<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999
Registration No. 333-80897
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
GATEWAY ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 44-0651207
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
500 DALLAS STREET, SUITE 2615
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (ZIP Code)
--------------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
WITH
ROBERT PANICO (1), CARL ROBEY (2) AND DOUGLAS MOSS (3)
(Full title of the plan or written contract)
-----------------------
MICHAEL T. FADDEN
GATEWAY ENERGY CORPORATION
500 DALLAS, SUITE 2615
HOUSTON, TEXAS 77002
(713) 336-0844
(Name, address and telephone number,
including area code, of agent for service)
-----------------------
With copy to:
ROCHELLE A. MULLEN, ESQ.
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
1125 SOUTH 103RD ST. - SUITE 720
OMAHA, NEBRASKA 68124-1090
<PAGE>
(1) The Company granted Mr. Panico a Non-Qualified Stock Option to
purchase 35,000 shares of Common Stock on October 1, 1997.
(2) The Company granted Mr. Robey a Non-Qualified Stock Option to
purchase 25,000 shares of Common Stock on October 1, 1997.
(3) The Company granted Mr. Moss a Non-Qualified Stock Option to
purchase 25,000 shares of Common Stock on February 2, 1998.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C>
==========================================================================================================
TITLE OF SECURITIES AMOUNT OF SHARES PROPOSED MAXIMUM PROPOSED AMOUNT OF
TO BE REGISTERED TO BE REGISTERED OFFERING PRICE MAXIMUM REGISTRATION
PER SHARE AGGREGATE PRICE FEE
----------------------------------------------------------------------------------------------------------
COMMON STOCK 85,000 $.245 $20,825 $5.79
==========================================================================================================
</TABLE>
(1) THE PROPOSED MAXIMUM OFFERING PRICE WAS DETERMINED IN ACCORDANCE
WITH RULE 457(c) UNDER THE SECURITIES ACT OF 1933, BASED ON THE
AVERAGE OF THE BID AND ASKED PRICE OF SHARES OF THE SAME CLASS
REPORTED ON THE BULLETIN BOARD SECTION OF NASDAQ ON JULY 26, 1999.
(2) In addition, pursuant to rule 416(c) under the securities act of
1933, this registration statement covers an indeterminate amount of
interests to be offered or sold pursuant to the plans described
herein.
-2-
<PAGE>
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
=============================================================
EXHIBIT
NUMBER EXHIBIT
- -------------------------------------------------------------
<S> <C>
5 Opinion of Counsel
23.1 Consent of Auditors
23.2 Consent of Counsel (included in Exhibit 5)
99.1 Panico Non-Qualified Stock Option Agreement
99.2 Robey Non-Qualified Stock Option Agreement
99.3 Moss Non-Qualified Stock Option Agreement
=============================================================
</TABLE>
The contents of the S-8 Registration Statement (File No. 333-80897)
is hereby incorporated by reference.
-3-
<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of
Texas on July 22, 1999.
GATEWAY ENERGY CORPORATION
BY: /s/
------------------------------------
Scott D. Heflin, Director and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Chairman, CEO and President 7/22/99
- --------------------------------
Michael T. Fadden
/s/ Director 7/22/99
- --------------------------------
Larry J. Horbach
/s/ Director 7/22/99
- --------------------------------
John B. Ewing
/s/ Director 7/22/99
- --------------------------------
Abe Yeddis
/s/ Director 7/22/99
- --------------------------------
Earl Hoffman
/s/ Director 7/22/99
- --------------------------------
Charles A. Holtgraves
/s/ Director 7/22/99
- --------------------------------
Gary McConnell
-4-
<PAGE>
Exhibit 5
LAW OFFICES OF
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
ONE PACIFIC PLACE
1125 S. 103RD STREET, SUITE 720
OMAHA, NEBRASKA 68124
(402) 397-1700
FAX (402) 397-1806
July 22, 1999
Michael Fadden, President
Gateway Energy Corporation
500 Dallas, Suite 2615
Houston, Texas 77002
Re: Registration of 85,000 Shares of Common Stock
on Amendment No. 1 to Form S-8
Dear Mr. Fadden:
We have acted as legal counsel for Gateway Energy Corporation, a
Delaware corporation, (the "Company") in connection with the Company's
preparation of the above-referenced registration of shares on Amendment No. 1 to
Form S-8 (the "Form S-8") being filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended, (the
"Act"), and the prospectus for the individual Non-Qualified Stock Option
Agreements, which are not filed, but are included as a part of the Form S-8 (the
"Prospectuses"). The Company is registering 85,000 shares of common stock
issuable pursuant to three separate Non-Qualified Stock Option Agreements
granted to officers of its subsidiaries. Specifically, the Company granted Mr.
Panico an option to purchase 35,000 shares of Common Stock on October 1, 1997;
Mr. Robey an option to purchase 25,000 shares of Common Stock on October 1,
1997; and Mr. Moss an option to purchase 25,000 shares of Common Stock on
February 2, 1998. All of the shares are to be offered and sold pursuant to the
Option Agreements and in the manner set forth in the Option Agreements, Form S-8
and each respective Prospectus.
In connection herewith, we have examined: (i) the Form S-8 and the
Prospectuses; (ii) the Option Agreements; (iii) the Certificate of Incorporation
and the Bylaws of the Company; (iv) the corporate minutes and proceedings of the
Company applicable to filing of the Form S-8; and (iv) such other proceedings,
documents and records as we deemed necessary or appropriate for the purposes of
making this opinion. In making such examinations, we have assumed the
genuineness of all signatures on all documents and conformed originals to all
copies submitted to us as conformed or photocopies. In addition to such
examination, we have ascertained or verified such additional facts as we deemed
necessary or appropriate for purposes of this opinion. However, as to various
questions of fact material to our opinion, we have relied upon representations,
statements or certificates of officers, directors, or representatives of the
Company or others.
<PAGE>
Based upon the foregoing, we are of the opinion that: (i) the Company
has been legally incorporated and is validly existing under the laws of the
state of Delaware; and (ii) the shares issued pursuant to the Option Agreements,
upon issuance and payment therefor, as contemplated by the Option Agreements,
Form S-8 and the Prospectuses, will be validly issued, fully paid and
non-assessable common stock of the Company.
We hereby consent to the filing of the opinion as an exhibit to the
Form S-8 and to any references to our firm in the Prospectuses. In giving this
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the Rules and Regulations of
the Commission promulgated thereunder.
Very truly yours,
/s/
Cline, Williams, Wright, Johnson &
Oldfather
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 23, 1999 except for Note T, for which
such date is May 25, 1999, accompanying the financial statements of Gateway
Energy Corporation included in the Annual Report on Form 10-KSB of Gateway
Energy Corporation for the year ended February 28, 1999, which is
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in this Registration Statement of the
aforementioned report.
GRANT THORNTON LLP
Houston, Texas
July 29, 1999
<PAGE>
Exhibit 99.1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH SECURITIES WILL
BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
VOID AFTER OCTOBER 1, 2007 35,000 SHARES
NONQUALIFIED STOCK OPTION
OF
GATEWAY ENERGY CORPORATION
THIS CERTIFIES THAT: Robert Panico, (the "Optionholder") is entitled to
subscribe for and purchase from Gateway Energy Corporation, a Delaware
corporation (the "Company"), at a price of $0.53 per share the ("Exercise
Price") payable in cash, check, or Common Stock of the Company, pursuant to the
terms hereof, 35,000 fully paid and non-assessable shares of the Company's
Common Stock, such price and such number of shares being subject to adjustment
as set forth in this option.
All Options granted to Optionee shall vest eleven thousand six hundred
sixty-seven (11,667) shares for each twelve months of continuous service as Vice
President of Gateway Pipeline Company by such Optionee, said period of
employment having commenced on October 1, 1997. In the event of a consolidation
or merger of the Company with or into another corporation, or any sale of all or
substantially all of the Company's property or assets, or any liquidation of the
Company, all unvested options shall become immediately vested.
Upon delivery of this option, together with payment of the Exercise Price
for the shares of Common Stock purchased, at the principal office of the Company
or at such other office or agency as the Company may designate by notice in
writing to the holder hereof, the Optionholder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. All
shares of Common Stock which may be issued upon the exercise of this option
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens, charges and encumbrances with respect thereto.
This option is subject to the following terms and conditions;
1. EXERCISE OF OPTION.
(a) MANNER OF EXERCISE. This option may be exercised in whole or in
part by the
<PAGE>
surrender of this option at the principal office of the Company and by the
payment to the Company by cash, check, or Common Stock of the Company for the
number of shares of Common Stock being purchased. The Company shall, as soon as
practicable after such delivery, prepared a certificate for the shares of Common
Stock purchased in the name of the Optionholder. Common Stock surrendered shall
be valued at the average of the bid and asked price of the Common Stock on the
date of exercise.
(b) PARTIAL EXERCISE. On any partial exercise, the Company shall
promptly issue and deliver to the Optionholder a new option or options of like
tenor in the name of that Optionholder providing for the right to purchase that
number of shares as to which this option has not been exercised.
2. DELIVERY OF STOCK CERTIFICATES. Within a reasonable time after full
or partial exercise of this option, the Company, at its expense, will cause to
be issued in the name of and delivered to the Optionholder, a certificate or
certificates for the number of shares of Common Stock to which the Optionholder
shall be entitled upon such exercise. No fractional shares will be issued upon
exercise of rights to purchase under this option. If upon any exercise of this
option a fraction of a share results, the Company will pay the fair cash value
of that fractional share.
3. ANTI-DILUTION PROVISIONS. In the event of any change in
capitalization effecting the Common Stock of the Company, such as a stock
dividend, stock split or recapitalization, the Company shall make proportionate
adjustments with respect to (i) the aggregate number of shares of Common Stock
issuable upon exercise of this option, (ii) the Exercise Price, and (iii) such
other matters as may be appropriate in light of the circumstances.
4. COMPLIANCE WITH SECURITIES ACT. The Optionholder, by acceptance
hereof; agrees that this option and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that such Optionholder
will not offer, sell or otherwise dispose of this option or any shares to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Act"). Certificates
representing all shares (unless registered under the Act or an opinion of
counsel has been given, satisfactory to the Company, that an exemption from
registration under the Act is available), shall be stamped or imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
AS TO SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
-2-
<PAGE>
5. NOTICES.
Upon any adjustments of the Exercise Price and any increase or decrease
in the number of shares of Common Stock purchasable upon the exercise of this
option, then, and in each such case, the Company, within thirty (30) days
thereafter, shall give written notice thereof to the registered Optionholder at
the address of such Optionholder as shown on the books of the Company which
notice shall state the Exercise Price as adjusted and the increased or decreased
number of shares purchasable upon the exercise of this option, setting forth in
reasonable detail the method of calculation of each.
6. MISCELLANEOUS.
(a) RESERVATION OF STOCK. The Company covenants that it will at all
times reserve and keep available, solely for issuance upon exercise of this
option, all shares of Common Stock from time to time issuable upon exercise of
this option.
(b) MODIFICATION. This option and any of its terms may be changed,
waived, or terminated by a written instrument signed by the Company and the
Optionholder.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this option and, in
the case of loss, theft, or destruction, on delivery of any indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, or surrender or cancellation of this option, the Company, at
its expense will execute and deliver, in lieu of this option, a new option of
like tenor.
(d) NO RIGHTS AS STOCKHOLDER. No Optionholder, as such, shall be
entitled to vote or receive dividends or be considered a stockholder of the
Company for any purpose, nor shall anything in this option be construed to
confer on any Optionholder as such, any rights of a stockholder of the Company
or any right to vote, to give or withhold consent to any corporate action, to
receive notice of meetings of stockholders, to receive dividends or otherwise.
(e) NOTICES. Notices hereunder to the Optionholder shall be sent by
certified or registered mail to the address given to the Company by the
Optionholder and shall be deemed given when so mailed.
(f) ARBITRATION. Any disputes arising out of, related to or in
connection with this option shall be submitted to binding arbitration pursuant
to the commercial arbitration rules of the American Arbitration Association. The
parties agree that the exclusive jurisdiction and venue for (a) any such
arbitration and (b) any action to compel any such arbitration shall be in the
county and state of domicile of the party being served with the arbitration
demand, and each party hereto hereby consents to such jurisdiction and venue for
the purpose of any such arbitration or action to compel arbitration. Each party
shall have thirty (30) days from the date of service of the arbitration demand
to appoint an independent and neutral arbitrator. The two arbitrators appointed
by the parties shall then have thirty (30) days to appoint a third arbitrator.
The arbitrators shall determine the applicable substantive and procedural law
for the arbitration
-3-
<PAGE>
proceedings, and may award reasonable attorneys' fees and actual costs incurred
in connection herewith.
(g) TRANSFERABILITY. This Option may be assigned or transferred by the
Optionholder. In the event of the death or disability of the Optionholder, this
Option may be exercised by any duly appointed guardian, conservator or personal
representative of the estate of the Optionholder.
IN WITNESS WHEREOF, the Company has caused this option to be signed by
its duly authorized officer.
Dated: October 1, 1997
GATEWAY ENERGY CORPORATION
By: /s/
----------------------------------------
Title: Chairman and Chief Executive Officer
-4-
<PAGE>
Exhibit 99.2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH SECURITIES WILL
BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
VOID AFTER OCTOBER 1, 2007 25,000 SHARES
NONQUALIFIED STOCK OPTION
OF
GATEWAY ENERGY CORPORATION
THIS CERTIFIES THAT: Carl Robey, (the "Optionholder") is entitled to
subscribe for and purchase from Gateway Energy Corporation, a Delaware
corporation (the "Company"), at a price of $0.53 per share the ("Exercise
Price") payable in cash, check, or Common Stock of the Company, pursuant to the
terms hereof, 25,000 fully paid and non-assessable shares of the Company's
Common Stock, such price and such number of shares being subject to adjustment
as set forth in this option.
All Options granted to Optionee shall vest eight thousand three hundred
thirty-three (8,333) shares for each twelve months of continuous service as Vice
President of Gateway Pipeline Company by such Optionee, said period of
employment having commenced on October 1, 1997. In the event of a consolidation
or merger of the Company with or into another corporation, or any sale of all or
substantially all of the Company's property or assets, or any liquidation of the
Company, all unvested options shall become immediately vested.
Upon delivery of this option, together with payment of the Exercise Price
for the shares of Common Stock purchased, at the principal office of the Company
or at such other office or agency as the Company may designate by notice in
writing to the holder hereof, the Optionholder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. All
shares of Common Stock which may be issued upon the exercise of this option
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens, charges and encumbrances with respect thereto.
This option is subject to the following terms and conditions;
1. EXERCISE OF OPTION.
(a) MANNER OF EXERCISE. This option may be exercised in whole or in
part by the
<PAGE>
surrender of this option at the principal office of the Company and by the
payment to the Company by cash, check, or Common Stock of the Company for the
number of shares of Common Stock being purchased. The Company shall, as soon as
practicable after such delivery, prepared a certificate for the shares of Common
Stock purchased in the name of the Optionholder. Common Stock surrendered shall
be valued at the average of the bid and asked price of the Common Stock on the
date of exercise.
(b) PARTIAL EXERCISE. On any partial exercise, the Company shall
promptly issue and deliver to the Optionholder a new option or options of like
tenor in the name of that Optionholder providing for the right to purchase that
number of shares as to which this option has not been exercised.
2. DELIVERY OF STOCK CERTIFICATES. Within a reasonable time after full
or partial exercise of this option, the Company, at its expense, will cause to
be issued in the name of and delivered to the Optionholder, a certificate or
certificates for the number of shares of Common Stock to which the Optionholder
shall be entitled upon such exercise. No fractional shares will be issued upon
exercise of rights to purchase under this option. If upon any exercise of this
option a fraction of a share results, the Company will pay the fair cash value
of that fractional share.
3. ANTI-DILUTION PROVISIONS. In the event of any change in
capitalization effecting the Common Stock of the Company, such as a stock
dividend, stock split or recapitalization, the Company shall make proportionate
adjustments with respect to (i) the aggregate number of shares of Common Stock
issuable upon exercise of this option, (ii) the Exercise Price, and (iii) such
other matters as may be appropriate in light of the circumstances.
4. COMPLIANCE WITH SECURITIES ACT. The Optionholder, by acceptance
hereof; agrees that this option and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that such Optionholder
will not offer, sell or otherwise dispose of this option or any shares to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Act"). Certificates
representing all shares (unless registered under the Act or an opinion of
counsel has been given, satisfactory to the Company, that an exemption from
registration under the Act is available), shall be stamped or imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE.
-2-
<PAGE>
5. NOTICES.
Upon any adjustments of the Exercise Price and any increase or decrease
in the number of shares of Common Stock purchasable upon the exercise of this
option, then, and in each such case, the Company, within thirty (30) days
thereafter, shall give written notice thereof to the registered Optionholder at
the address of such Optionholder as shown on the books of the Company which
notice shall state the Exercise Price as adjusted and the increased or decreased
number of shares purchasable upon the exercise of this option, setting forth in
reasonable detail the method of calculation of each.
6. MISCELLANEOUS.
(a) RESERVATION OF STOCK. The Company covenants that it will at all
times reserve and keep available, solely for issuance upon exercise of this
option, all shares of Common Stock from time to time issuable upon exercise of
this option.
(b) MODIFICATION. This option and any of its terms may be changed,
waived, or terminated by a written instrument signed by the Company and the
Optionholder.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this option and, in
the case of loss, theft, or destruction, on delivery of any indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, or surrender or cancellation of this option, the Company, at
its expense will execute and deliver, in lieu of this option, a new option of
like tenor.
(d) NO RIGHTS AS STOCKHOLDER. No Optionholder, as such, shall be
entitled to vote or receive dividends or be considered a stockholder of the
Company for any purpose, nor shall anything in this option be construed to
confer on any Optionholder as such, any rights of a stockholder of the Company
or any right to vote, to give or withhold consent to any corporate action, to
receive notice of meetings of stockholders, to receive dividends or otherwise.
(e) NOTICES. Notices hereunder to the Optionholder shall be sent by
certified or registered mail to the address given to the Company by the
Optionholder and shall be deemed given when so mailed.
(f) ARBITRATION. Any disputes arising out of, related to or in
connection with this option shall be submitted to binding arbitration pursuant
to the commercial arbitration rules of the American Arbitration Association. The
parties agree that the exclusive jurisdiction and venue for (a) any such
arbitration and (b) any action to compel any such arbitration shall be in the
county and state of domicile of the party being served with the arbitration
demand, and each party hereto hereby consents to such jurisdiction and venue for
the purpose of any such arbitration or action to compel arbitration. Each party
shall have thirty (30) days from the date of service of the arbitration demand
to appoint an independent and neutral arbitrator. The two arbitrators appointed
by the parties shall then have thirty (30) days to appoint a third arbitrator.
The arbitrators shall determine the applicable substantive and procedural law
for the arbitration
-3-
<PAGE>
proceedings, and may award reasonable attorneys' fees and actual costs incurred
in connection herewith.
(g) TRANSFERABILITY. This Option may be assigned or transferred by the
Optionholder. In the event of the death or disability of the Optionholder, this
Option may be exercised by any duly appointed guardian, conservator or personal
representative of the estate of the Optionholder.
IN WITNESS WHEREOF, the Company has caused this option to be signed by
its duly authorized officer.
Dated: October 1, 1997
GATEWAY ENERGY CORPORATION
By: /s/
-----------------------------------------
Title: Chairman and Chief Executive Officer
-4-
<PAGE>
Exhibit 99.3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH SECURITIES WILL
BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
VOID AFTER FEBRUARY 2, 2008 25,000 SHARES
NONQUALIFIED STOCK OPTION
OF
GATEWAY ENERGY CORPORATION
THIS CERTIFIES THAT: Douglas Moss, (the "Optionholder") is entitled to
subscribe for and purchase from Gateway Energy Corporation, a Delaware
corporation (the "Company"), at a price of $0.47 per share the ("Exercise
Price") payable in cash, check, or Common Stock of the Company, pursuant to the
terms hereof, 25,000 fully paid and non-assessable shares of the Company's
Common Stock, such price and such number of shares being subject to adjustment
as set forth in this option.
All Options granted to Optionee shall vest eight thousand three hundred
thirty-three (8,333) shares for each twelve months of continuous service as Vice
President of Gateway Pipeline Company by such Optionee, said period of
employment having commenced on February 2, 1998. In the event of a consolidation
or merger of the Company with or into another corporation, or any sale of all or
substantially all of the Company's property or assets, or any liquidation of the
Company, all unvested options shall become immediately vested.
Upon delivery of this option, together with payment of the Exercise Price
for the shares of Common Stock purchased, at the principal office of the Company
or at such other office or agency as the Company may designate by notice in
writing to the holder hereof, the Optionholder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. All
shares of Common Stock which may be issued upon the exercise of this option
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens, charges and encumbrances with respect thereto.
This option is subject to the following terms and conditions;
1. EXERCISE OF OPTION.
(a) MANNER OF EXERCISE. This option may be exercised in whole or in
part by the
<PAGE>
surrender of this option at the principal office of the Company and by the
payment to the Company by cash, check, or Common Stock of the Company for the
number of shares of Common Stock being purchased. The Company shall, as soon as
practicable after such delivery, prepared a certificate for the shares of Common
Stock purchased in the name of the Optionholder. Common Stock surrendered shall
be valued at the average of the bid and asked price of the Common Stock on the
date of exercise.
(b) PARTIAL EXERCISE. On any partial exercise, the Company shall
promptly issue and deliver to the Optionholder a new option or options of like
tenor in the name of that Optionholder providing for the right to purchase that
number of shares as to which this option has not been exercised.
2. DELIVERY OF STOCK CERTIFICATES. Within a reasonable time after full
or partial exercise of this option, the Company, at its expense, will cause to
be issued in the name of and delivered to the Optionholder, a certificate or
certificates for the number of shares of Common Stock to which the Optionholder
shall be entitled upon such exercise. No fractional shares will be issued upon
exercise of rights to purchase under this option. If upon any exercise of this
option a fraction of a share results, the Company will pay the fair cash value
of that fractional share.
3. ANTI-DILUTION PROVISIONS. In the event of any change in
capitalization effecting the Common Stock of the Company, such as a stock
dividend, stock split or recapitalization, the Company shall make proportionate
adjustments with respect to (i) the aggregate number of shares of Common Stock
issuable upon exercise of this option, (ii) the Exercise Price, and (iii) such
other matters as may be appropriate in light of the circumstances.
4. COMPLIANCE WITH SECURITIES ACT. The Optionholder, by acceptance
hereof; agrees that this option and the shares of Common Stock to be issued upon
exercise hereof are being acquired for investment and that such Optionholder
will not offer, sell or otherwise dispose of this option or any shares to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended (the "Act"). Certificates
representing all shares (unless registered under the Act or an opinion of
counsel has been given, satisfactory to the Company, that an exemption from
registration under the Act is available), shall be stamped or imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO SUCH TRANSFER OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE.
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5. NOTICES.
Upon any adjustments of the Exercise Price and any increase or decrease
in the number of shares of Common Stock purchasable upon the exercise of this
option, then, and in each such case, the Company, within thirty (30) days
thereafter, shall give written notice thereof to the registered Optionholder at
the address of such Optionholder as shown on the books of the Company which
notice shall state the Exercise Price as adjusted and the increased or decreased
number of shares purchasable upon the exercise of this option, setting forth in
reasonable detail the method of calculation of each.
6. MISCELLANEOUS.
(a) RESERVATION OF STOCK. The Company covenants that it will at all
times reserve and keep available, solely for issuance upon exercise of this
option, all shares of Common Stock from time to time issuable upon exercise of
this option.
(b) MODIFICATION. This option and any of its terms may be changed,
waived, or terminated by a written instrument signed by the Company and the
Optionholder.
(c) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this option and, in
the case of loss, theft, or destruction, on delivery of any indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, or surrender or cancellation of this option, the Company, at
its expense will execute and deliver, in lieu of this option, a new option of
like tenor.
(d) NO RIGHTS AS STOCKHOLDER. No Optionholder, as such, shall be
entitled to vote or receive dividends or be considered a stockholder of the
Company for any purpose, nor shall anything in this option be construed to
confer on any Optionholder as such, any rights of a stockholder of the Company
or any right to vote, to give or withhold consent to any corporate action, to
receive notice of meetings of stockholders, to receive dividends or otherwise.
(e) NOTICES. Notices hereunder to the Optionholder shall be sent by
certified or registered mail to the address given to the Company by the
Optionholder and shall be deemed given when so mailed.
(f) ARBITRATION. Any disputes arising out of, related to or in
connection with this option shall be submitted to binding arbitration pursuant
to the commercial arbitration rules of the American Arbitration Association. The
parties agree that the exclusive jurisdiction and venue for (a) any such
arbitration and (b) any action to compel any such arbitration shall be in the
county and state of domicile of the party being served with the arbitration
demand, and each party hereto hereby consents to such jurisdiction and venue for
the purpose of any such arbitration or action to compel arbitration. Each party
shall have thirty (30) days from the date of service of the arbitration demand
to appoint an independent and neutral arbitrator. The two arbitrators appointed
by the parties shall then have thirty (30) days to appoint a third arbitrator.
The arbitrators shall determine the applicable substantive and procedural law
for the arbitration
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proceedings, and may award reasonable attorneys' fees and actual costs incurred
in connection herewith.
(g) TRANSFERABILITY. This Option may be assigned or transferred by the
Optionholder. In the event of the death or disability of the Optionholder, this
Option may be exercised by any duly appointed guardian, conservator or personal
representative of the estate of the Optionholder.
IN WITNESS WHEREOF, the Company has caused this option to be signed by
its duly authorized officer.
Dated: October 1, 1997
GATEWAY ENERGY CORPORATION
By: /s/
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Title: Chairman and Chief Executive Officer
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