Document:

Prepared by MERRILL CORPORATION

EMPLOYMENT AGREEMENT

 

This Employment

Agreement is entered into as of the 1st day of July, 2001, by and between

Gateway Energy Corporation, a Delaware corporation, with its principal place of

business at 500 Dallas Street, Suite 2615, Houston, Texas  77002 (hereinafter the “Company”), subject

to the further definition set forth in Section 7.1, and Scott D. Heflin, whose

address is 12422 Rip Van Winkle Drive, Houston, Texas 77024  (hereinafter “Executive”).

 

WHEREAS, the Company

considers the establishment and maintenance of a sound and vital management to

be essential to protecting and enhancing the best interests of the Company and

its shareholders; and

 

WHEREAS, the Board of

Directors of the Company has determined that appropriate steps should be taken

to reinforce and encourage the continued attention and dedication of members of

the Company's management, including Executive, to their assigned duties without

distraction.

 

NOW, THEREFORE, in

consideration of the mutual covenants and agreements of the parties set forth

herein, and for other good and valuable consideration, the parties agree as

follows:

 

Section 1.  Employment.

 

The Company and

Executive agree that Executive shall serve as Treasurer, Secretary and Chief

Financial Officer of the Company.  Executive

shall perform such duties and exercise such powers pertaining to the management

and operations of the Company as may be determined from time to time by the

Company.  Such duties and powers shall

be consistent with those normally expected of persons holding similar

positions.  Executive’s duties, however,

are subject to reasonable modifications based on future developments in the

Company’s business.

 

Section 2. Term of Agreement.

 

This Agreement will be

effective as of July 1, 2001, and, except as otherwise provided in this

Agreement, will continue in effect until October 31, 2004 and shall be

renewable for additional one (1) year terms at the option of the Company.  If either party chooses not to renew this

Agreement for a successive one year term, the party making that choice must

provide the other party with notice of the intent not to renew at least 180

days prior to the expiration of the then current term.  If a Change in Control occurs prior to the

expiration of the initial term of this Agreement, this Agreement will continue

in effect for three (3) years from the Change in Control.  If a Change in Control occurs during a one

(1) year renewal term, this Agreement will continue in effect for one (1) year

from the Change in Control.  Executive’s

base salary while employed will be determined from year to year in accordance

with the Company’s Executive Compensation Plan (the “Plan”), but shall be no

less than $120,000 annually.

 

Section 3. Change in Control.

 

The Company recognizes

that, as is the case with many publicly held corporations, the possibility of a

change in control exists, and that possibility, along with the uncertainty and

questions which may arise among management, may result in the departure or

distraction of management personnel to the detriment of the Company and its

shareholders.  In order to induce

Executive to remain in its employ, the Company agrees to provide Executive the

payments and benefits described in this Agreement if Executive's employment

with the Company is terminated subsequent to a “Change in Control” of the

Company as defined in Section 4, under the circumstances described in Section

5.

 

Section 4. Definition of Change in Control.

 

For purposes of this

Agreement, a Change in Control of the Company means the occurrence of any of

the following events during the period in which this Agreement remains in

effect.  A Change in Control will be

deemed to occur on the date the event occurs:

 

4.1           Change in Voting Power. Any

person or persons acting together which would constitute a “group” for purposes

of Section 13(d) of the Exchange Act (other than the Company, or any

Subsidiary, or any entity beneficially owned by any of the foregoing)

beneficially own (as defined in Rule 13(d)-3 under the Exchange Act) without

Board approval or consent, directly or indirectly, at least thirty percent

(30%) of the total voting power of the Company entitled to vote generally in

the election of the Board;

 

4.2           Change in Board of Directors.

Either:

 

(a)           the Current Directors (as hereinafter

defined) cease for any reason to constitute at least a majority of the members

of the Board (for these purposes, a “Current Director” means any member of the

Board as of the date of this Agreement, and any successor of a Current Director

whose election or nomination for election by the Company's stockholders was

approved by at least a majority of the current Directors then on the Board); or

 

(b)           at any meeting of the stockholders of

the Company called for the purpose of electing directors, a majority of the

persons nominated by the Board for election as directors fail to be elected; or

 

4.3           Liquidation, Merger or

Consolidation. The stockholders of the Company approve:

 

(a)           a plan of complete liquidation of the

Company; or

 

(b)           an agreement providing for the merger

or consolidation of the Company (i) in which the Company is not the continuing

or surviving corporation (other than consolidation or merger with a wholly

owned subsidiary of the Company in which all shares outstanding immediately

prior to the effectiveness thereof are changed into or exchanged for the same

consideration) or (ii) pursuant to which the shares are converted into

cash, securities or other property, except a consolidation or merger of the

Company in which the holders of the shares immediately prior to the

consolidation or merger have, directly or indirectly, at least a majority of

the common stock of the continuing or surviving corporation immediately after

such consolidation or merger, or in which the Board immediately prior to the

merger or consolidation would, immediately after the merger or consolidation,

constitute a majority of the board of directors of the continuing or surviving

corporation; or

 

4.4           Sale of Assets. The

stockholders of the Company approve an agreement (or agreements) providing for

the sale or other disposition (in one transaction or a series of transactions)

of all or substantially all of the assets of the Company.

 

Section

5.  Termination Following Change in

Control.

 

If

any of the events described in Section 4 constituting a Change in Control

occur, Executive will be entitled to the payments and benefits provided for in

Section 6 if a subsequent termination of Executive's employment occurs within

three (3) years from the date of that Change in Control, unless that termination

is:

 

(a)           because

of Executive's death;

 

(b)           by

the Company for Cause or Disability; or

 

(c)           by

Executive other than for Good Reason.

 

Those payments and

benefits will be in lieu of any severance payments Executive would otherwise

receive in accordance with Section 19 of this Agreement.

 

5.1           Cause. Termination by the

Company of Executive's employment for “Cause” means Executive has materially

breached this Agreement or has engaged in action or misconduct in connection

with the performance of his duties that is injurious to the business of the

Company, or is convicted of a felony or commits an act of gross, flagrant, and

willful misconduct relating to his employment or the Company’s business,

including, but not limited to, theft or embezzlement of the Company’s property

or money, or an act of fraud against the Company.  If Company believes Cause exists, as defined herein, a written

notice will be delivered to Executive by the Chief Executive Officer of the

Company (or if Executive is the Chief Executive Officer, the Chairman of

the  Compensation and Stock Option

Committee) that specifically identifies the manner in which the Chief Executive

Officer (or the Chairman of the Committee) believes that Executive has given the

Company Cause for termination of Executive's employment, and giving Executive

an opportunity for Executive, together with Executive's counsel, to be heard

before the Board of Directors of the Company. 

The Board of Directors of the Company may then make a finding that, in

the good faith opinion of two-thirds of the Board of Directors (excluding the

Executive), Executive acted (or failed to act when he should have acted) in a

manner constituting Cause as defined herein, and specifying the particulars of

that finding in detail. For purposes of this subsection 5.1, no act, or failure

to act, on Executive's part will be considered “willful” unless done, or

omitted to be done, by Executive not in good faith and without reasonable

belief that Executive's action or omission was in the best interest of the

Company.  Following the opportunity for

the Executive, together with the Executive’s counsel, to be heard, the Board of

Directors may excuse the Executive from any further Board of Directors’

proceeding where the finding is discussed or made.

 

5.2           Disability. Termination by the

Company of Executive's employment for “Disability” means termination of

Executive’s employment following and because of Executive's failure to perform

substantially all of the material duties of his position for a period of at least

one hundred eighty (180) consecutive calendar days due to physical or mental

illness or injury.  Executive will

continue to receive Executive's full base salary at the rate in effect and any

bonus payments under the Plan payable during the one hundred eighty (180) day

qualification period until termination of Executive's employment for

Disability. After that termination, Executive's benefit will be determined in

accordance with the Company's other benefit plans and practices then in effect

that apply to Executive.  The Company

will have no further obligation to Executive under this Agreement and all

supplemental benefits will be terminated. 

If the Company and Executive disagree as to Executive's incapacity, each

may appoint a medical doctor to certify his opinion as to Executive's

incapacity, and if the doctors do not agree as to Executive's incapacity, then

the two doctors will appoint a third medical doctor to certify his opinion as

to Executive's incapacity, and the decision of a majority of the three doctors

will prevail.  The Company will bear the

costs of the doctors’ opinions.

 

5.3           Good Reason. Termination by

Executive of Executive's employment for “Good Reason” means termination by

Executive of Executive's employment based on:

 

(a)           The assignment to Executive of duties

inconsistent with his position and status with the Company as they existed

immediately prior to a Change in Control, or a substantial change in

Executive's title, offices or authority, or in the nature of his

responsibilities, as they existed immediately prior to a Change in Control,

except in connection with the termination of his employment for Cause or

Disability or as a result of his death or by Executive other than for Good

Reason;

 

(b)           A reduction in Executive's base

salary as in effect on the date of this Agreement or as his salary may be

increased from time to time;

 

(c)           A failure to continue the Company's

Plan, as it may be modified from time to time, substantially in the form in

effect immediately prior to a Change in Control, or a failure to continue

Executive as a participant in the Plan on a basis substantially similar to his

participation immediately prior to a Change in Control, or to pay Executive the

amounts that Executive would be entitled to receive in accordance with the

Plan;

 

(d)           Requiring Executive to be based more

than fifty (50) miles from the location where Executive is based immediately

prior to a Change in Control, except for required travel on business to an

extent substantially consistent with Executive’s business travel obligations

prior to the Change in Control, or if Executive is agreeable to relocating,

then the Company agrees to reimburse Executive for all reasonable moving

expenses incurred by Executive or to indemnify Executive against any loss realized

in the sale of his principal residence in connection with that relocation;

 

(e)           The failure to continue in effect any

retirement plan, life insurance plan, medical insurance plan, disability plan

or any other benefit plan in which Executive is participating immediately prior

to a Change in Control (or provide plans providing Executive with substantially

similar benefits), the taking of any action by the Company that would adversely

affect Executive's participation or materially reduce his benefits under any of

those plans or deprive Executive of any material fringe benefit enjoyed by

Executive immediately prior to a Change in Control; or

 

(f)            The failure by the Company to obtain

the assumption of this Agreement by any successor, as contemplated in Section

7.

 

5.4           Notice of Termination. Any

purported termination by the Company pursuant to subsections 5.1 or 5.2 or by

Executive pursuant to subsection 5.3 will be communicated by written Notice of

Termination to the other party. For purposes of this Agreement, a “Notice of

Termination” means a notice that indicates the specific termination provision

in this Agreement relied upon and setting forth in reasonable detail the facts

and circumstances claimed to provide a basis for termination of Executive's

employment under the provision so indicated. Any purported termination not

effected pursuant to a Notice of Termination meeting the requirements set forth

in this Agreement will not be effective.

 

5.5           Date of Termination.  For purposes of this Agreement, the date of

the termination of Executive’s employment (“Date of Termination”) will be:

 

(a)           if Executive’s employment is

terminated by his death, the end of the month in which his death occurs;

 

(b)           if Executive’s employment is

terminated for Disability, thirty (30) days after Notice of Termination is

given; or

 

(b)           if Executive’s employment is

terminated by Executive or by the Company for any other reason, the date

specified in the Notice of Termination.

 

Section 6.  Payments

and Benefits Upon Certain Terminations Following a Change in Control.

 

If

within three (3) years following the Change in Control, Executive's employment

is terminated other than for Death, Disability or Cause, or if Executive

terminates his employment for Good Reason, then the following provisions will

apply:

 

6.1           Compensation Through Date of

Termination. The Company will pay Executive within thirty (30) days after

termination:

 

(a)           Any

unpaid amount of Executive’s base salary through the Date of Termination;

 

(b)           With

respect to any year then completed, any unpaid amount accrued to Executive

pursuant to the Plan; and

 

(c)           With

respect to any year then partially completed, a pro rata portion through the

Date of Termination of Executive’s annual bonus under the Plan, based upon the

amount of his bonus for the previous year.

 

6.2           Additional Severance. In lieu

of any further salary and bonus payments to Executive for periods subsequent to

the Date of Termination, or other severance payments, the Company will pay as

severance pay to Executive two times the sum of:

 

(a)           Executive's annual base salary as of

the date of Change in Control, or as of the Date of Termination, whichever is

greater; and

 

(b)           Executive's annual bonus under the

Plan.  Executive's annual bonus amount

is to be based on the greater of:

 

(1)           the average of Executive's bonus for

the two fiscal years of the Company preceding the year in which the Change in

Control occurs; or

 

(2)           the average of Executive's bonus for

the two fiscal years of the Company preceding the year in which the termination

of employment occurs.

 

The

severance pay provided for in this Section 6.2 shall be transferred to a “Rabbi

Trust,” effective as of the Date of Termination, and paid to Executive in

twenty-four (24) equal monthly installments commencing on the first day of the

next month following the Date of Termination, and on the first day of each

subsequent month, until fully paid.

 

6.3           Benefit Plans.  In the event of a Change in Control, unless

Executive's employment is terminated for Cause, the Company will, at the

Company expense, maintain in full force and effect for Executive's continued

benefit, for a period of four (4) years following the Date of Termination, the

health, dental, disability and other welfare benefits, plan, programs and

arrangements substantially equivalent to the most valuable coverage provided

under any plan maintained by the Company from time to time during such

period.  In addition, Executive will

continue to be provided during the four (4) years following the Date of

Termination, with the same life insurance coverage maintained on his life

immediately prior to the Date of Termination. 

These benefits shall be reduced by the amount of similar benefits

provided to Executive during such period by a subsequent employer, as

determined solely by the Board.  For the

purposes of enforcing this offset provision, Executive shall notify the Board

as to the terms and conditions of any subsequent employment and the

corresponding benefits received pursuant thereto, and shall provide, or cause

to provide the Board, correct, complete, and timely information concerning the

same.

 

6.4           No Mitigation Required.  Executive will not be required to mitigate

the amount of any payment provided for in this Section 6 by seeking other

employment or otherwise, nor will the amount of any payment provided for in

this Section 6 be reduced by any compensation earned by Executive as the result

of employment with another employer after the Date of Termination or otherwise,

except for a reduction in benefits as set forth in subsection 6.3.

 

6.5           Tax Gross-up Payment.  If any payments or benefits provided

pursuant to this Section 6 are subject to an excise tax on an “excess parachute

payment” under Section 4999 of the Internal Revenue Code of 1986 (the “Code”),

or any successor provision of the Code, or are subject to an excise or penalty

tax under any similar provision of any other revenue system to which Executive

may be subject, the Company will provide a gross-up payment to Executive in

order to place Executive in the same after-tax position Executive would have

been in had no excise or penalty tax become due and payable under Code Section

4999 (or any successor provision) or any similar provision of another revenue

system.  No gross-up payment will be

made for any excise or penalty tax attributable to any stock options granted to

Executive, or for any other payments or benefits provided to Executive under

other sections of this Agreement.

 

Section 7. Successors; Binding Agreement.

 

7.1           Assumption by Company’s Successor.

The Company will request any successor (whether direct or indirect, by

purchase, merger, consolidation or otherwise) to all or substantially all of

the business and/or assets of the Company, by agreement in form and substance

reasonably satisfactory to Executive, to expressly assume and agree to perform

this Agreement.  Failure of the Company

to obtain that agreement prior to the effectiveness of any succession will be a

breach of this Agreement and will entitle Executive to payments and benefits

from the Company in the same amount and on the same terms to which Executive

would be entitled under this Agreement if Executive terminated Executive's

employment for Good Reason within three (3) years following a Change in

Control, except that for purposes of implementing the foregoing, the date on

which that succession becomes effective will be deemed the Date of

Termination.  As used in this Agreement,

“Company” means Gateway Energy Corporation and any successor to its business

and/or assets, regardless of whether such successor specifically assumes and

agrees to perform this Agreement.

 

7.2           Enforcement by Executive’s

Successor. This Agreement will inure to the benefit of and be enforceable

by Executive's personal or legal representatives, executors, administrators,

successors, heirs, distributees, devisees and legatees.  If Executive dies subsequent to the

termination of Executive's employment while any amount would still be payable

to Executive pursuant to this Agreement if Executive had continued to live, all

those amounts, will be paid in accordance with the terms of this Agreement to

Executive's devisee, legatee or other designee or, if there be no designee, to

Executive's estate. The foregoing payment will be made in a lump sum within

sixty (60) days following the date of Executive's death.

 

Section 8.  Working

Facility.

 

Executive

will perform his services hereunder at the principal office of the Company,

located in Houston, Texas, except as travel to other locations is warranted by

the business of the Company.  The

Company shall provide Executive with such office space, secretarial help, and

other facilities and services as may be suitable to his position and

appropriate for the performance of his duties.

 

Section 9.  Expenses

and Benefits.

 

The

Company shall pay or reimburse Executive for any expenses reasonably incurred

by him in furtherance of his duties hereunder, including, but not limited to,

reasonable expenses for traveling, meals and hotel accommodations, upon

submission by Executive of vouchers or itemized statements therefor, prepared

in compliance with such rules and policies as the Company may from time to time

adopt and as may be required in order to permit such payments as proper

deductions by the Company under the Internal Revenue Code and the rules and

regulations adopted pursuant thereto, now or hereafter in effect.

 

Executive

shall have made available to him, on substantially the same terms as other

management level employees of the Company, group insurance, retirement plans,

and other benefit programs in effect from time to time during the term of

Executive’s employment.  Executive’s

participation under any group insurance programs, retirement plans or other

benefit programs shall be subject to the applicable terms and conditions of the

same.  This paragraph shall not be

construed as a commitment on the part of the Company to establish, maintain, or

continue any such plans or programs.

 

Section 10. Notice.

 

For

purposes of this Agreement, notices and all other communications provided for

in this Agreement will be in writing and will be deemed to have been duly given

when delivered or mailed by United States registered mail, return receipt

requested, postage prepaid, addressed to the respective addresses set forth on

the first page of this Agreement, provided that all notices to the Company will

be directed to the attention of the Chief Executive Officer of the Company (or

if the notice is from the Chief Executive Officer, to the Secretary of the

Company), or to such other address as either party may have furnished to the

other in writing in accordance with this Section 10, except that notice of

change of address will be effective only upon receipt.

 

Section 11. Modification and Waiver.

 

No

provision of this Agreement may be modified, waived or discharged unless that

waiver, modification or discharge is agreed to in writing by Executive and such

officer as may be specifically designated by the Board of Directors of the

Company. No waiver by either party at any time of any breach by the other party

of, or compliance with, any condition or provision of this Agreement to be

performed by that other party will be deemed a waiver of similar or dissimilar

provisions or conditions at the time or at any prior or subsequent time.

 

Section 12. Construction.

 

This

Agreement supersedes any oral agreement between Executive and the Company and

any oral representation by the Company to Executive with respect to the subject

matter of this Agreement.  The validity,

interpretation, construction and performance of this Agreement will be governed

by the laws of the State of Texas.

 

Section 13. Severability.

 

If

any one or more of the provisions of this Agreement, including but not limited

to Section 18 hereof, or any word, phrase, clause, sentence or other portion of

a provision is deemed illegal or unenforceable for any reason, that provision

or portion will be modified or deleted in such a manner as to make this

Agreement as modified legal and enforceable to the fullest extent permitted

under applicable laws. The validity and enforceability of the remaining

provisions or portions will remain in full force and effect.

 

Section 14. Counterparts.

 

This

Agreement may be executed in two or more identical counterparts, each of which

will take effect as an original and all of which will evidence one and the same

agreement.

 

Section

15. Legal Fees.

 

If

the Company breaches this Agreement or if, within three (3) years following a

Change in Control, (a) Executive's employment is terminated by the Company

other than for Cause or Disability; or (b) Executive terminates Executive's

employment for Good Reason, the Company will reimburse Executive for all legal

fees and expenses reasonably incurred by Executive as a result of that

termination (including all those fees and expenses, if any, incurred in

contesting or disputing the termination or in seeking to obtain or enforce any

right or benefit provided by this Agreement, unless the Company is the

prevailing party in such contest or dispute).

 

Section 16. Employment by a Subsidiary.

 

Either

the Company or a Subsidiary may be Executive's legal employer. For purposes of

this Agreement, any reference to Executive's termination of employment with the

Company means termination of employment with the Company and all Subsidiaries,

and does not include a transfer of employment between any of them. The actions

referred to under the definition of “Good Reason” in subsection 5.3 include the

actions of the Company or Executive's employing Subsidiary, as applicable. The

obligations created under this Agreement are obligations of the Company. A

change in control of a Subsidiary will not constitute a Change in Control for

purposes of this Agreement unless there is also a contemporaneous Change in

Control of the Company. For purposes of this Agreement, a “Subsidiary” means an

entity more than fifty percent (50%) of whose equity interests are owned

directly or indirectly by the Company.

 

Section 17.  Arbitration.

 

Except

for the rights and duties of the parties set forth in Section 18 of this

Agreement, any dispute or controversy arising under or in connection with this

Agreement shall be settled exclusively by arbitration in Houston, Texas,

according to the rules of the American Arbitration Association then in effect.

Judgment may be entered on the arbitrator's award in any court having

jurisdiction; provided, however, that Executive shall be entitled to seek

specific performance of his right to be paid for all periods up to the Date of

Termination during the pendency of any dispute or controversy arising under or

in connection with this Agreement.

 

Section 18.  Restrictive

Covenant.

 

18.1         Need for Protection.  Executive acknowledges that, because of his

senior executive position with the Company, his knowledge of the affairs of the

Company and his relations with its suppliers and customers, he could do serious

damage to the financial welfare of the Company, should he compete or assist

others in competing with the business of the Company.  Accordingly, the parties agree as follows:

 

18.2         Confidential Information.

 

(a)           Non-Disclosure.  Except as the Company may permit or direct

in writing, during the term of this Agreement and thereafter, Executive agrees

that he will never disclose to any person or entity any confidential or

proprietary information, knowledge, or data of the Company, which he may have

obtained while in the employ of the Company, relating to any customers,

customer lists, methods of distribution, sales, prices, profits, costs,

contracts, inventories, suppliers, dealers, distributors, business prospects,

business methods, manufacturing ideas, formulas, plans or techniques, research,

trade secrets, or know how of the Company.

 

(b)           Return of Records.  All records, documents, software, computer

disks, and any other form of information relating to the business of the

Company, which are or were prepared or created by Executive, or which may or

did come into his possession during the term of his employment with the

Company, including any and all copies thereof, shall be returned to the

Company, or as the case may be, shall remain in the possession of the Company,

upon termination of employment for any reason.

 

(c)           Future Employment.  Nothing in this section shall limit the

Executive’s right to carry Executive’s accumulated career knowledge and

professional skills to any future employment, subject to the specific

limitations of the foregoing provisions of this section and the covenants set

forth below.

 

18.3         Non-Competition.

 

(a)           Scope of Operations.  The parties hereto acknowledge that the

Company’s operations are within the continental United States, and that it

conducts business throughout the continental United States, thus, the Company’s

need for protection against unfair competition is throughout the continental

United States.

 

(b)           Covenant Not To Compete.  Executive agrees that he will not, during

the term of this Agreement and for a period of six (6) months after his

employment with the Company has terminated:

 

(1)           engage directly or indirectly, for his

own personal benefit or the benefit of any person or entity other than the

Company, in bidding on any projects which would result in direct competition

with the Company, anywhere in the continental United States; or

 

(2)           develop, promote, invest in, provide

financing for, be employed by, or operate any business on his own behalf, or

for any other person or entity, which bids or solicits on any projects which

would result in direct competition with the Company, or, assist any other

person in doing so.

 

18.4         Termination Without Cause.  It is understood and agreed that in the

event the Company terminates Executive’s employment without Cause, subsection

18.3 hereof shall be null and void. 

Notwithstanding the foregoing provision, however, if Executive’s employment

is terminated under circumstances which entitle him to receive the payments and

benefits provided in Section 6 of this Agreement, then in such event, the

provisions of Section 18.3 hereof shall remain in full force and effect.

 

18.5         Judicial Modification.  In the event that any court of law or equity

shall consider or hold any aspect of this Section 18 to be unreasonable or

otherwise unenforceable, the parties hereto agree that the aspects of this

section so found may be reduced, reformed or modified by appropriate order of

the court, and shall thereafter continue, as so modified, in full force and

effect.

 

18.6         Injunctive Relief.  The parties hereto acknowledge that the

remedies at law for breach of this section will be inadequate, and the Company

shall be entitled to injunctive relief for violation thereof; provided,

however, that nothing herein shall be construed as prohibiting the Company from

pursing any other remedies available for such breach or threatened breach,

including the recovery of damages from Executive.

 

Section

19.  Termination and Severance; No

Change in Control.

 

Executive’s

employment under this Agreement may be terminated, separate and apart from the

occurrence of a Change in Control, in one of the following ways:

 

19.1         Mutual Agreement.  At any time by mutual written agreement of

both parties to this Agreement, subject to any terms and conditions specified

in such mutual written agreement; or

 

19.2         For Cause.  At any time by the Company, by written

notice to Executive, terminating this Agreement and discharging Executive for

Cause, as defined in Section 5.1 of this Agreement; or

 

19.3         Automatically.  Automatically and immediately should one of

the following events occur:

 

(a)           Executive dies; or

 

(b)           Executive’s Disability, as defined in

Section 5.2 of this Agreement.

 

19.4         Severance.  In addition to the foregoing, Company may at

any time, upon thirty (30) days’ written notice, terminate this Agreement

without Cause.  If termination occurs

during the initial term of this Agreement, Executive shall be entitled to

severance pay in an amount equal to (including amounts paid during the 30-day

notice period) one (1) years’ base salary at the rate then in effect, or the

base salary attributable to the remaining months of the term of this Agreement

at the rate then in effect, whichever is greater.  If termination occurs during a one (1) year renewal period under

this Agreement, Executive shall be entitled to severance pay in an amount equal

to (including amounts paid during the 30-day notice period) the base salary

attributable to the remaining months of the one (1) year term at the rate then

in effect.  In either event, Executive

shall also receive a pro rata share of any cash bonus paid for the year,

attributable to that portion of the year during which Executive was employed,

and will also receive any unpaid bonus attributable to the previous year of

employment.  The base salary portion of

the severance shall be payable, at the Company’s option, in a lump sum or in

equal monthly installments consistent with the Company’s ordinary payroll

practices.  The cash bonus portion of

the severance shall be paid in accordance with the schedule set forth in the

Plan.  Executive shall also be entitled

to continuation of benefits through the end of the employment term then in

effect under this Agreement, or if sooner, until such time as he secures

alternative employment which provides him with comparable benefits.  If the Company terminates this Agreement

without Cause, the Company shall have the right at its option, to require

Executive to immediately leave the Company’s premises; provided, that the

Company shall be obligated to pay (as part of the severance) Executive’s base

salary during the 30-day notice period.

 

Section 20.  Exclusivity

of Services.

 

Executive

agrees that his employment with the Company will be full time, and that he will

devote his best efforts and attention to the business of the Company.  The Company agrees that Executive will serve

as a member of the Board of Directors of the Company.  In the event of his election to the Board, Executive will receive

no additional compensation for his services as a Board member.  The Company, through the Board of Directors,

agrees to nominate the Executive to serve as a member of the Board of Directors

of the Company.

 

 

IN

WITNESS WHEREOF, the parties have executed this Agreement as of the date first

above written.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  GATEWAY ENERGY

  CORPORATION, INC.

  

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  John B. Ewing,

  Chairman

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Compensation and Stock

  Option

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Committee

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Scott D. HeflinPrepared by MERRILL CORPORATION

EXHIBIT 10.1

 

AMENDMENT NO. 2 TO

ALLIANCE AGREEMENT

 

BETWEEN

 

COVANCE INC. AND

VARIAGENICS, INC.

 

 

 

This Amendment No. 2,

effective August 1, 2001, is an Amendment to the Alliance Agreement between

Covance Inc., a Delaware corporation (“Covance”), and Variagenics, Inc., a

Delaware corporation (“Variagenics”), dated August 2, 1999, as amended

effective September 1, 2000 (the “Agreement”). 

Capitalized terms used herein and not otherwise defined shall have the

meanings ascribed to them in the Agreement.

 

                WHEREAS,

Variagenics and Covance wish to allocate additional personnel to support the

Alliance;

 

                WHEREAS, to

accomplish the foregoing, Variagenics and Covance desire to amend the Agreement

as reflected herein;

 

                NOW, THEREFORE, in

consideration of the mutual promises contained herein, and for other good and

valuable consideration, the receipt of which is hereby acknowledged, the

parties hereto agree as follows:

 

	

  1.

  	

  That Section 3 of the Agreement be further amended

  by adding a new paragraph after the first paragraph of Section 3(a) which

  shall read as follows:

  
	

   

  	

   

  
	

   

  	

  Effective January 1, 2001, Covance will also fund

  [_____] percent ([__]%) of one (1) sales and marketing employee at a rate of

  $[_____] per year, which employee will be an employee of Variagenics.  A payment of $[_____] for such employee

  will be made upon execution of this Amendment and payments of $[_____] shall

  be made quarterly commencing on August 1, 2001.  The employee will be under the control of Variagenics and shall

  dedicate [_____] of his or her time to supporting sales and marketing

  activities in furtherance of the Alliance. Variagenics shall promptly provide

  to Covance the name of such employee. 

  If such employee ceases to dedicate [_____] of his or her time to

  supporting the Alliance for any reason, Variagenics shall promptly notify

  Covance of such event and use its commercially reasonable efforts to replace

  such employee as soon as possible, including the reassignment of other

  Variagenics employees.  Covance’s

  obligation to fund the sales and marketing position pursuant to this

  paragraph shall renew annually on August 1st of each year unless

  Covance gives Variagenics written notice of its intent to terminate its

  obligations pursuant to this paragraph ninety (90) days prior to the

  expiration of the then-current period.

  

 

All other terms and conditions set forth in the

Agreement shall remain in full force and effect.

 

IN WITNESS WHEREOF, the parties have duly executed

this Amendment effective the day and year first above written.

 

	

   

  	

  COVANCE INC.

  	

   

  	

  VARIAGENICS, INC.

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  /s/ John Riley

  	

   

  	

  /s/ Richard P. Shea

  	

   

  
	

   

  	

  Name:

  	

  John Riley

  	

   

  	

  Name:

  	

  Richard P. Shea

  	

   

  
	

   

  	

  Title:

  	

  VP, Finance

  	

   

  	

  Title:

  	

  Chief Financial Officer

  	

   

  
	

   

  	

   

  	

  Covance CLS, Inc.

  	

   

  	

   

  	

  Variagenics, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]