or body having jurisdiction over the Buyer or
his or her properties or assets, or any third party.
4.3 Reliance. The Buyer is actively involved in the management of
the Company and, in connection with his or her decision to purchase the
Interests pursuant to this Agreement, is not relying upon any representation or
warranty of Seller or the Company regarding the Company or its business,
financial condition or results of operations, except as expressly set forth
herein
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5. Miscellaneous.
5.1 General. This Agreement shall not be assigned by any party
without the prior written consent of each of the other parties. This Agreement
and all of its provisions and conditions are for the sole and exclusive benefit
of the parties to this Agreement and their successors and assigns. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment. This Agreement embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all prior agreements between the parties with respect to its
subject matter. This Agreement shall be governed by the law of the State of
Texas, without regard to conflict of law principles thereunder. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.
5.2 Rule 144 Compliance. With a view to making available to Seller
the benefits of Rule 144 promulgated under the Securities Act of 1933, as
amended, Buyer shall cause Gateway, so long as Gateway is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) File with the SEC in a timely manner all reports and other
documents required of Gateway under the Securities Act and the
Exchange Act; and
(iii) Within five (5) days after the written request of Seller,
cause legal counsel of Gateway to provide an opinion of counsel in
substantially the form attached hereto as Exhibit A regarding the
removal of the restrictive legend from the certificate evidencing the
shares of Common Stock issued pursuant to this Agreement in accordance
with Rule 144(b)(1) at such time as such transfer is permitted
thereunder.
5.3 Expenses. The parties hereto will each be solely responsible for
and bear all of their respective expenses, including, without limitation,
expenses of legal counsel, accountants and other advisers, incurred at any time
in connection with pursuing, negotiating, drafting, executing or consummating
this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GATEWAY PROCESSING COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇▇▇ DRILLING ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
6
EXHIBIT A
Ladies and Gentlemen:
Our client, Gateway Energy Corporation, a Delaware corporation (the
"Company"), has requested us to provide you with our opinion as to whether the
Shareholder may have the restrictive legend removed from stock certificate
number ______, which certificate is registered in the name of the Shareholder,
evidencing an aggregate of 100,000 shares (the "Shares") of the Company's Common
Stock, par value $0.25 per share (the "Common Stock"), pursuant to the
provisions of Rule 144(b)(1) promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act").
We have made such investigations as we deemed necessary and
appropriate under the circumstances in order to allow us to render the opinion
expressed herein and, in this regard, we have been provided with the following:
o a copy of a the Shareholder's Representation Letter, dated
_________, 2008, a form of which is attached hereto as Schedule 1
(the "Representation Letter"); and
o copy of the stock certificate numbered _____.
We have also relied on other written and oral representations of the Company,
its directors or officers.
We have assumed without independent investigation (i) the authenticity
of the Representation Letters and the certificate representing the Shares
(collectively, the "Documents"), (ii) the conformity to the original Documents
of the copies thereof furnished to us, (iii) the genuineness of the signatures
on the Documents, (iv) the authority and capacity of the persons who signed the
Documents, (v) our ability to rely on the statements and representations
contained in the Documents and other written or oral representations of the
Company, its directors and officers, and (vi) that the representations set forth
in the Documents and those made by the Company, its directors and officers
remain true and correct as of the date hereof.
Based solely upon the foregoing, we are of the opinion that the
Shareholder may rely upon Rule 144(b)(1), and a new certificate representing the
Shares may be issued without including thereon the legend restricting transfer
under the Act currently set forth on certificate number _____.
In rendering the foregoing opinion, we have assumed and relied upon
the completeness and accuracy of all statements, representations and agreements
provided to us by or on behalf of the Company and the Shareholder (including the
statements, representations and agreements contained in the Representation
Letters).
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
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SCHEDULE 1
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Re: Rule 144(b)(1) - Cert. Nos. _________ representing
100,000 shares of Common Stock of Gateway Energy
Corporation (the "Company") registered to ▇▇▇▇▇
Drilling Acquisition Company
Ladies and Gentlemen:
The undersigned hereby requests that the restrictive legend be removed
from the above referenced stock certificate evidencing a total of 100,000 shares
of Common Stock (the "Shares") of the Company, pursuant to Rule 144(b)(1)
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act").
The undersigned hereby represents to you that it is not, and has not
been during the preceding three months, an affiliate (as defined in Rule 144 of
the Act) of the Company and is not directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with, the
Company.
Dated: _____________, 20___
▇▇▇▇▇ DRILLING ACQUISITION COMPANY
By: /s/
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President
