**Exhibit 4(b)(4)**

 

FIRSTAMENDMENT TO

FIRST AMENDED AND RESTATED CREDIT AGREEMENT

 

Reference ismade to First Amended and Restated Credit Agreement dated as of March 31,2003 (the “Agreement”) between GATEWAY PIPELINE COMPANY, a Texas corporationand GATEWAY PROCESSING COMPANY, a Texas corporation (collectively “Borrowers”),GATEWAY ENERGY CORPORATION, a Texas corporation (“Guarantor”) and SOUTHWESTBANK OF TEXAS, N. A., a national banking association (the “Lender”), pursuantto which the Borrowers amended and restated, upon the terms and conditionstherein stated, a One Million Five Hundred Thousand Dollar ($1,500,000.00)credit facility (“Loan”) with a Maturity Date of  December 31, 2005, ** **subjectto****theconditions and covenants in the Agreement and Loan Documents.

 

RECITALS:

 

A                                      The Borrowers: (a) anticipatethat they will begin to collect revenues from the Madisonville Gathering Systemduring the third quarter of 2003 and (b) requested the Lender to extend theinterest only period, and restate and rearrange the amortization period, of theLoan.

 

B.                                     The Lender has approvedBorrowers’ requests, subject to the conditions and covenants specified in thisFirst Amendment to First Amended and Restated Credit Agreement (the“Amendment”) and in the Loan Documents to be delivered with this FirstAmendment.

 

THEREFORE,the Borrowers and the Lender hereby agree as follows, intending to be legallybound:

 

Section 1.                                            Definitions.  All capitalized terms shall have the meaning assigned to them inthe Agreement, except as added, restated or otherwise defined herein below:

 

(a)                                  Agreement.  The definition of Agreement is hereby restated as follows:

 

“Agreement means the First Amended and RestatedCredit Agreement, as amended by the Amendment, including the Schedules andExhibits thereto, respectively, as the same may be amended or supplemented fromtime to time.

 

(b)                                 Amendment.  The following definition of Amendment is hereby added to theAgreement:

 

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“Amendment means the First Amendment to FirstAmended and Restated Credit Agreement delivered as of July 31, 2003 byBorrowers and Guarantor to Lender.”

 

(c)                                  Loan Documents.  The definition of Loan Documents is hereby restated as follows:

 

“Loan Documents means (a) the Agreement, as amendedby the Amendment and any certificates delivered in connection therewith,respectively, (b) any and all promissory notes (including, without limitation,the Note issued pursuant to the Amendment), the Security Documents and any andother agreements in favor of Lender now or hereafter delivered pursuant to theAgreement and (c) all future renewals, extensions, rearrangements orrestatements of, or amendments or supplements to, any of the foregoing.

 

(d)                                 Madisonville Mortgage. The definition of MadisonvilleMortgage is hereby restated as follows:

 

“Madisonville Mortgage means the First Amendedand Restated Deed of Trust,Mortgage, Assignment of Production, Security Agreement and Financing Statementdated as of March 31, 2003, recorded in Volume 655, page 1 of the RealProperty Records of Madison County, Texas, as amended by First Amendment to First Amended and Restated Deed of Trust,Mortgage, Assignment of Production, Security Agreement and Financing Statementdated as of March 31, 2003, executed byBorrowers, as Mortgagor and Debtor, to A. Stephen Kennedy, as Trustee for thebenefit of Lender, as Beneficiary, Mortgagee and Secured Party, and any amendment, extension, modification,renewal or supplement thereof, which (a) covers the MadisonvilleGathering System and (b) partially amends, extends and restates (but does notdischarge, novate or release)  the Deed of Trust, Mortgage,Assignment of Production, Security Agreement and Financing Statement dated asof August 31, 2002, and recorded in Volume632, page 186 of the Official Public Records of Madison County, Texas, which was previously amended by (i) Second LoanModification Agreement dated as of February 28, 2003, recording deferred,each of which was delivered by Borrowers,as mortgagor and debtor, to A. Stephen Kennedy, as Trustee for the benefit ofLender, as holder and secured party, covering the Madisonville GatheringSystem.”

 

(e)                                  Note.  The definition of  Note ishereby restated as follows:

 

“Note means (a) the promissory note dated as ofMarch 31, 2003, executed and delivered by Borrowers pursuant to theAmendment, which amends,rearranges, restates, renews and extends (but does not novate)  (i) Promissory Note dated March 31,2003 made by Borrowers and payable to the order of Lender in the originalprincipal amount of One Million Five Hundred Thousand and No/100($1,500,000.00) pursuant to the First Amended and Restated Credit Agreement and(b) any amendment,

 

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rearrangement,restatement, renewal and extension of the Note, (ii) Promissory Note dated August 31, 2002 made by Borrowersand payable to the order of Lender in the original principal amount of OneMillion Five Hundred Thousand and No/100 ($ 1,500,000.00) pursuant to theExisting Credit Agreement and (iii) PromissoryNote dated February 21, 2002 made by Borrowers and payable to the order ofLender in the original principal amount ofOne Million Five Hundred Thousand and NO/100ths Dollars pursuant to the CreditAgreement of even date therewith.

 

Each of the foregoing definitions as used in theLoan Documents shall include the definition or exhibit as amended or restatedhereby.

 

Section 2.               Amendments.  The Agreement is hereby amended and restatedas follows:

 

(a)                                  Section 2.2 of the Agreement is herebyamended and restated as follows:

 

“2.2. Payments. The Borrowers shall repay the principal and accrued but unpaid interestof the Loan advanced under the Agreement in twenty-seven (27) monthlyinstallments, the first twenty-six installments shall be in the amount of FiftyFour Thousand Eight Hundred Eighteen and 54/100ths Dollars ($54,818.54) each,and the last installment shall be in the amount of the then remaining unpaidprincipal balance hereof and all accrued but unpaid interest thereon.  The first monthly installment of principaland accrued but unpaid interest shall be due and payable on October 31,2003 and a like installment being due and payable on each Payment Datethereafter until the Maturity Date, when the then remaining unpaid principalbalance, and accrued but unpaid interest thereon, shall be due and payable infull. Each payment on the Obligations must be paid at Lender’s office, 5 PostOak Park Place Office Building, 4400 Post Oak Parkway, Houston, Texas 77027, infunds which are or will be available for immediate use by Lender by 2:00 p.m.(Houston time) on the day due.  If anyaction is required or any payment is to be made on a day which is not aBusiness Day, then that action or payment may be delayed until the nextsucceeding Business Day.  Any extensionof time shall be included in the computation of payments of interest and fees.All payments by the Borrowers of principal of and interest on the Loan, and ofall fees and other amounts payable under any Loan Document, shall be payablewithout deduction for or on account of any present or future Taxes or othercharges (excluding any franchise taxes or income taxes imposed on or measuredby the overall net income, assets net worth or shareholders’ capital of Lender)levied or imposed by the United States of America (or by any politicalsubdivision or taxing authority thereof or therein) through withholding ordeduction with respect to any such payments. If any Taxes or other charges are so levied or imposed, the Borrowerswill make additional payments in such amounts so that every net payment ofprincipal of and interest on the Obligations, and of all other amounts payableby it under any Loan Document, after withholding or deduction for or on accountof any such present or future Taxes or other charges, will not be less than theamount provided for herein or therein.”

 

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(b)                                 Sections 2.3 of the Agreement is herebyamended and restated as follows:

 

“2.3 Interest Rate and Payments.  The principal of the Loan advanced under theAgreement shall bear interest prior to the earlier of the Maturity Date, orDefault, at a fixed rate of seven and one-quarter per cent (7.25%) per annum.The Borrowers shall pay accrued but unpaid interest on the principal advancedhereunder as follows: (a) the Borrowers shall pay interest only as it accrueson the Note beginning on April 30, 2003 and continuing on each PaymentDate thereafter until September 30, 2003; and (b) the Borrowers shall payinstallments of principal and interest as it accrues in accordance with Section2.2 beginning on October 31, 2003 and continuing until the Maturity Date.”

 

Section 3.               ConditionsPrecedent.  Borrowers acknowledgethat  the Lender’s obligations underthis Amendment are conditioned upon Borrowers’ and Guarantor’s compliance withthe conditions precedent set forth in Section 4 of the Agreementincluding, without limitation, delivery of Security Documents, materialcontracts, lien searches, evidence of title to Collateral and environmentalinformation.

 

Section 4.                                            Representations.  The Borrowers represent and warrant that all of therepresentations and warranties contained in the Agreement and all instrumentsand documents executed pursuant thereto or contemplated thereby are true andcorrect in all material respects on and as of this date, except (a) suchrepresentations that relate solely to an earlier date and that were true andcorrect on such earlier date, and (b) the breach or inaccuracy ofrepresentations and warranties about which the Lender has been notified inwriting prior to the date of this Amendment.

 

Section 5.                                            Continued Force and Effect.  Except as specifically amended herein, all of the terms andconditions of the Agreement and all documents executed in connection therewithor contemplated thereby are and remain in full force and effect in accordancewith their respective terms.  All of theterms used herein have the same meanings as set out in the Agreement, unlessamended hereby or unless the context clearly requires otherwise.  References in the Agreement to the“Agreement,” the “Credit Agreement”, “hereof”, “herein” and words of similarimport shall be deemed to be references to the Agreement as amended hereby.  Any reference in the Note or any of theSecurity Documents to the “Agreement” or the “Credit Agreement” shall be deemedto be references to the Agreement as amended through the date hereof.

 

Section 6.                                            Severability.  In the event any one or more provisions contained in theAgreement or this Amendment should be held to be invalid, illegal orunenforceable in any respect, the validity, enforceability and legality of theremaining provisions contained herein and therein shall not be affected in anyway or impaired thereby and shall be enforceable in accordance with theirrespective terms.

 

Section 7.                                            Expenses.  The Borrowers agree to pay (a) a work fee of One Thousand andno/100ths Dollars ($1,000.00 ) to Lender and (b) all out-of-pocket costs andexpenses (including reasonable fees and expenses of legal counsel) of theLender in connection with the preparation and enforcement of this  Amendment.

 

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Section 8.                                            Acknowledgment.  The Borrowers ratify and confirm that the Agreement, and theother Loan Documents executed in connection therewith, or pursuant thereto, areand remain in full force and effect in accordance with their respective termsand that the Collateral is unimpaired by this Amendment.  The officers of each of the Borrowersexecuting this Amendment, or any Loan Documents executed in connection with orcontemplated by this Amendment, represent and warrant that they have full powerand authority to execute and deliver this Amendment and the Loan Documents onbehalf of each of the Borrowers, that such execution and delivery has been dulyauthorized by the Board of Directors of each of the Borrowers pursuant toresolutions delivered to Lender contemporaneously herewith and that theresolutions previously delivered to the Lender on March 31, 2003, in connectionwith the execution and delivery of the Agreement, are and remain in full forceand effect and have not been altered, amended or repealed in anywise.

 

Section 9.                                            Governing Law.  This Amendment shall be governed by and construed in accordancewith the laws of the State of Texas and, to the extent applicable, by federallaw.

 

Section 10.                                      Affirmation of SecurityInterest.  The Borrowers hereby confirm and agree that(a) any and all Liens granted to or for the benefit of, or Collateral now orhereafter held by, the Lender as security for payment and performance of theNote is hereby renewed and carried forth to secure payment and performance ofall of the Obligations; and (b) the Security Documents are and remain legal,valid and binding obligations of the parties thereto, enforceable in accordancewith their respective terms.

 

Section 11.                                      **ARBITRATION.****THE BORROWERS, GUARANTOR ANDLENDER AGREE THAT ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN THEM, OR ANYOF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, WHETHER INDIVIDUAL, JOINT OR CLASSIN NATURE, ARISING FROM THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS(INCLUDING CONTRACT AND TORT DISPUTES) SHALL BE ARBITRATED PURSUANT TO THERULES OF THE AMERICAN ARBITRATION ASSOCIATION UPON THE REQUEST OF ANY PARTY. NOACT TO TAKE OR DISPOSE OF ANY COLLATERAL SECURING THE OBLIGATIONS SHALLCONSTITUTE A WAIVER OF THIS ARBITRATION PROVISION OR BE PROHIBITED BY THISARBITRATION PROVISION. THE FOREGOING INCLUDES OBTAINING INJUNCTIVE RELIEF OR ATEMPORARY RESTRAINING ORDER; INVOKING A POWER OF SALE UNDER ANY OF THE SECURITYDOCUMENTS; OBTAINING A WRIT OF ATTACHMENT OR THE IMPOSITION OF A RECEIVER; OREXERCISING ANY RIGHTS RELATING TO PERSONAL PROPERTY, INCLUDING TAKING ORDISPOSING OF SUCH PROPERTY WITH OR WITHOUT JUDICIAL PROCESS PURSUANT TO ARTICLE9 OF THE UCC. ANY DISPUTES, CLAIMS AND CONTROVERSIES CONCERNING THE LAWFULNESSOR REASONABLENESS OF ANY ACT OR EXERCISE OF ANY RIGHTS OR ANY RIGHT RELATING TOTHE COLLATERAL SECURING THE OBLIGATIONS (INCLUDING, WITHOUT LIMITATION, ANYCLAIM TO RESCIND, REFORM OR OTHERWISE MODIFY ANY AGREEMENT RELATING TO THECOLLATERAL SECURING THE OBLIGATIONS) SHALL ALSO BE ARBITRATED; PROVIDED THAT NOARBITRATOR SHALL HAVE THE RIGHT OR POWER TOENJOIN OR RESTRAIN ANY ACT OF ANYPARTY.  JUDGMENT UPON ANY AWARD RENDEREDBY ANY ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION;PROVIDED THAT NOTHING CONTAINED**

 

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**HEREIN SHALL BEDEEMED TO BE A WAIVER BY LENDER OF THE PROTECTIONS AFFORDED TO THE LENDER UNDER12 USC § 91, TEX. FIN. CODE § 59.007, OR THE LAWS OF ANY OTHER STATE (TO THEEXTENT APPLICABLE TO THE LENDER) OR ANY OTHER PROTECTION PROVIDED TO THE LENDERBY THE LAWS OF THE STATE OF TEXAS OR THE UNITED STATES. THE STATUTE OFLIMITATIONS, OR ESTOPPEL, LACHES, WAIVER OR SIMILAR DOCTRINES THAT WOULDOTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE INANY ARBITRATION PROCEEDING AND THE COMMENCEMENT OF ANY ARBITRATION PROCEEDINGSHALL BE DEEMED THE COMMENCEMENT OF AN ACTION FOR THESE PURPOSES. THE FEDERALARBITRATION ACT SHALL APPLY TO THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENTOF THIS ARBITRATION PROVISION. IF THE FEDERAL ARBITRATION ACT IS INAPPLICABLETO ANY SUCH DISPUTE, CLAIM OR CONTROVERSY FOR ANY REASON, THE ARBITRATION SHALLBE CONDUCTED PURSUANT TO THE TEXAS GENERAL ARBITRATION ACT, THIS ARBITRATIONPROVISION AND THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATIONASSOCIATION.**

 

Section 12.                                      **JURISDICTION AND VENUE****. SUBJECT TO THEPROVISIONS OF SECTION 11, ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISINGDIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF RELATED TO OR FROM THISAMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE LITIGATED, AT THE SOLEDISCRETION AND ELECTION OF THE LENDER, IN THE COURTS HAVING SITUS IN HOUSTON,HARRIS COUNTY, TEXAS. IN THAT REGARD, THE BORROWERS AND GUARANTOR HEREBY SUBMITTO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN HOUSTON,HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFEROR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THELENDER IN ACCORDANCEWITH THIS SECTION.**

 

Section 13.                                      Notice and Acknowledgment ofNo Oral Agreements.  To the extent allowed by law,the parties hereto agree to be bound by the terms of the following notice:

 

**NOTICE****:  THISAGREEMENT AND ALL OTHER DOCUMENTS RELATING TO THIS LOAN CONSTITUTE A WRITTENLOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES ANDMAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS ORSUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.**

 

**THERE ARE NOUNWRITTEN ORAL AGREEMENTS OF THE PARTIES RELATING TO THIS LOAN.**

 

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EXECUTEDeffective as of March 31, 2003.

 
| Address:                         | BORROWERS:                        |
|----------------------------------|--------------------------------------------------|
|                             |                                             |
| One Allen  Center                | GATEWAY  PIPELINE COMPANY                        |
| 500 Dallas Street, Suite 2615    |                                             |
| Houston,  Texas 77002            | By:                                              |   |   |
| Phone:  (713) 336-0844      | Michael T. Fadden, President                     |
| Fax:  (713) 336-0855        |                                             |
|                             |                                             |
| Address:                         | GATEWAY  PIPELINE COMPANY                   |
| One Allen  Center                |                                             |
| 500 Dallas Street, Suite 2615    | By:                                              |   |   |
| Houston,  Texas 77002            | Michael T. Fadden, President                     |
| Phone:  (713) 336-0844      |                                             |
| Fax:  (713) 336-0855        |                                             |
|                             |                                             |
| Address:                         | SOUTHWEST  BANK OF TEXAS, N.A.              |
|                             |                                             |
| 5 Post Oak  Park Office Building |                                             |
| 4400 Post  Oak Parkway           | By:                                              |   |   |
| Houston,  Texas 77027            | Name:Ken  Batson                                 |
| Mail:                            | Title:Assistant  Vice President - Energy Lending |
| P. O. Box  27459                 |                                             |
| Houston,  Texas 77227-7459       |                                             |
| Phone:  (713) 232-1247      |                                             |
| Fax:  (713) 561-0345        |                                             |
|                                  |                                                  |  |  |  |  |  |

 

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