Exhibit 4(b)(5)


 


SECOND AMENDMENT TO 


FIRST AMENDED AND RESTATED CREDIT AGREEMENT


 


Reference is made to First Amended and Restated Credit Agreement dated
as of March 31, 2003, as amended by the First Amendment to First Amended and
Restated Credit Agreement dated as of July 31, 2003 (collectively the
“Agreement”), between GATEWAY PIPELINE COMPANY, a Texas corporation and GATEWAY
PROCESSING COMPANY, a Texas corporation (collectively “Borrowers”), GATEWAY
ENERGY CORPORATION, a Texas corporation (“Guarantor”) and SOUTHWEST BANK OF
TEXAS, N. A., a national banking association (the “Lender”), pursuant to which
the Borrowers amended and restated, upon the terms and conditions therein
stated, a One Million Five Hundred Thousand Dollar ($1,500,000.00) credit
facility (“Loan”) with a Maturity Date of December 31, 2005,  subject to  the conditions and covenants
in the Agreement and Loan Documents.


 


RECITALS:


 


A             The Borrowers: (a)
reported that the current ratio of Current Assets to Current Liabilities as of
the end of the Third Quarter of 2003 was 0.96, instead of 1.0, as required
pursuant to Section 6.29 of the Credit Agreement and (b) requested the
Lender to waive compliance with the current ratio covenant for the Third
Quarter of 2003.


 


B.            The Lender has
approved Borrowers’ request, subject to the conditions and covenants specified
in this Second Amendment to First Amended and Restated Credit Agreement (the
“Amendment”) and in the Loan Documents to be delivered in connection herewith
or pursuant hereto.


 


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


 


Section 1.               Definitions.  All capitalized terms shall have the meaning
assigned to them in the 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 Restated Credit Agreement, as amended by the
Amendments, including the Schedules


 


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and Exhibits thereto,
respectively, as the same may be amended or supplemented from time to time.”


 


(b)   Amendment.  The definition of Amendment is hereby
restated as follows:


 


“Amendments
mean the (i) First Amendment to First Amended and Restated Credit Agreement
delivered as of July 31, 2003 by Borrowers and Guarantor to Lender and (ii) the
Second Amendment to First Amended and Restated Credit Agreement dated as of
November 15, 2003 by Borrowers and Guarantor to Lender.”


 


(c)           Guarantor
Subordination. The following definition of Guarantor Subordination is
hereby added to the Agreement.


 


“Guarantor Subordination means an agreement in form and
substance acceptable to Lender, and any amendment, extension, modification,
renewal or supplement thereof, delivered or to be delivered by Guarantor, as
the subordinated creditor, to the Lender, as the senior creditor, expressly
subordinating all Liens and Rights that the Borrowers or Guarantor may now or
hereafter have with respect to certain inter-company debts as referred to therein.”


 


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


 


“Loan
Documents means (a) the Agreement, as amended by the Amendments and any
certificates delivered in connection therewith, respectively, (b) any and all
promissory notes (including, without limitation, the Note issued pursuant to
the First Amendment to First Amended and Restated Credit Agreement delivered as
of July 31, 2003), the Security Documents, the Guarantor Subordination and any
and other agreements in favor of Lender now or hereafter delivered pursuant to
the Agreement and (c) all future renewals, extensions, rearrangements or
restatements of, or amendments or supplements to, any of the foregoing.”


 


Each of the foregoing definitions as used in the Loan Documents shall
include the definition or exhibit as amended or restated hereby.


 


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


 


(a)           Section 6.24
of the Agreement is hereby amended and restated as follows:


 


“0.1         Restrictions on
Debt.  Borrowers and Guarantor will
not incur, create, assume, or permit to exist any Debt, except:


 


(a)           the Obligations;


 


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(b)           existing Debt
described on Schedule 6.24 hereto or inter-company debt as
disclosed in writing by the Borrowers to Lender from time to time;


 


(c)           Debt secured by
Permitted Liens; and


 


(d)           Extensions, renewals
and refinancings of Debt described in clauses (b) and (c) above, without
any increase in the outstanding principal amount thereof, provided that the
other terms and conditions of such extension, renewal or refinancing are not
materially more onerous than the existing terms and conditions of such Debt.


 


“The
Borrowers may make payments of principal and interest to the Guarantor with
respect to the inter-company debts from time to time; provided that (a)
no Default exists under or with respect to any of the Loan Documents or the
obligations prior to the time that any payment is made, (b) the Borrowers have
either (1) cash liquidity in excess of Three Hundred Seventy Thousand Five
Hundred and NO/100ths Dollars ($370, 500.00), or (2) cash payments of monthly
expense and Debt repayment obligations owing by them of at least Three Hundred
Seventy Thousand Five Hundred and NO/100ths Dollars ($370, 500.00), provided
that this applies only to items that are due and payable during the specific
month in question and not to accruals that are payable after the current month,
or (3) any combination of the preceding sub-clauses (1) and (2) totaling Three
Hundred Seventy Thousand Five Hundred and NO/100ths Dollars ($370, 500.00), and
(c) a Default would not otherwise arise or result from any payment of
inter-company debt by the Borrowers to the Guarantor. “


 


Section 3. Waiver.
Contemporaneously herewith, the Lender has delivered a limited waiver the
Borrowers’ compliance with the current ratio covenant set forth in Section
6.29 of the Agreement as of the end of the Third Quarter of 2003 resulting
from the distribution or payment of cash by the Borrowers to the Guarantor
during the Third Quarter of 2003, in consideration of a reduction of
non-current inter-company payables owed by the Borrowers to the Guarantor. The
Borrowers and Guarantor acknowledge that the delivery of the waiver, this
amendment and the other Loan Documents pursuant thereto or in connection
therewith will produce a material, direct and substantial benefit to the
Borrowers and the Guarantor.


 


Section 4. Conditions Precedent.  Borrowers acknowledge that the Lender’s obligations under this
Amendment are conditioned upon Borrowers’ and Guarantor’s compliance with the
conditions precedent set forth in Section 4 of the Agreement including,
without limitation, delivery of Security Documents, material contracts, lien
searches, evidence of title to Collateral and environmental information.


 


Section 5.               Representations.  The Borrowers represent and warrant that all
of the representations and warranties contained in the Agreement and all
instruments and documents executed pursuant thereto or contemplated thereby are
true and correct in all material respects on and as of this date, except (a)
such representations that relate solely to an earlier date and that were true
and correct on such earlier date, and (b) the breach or inaccuracy of representations
and warranties about which the Lender has been notified in writing prior to the
date of this Amendment.


 


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Section 6.               Continued
Force and Effect.  Except as
specifically amended herein, all of the terms and conditions of the Agreement
and all documents executed in connection therewith or contemplated thereby are
and remain in full force and effect in accordance with their respective
terms.  All of the terms used herein
have the same meanings as set out in the Agreement, unless amended hereby or
unless the context clearly requires otherwise. 
References in the Agreement to the “Agreement,” the “Credit Agreement”,
“hereof”, “herein” and words of similar import shall be deemed to be references
to the Agreement as amended hereby.  Any
reference in the Note or any of the Security Documents to the “Agreement” or
the “Credit Agreement” shall be deemed to be references to the Agreement as
amended through the date hereof.


 


Section 7.               Severability.  In the event any one or more provisions
contained in the Agreement or this Amendment should be held to be invalid,
illegal or unenforceable in any respect, the validity, enforceability and
legality of the remaining provisions contained herein and therein shall not be
affected in any way or impaired thereby and shall be enforceable in accordance
with their respective terms.


 


Section 8.               Expenses.  The Borrowers agree to pay (a) a work fee of
Five Hundred no/100ths Dollars ($500.00) to Lender and (b) all out-of-pocket costs
and expenses (including reasonable fees and expenses of legal counsel) of the
Lender in connection with the preparation and enforcement of this Amendment.


 


Section 9.               Acknowledgment.  The Borrowers ratify and confirm that the
Agreement, and the other Loan Documents executed in connection therewith, or
pursuant thereto, are and remain in full force and effect in accordance with
their respective terms and that the Collateral is unimpaired by this
Amendment.  The officers of each of the
Borrowers executing this Amendment, or any Loan Documents executed in
connection with or contemplated by this Amendment, represent and warrant that
they have full power and authority to execute and deliver this Amendment and
the Loan Documents on behalf of each of the Borrowers, that such execution and
delivery has been duly authorized by the Board of Directors of each of the
Borrowers pursuant to resolutions previously delivered to the Lender on March
31, 2003 and July 31, 2003, in connection with the execution and delivery of
the Agreement, are and remain in full force and effect and have not been
altered, amended or repealed in anywise.


 


Section 10.             Governing
Law.  This Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
and, to the extent applicable, by federal law.


 


Section 11.             Affirmation
of Security Interest.  The Borrowers
hereby confirm and agree that (a) any and all Liens granted to or for the
benefit of, or Collateral now or hereafter held by, the Lender as security for
payment and performance of the Note is hereby renewed and carried forth to
secure payment and performance of all of the Obligations; and (b) the Security
Documents are and remain legal, valid and binding obligations of the parties
thereto, enforceable in accordance with their respective terms.


 


Section
12.             ARBITRATION. THE BORROWERS,
GUARANTOR AND LENDER AGREE THAT ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN
THEM, OR ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, WHETHER INDIVIDUAL,
JOINT OR CLASS IN NATURE, ARISING FROM THIS


 


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AMENDMENT
OR ANY OF THE OTHER LOAN DOCUMENTS (INCLUDING CONTRACT AND TORT DISPUTES) SHALL
BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION
UPON THE REQUEST OF ANY PARTY. NO ACT TO TAKE OR DISPOSE OF ANY COLLATERAL
SECURING THE OBLIGATIONS SHALL CONSTITUTE A WAIVER OF THIS ARBITRATION
PROVISION OR BE PROHIBITED BY THIS ARBITRATION PROVISION. THE FOREGOING
INCLUDES OBTAINING INJUNCTIVE RELIEF OR A TEMPORARY RESTRAINING ORDER; INVOKING
A POWER OF SALE UNDER ANY OF THE SECURITY DOCUMENTS; OBTAINING A WRIT OF
ATTACHMENT OR THE IMPOSITION OF A RECEIVER; OR EXERCISING ANY RIGHTS RELATING
TO PERSONAL PROPERTY, INCLUDING TAKING OR DISPOSING OF SUCH PROPERTY WITH OR WITHOUT
JUDICIAL PROCESS PURSUANT TO ARTICLE 9 OF THE UCC. ANY DISPUTES, CLAIMS AND
CONTROVERSIES CONCERNING THE LAWFULNESS OR REASONABLENESS OF ANY ACT OR
EXERCISE OF ANY RIGHTS OR ANY RIGHT RELATING TO THE COLLATERAL SECURING THE
OBLIGATIONS (INCLUDING, WITHOUT LIMITATION, ANY CLAIM TO RESCIND, REFORM OR
OTHERWISE MODIFY ANY AGREEMENT RELATING TO THE COLLATERAL SECURING THE
OBLIGATIONS) SHALL ALSO BE ARBITRATED; PROVIDED THAT NO ARBITRATOR SHALL HAVE
THE RIGHT OR POWER TOENJOIN OR RESTRAIN ANY ACT OF ANY PARTY.  JUDGMENT UPON ANY AWARD RENDERED BY ANY
ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION; PROVIDED THAT
NOTHING CONTAINED HEREIN SHALL BE DEEMED TO BE A WAIVER BY LENDER OF THE
PROTECTIONS AFFORDED TO THE LENDER UNDER 12 USC § 91, TEX. FIN. CODE § 59.007,
OR THE LAWS OF ANY OTHER STATE (TO THE EXTENT APPLICABLE TO THE LENDER) OR ANY
OTHER PROTECTION PROVIDED TO THE LENDER BY THE LAWS OF THE STATE OF TEXAS OR
THE UNITED STATES. THE STATUTE OF LIMITATIONS, OR ESTOPPEL, LACHES, WAIVER OR
SIMILAR DOCTRINES THAT WOULD OTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A
PARTY SHALL BE APPLICABLE IN ANY ARBITRATION PROCEEDING AND THE COMMENCEMENT OF
ANY ARBITRATION PROCEEDING SHALL BE DEEMED THE COMMENCEMENT OF AN ACTION FOR
THESE PURPOSES. THE FEDERAL ARBITRATION ACT SHALL APPLY TO THE CONSTRUCTION,
INTERPRETATION AND ENFORCEMENT OF THIS ARBITRATION PROVISION. IF THE FEDERAL
ARBITRATION ACT IS INAPPLICABLE TO ANY SUCH DISPUTE, CLAIM OR CONTROVERSY FOR
ANY REASON, THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE TEXAS GENERAL
ARBITRATION ACT, THIS ARBITRATION PROVISION AND THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION.


 


Section 13.             JURISDICTION AND VENUE.
SUBJECT TO THE PROVISIONS OF SECTION 12, ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF RELATED
TO OR FROM THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE LITIGATED,
AT THE SOLE DISCRETION AND ELECTION OF THE LENDER, IN THE COURTS HAVING SITUS
IN HOUSTON, HARRIS COUNTY, TEXAS. IN THAT REGARD, THE BORROWERS AND GUARANTOR
HEREBY SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
IN HOUSTON,


 


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HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY
LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCEWITH THIS SECTION.


 


Section 14.             Notice
and Acknowledgment of No Oral Agreements. 
To the extent allowed by law, the parties hereto agree to be bound by
the terms of the following notice:


 


NOTICE:  THIS AGREEMENT AND ALL OTHER DOCUMENTS
RELATING TO THIS LOAN CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.


 


THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES RELATING TO THIS LOAN.


 


EXECUTED
effective as of November 15, 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
  PROCESSING COMPANY

  
	
   

  	
   

  	
   

  
	
  One Allen
  Center

  	
  By:

  	
   

  	
   

  
	
  500 Dallas
  Street, Suite 2615

  	
   

  	
  Michael T. Fadden, President

  
	
  Houston,
  Texas 77002

  	
   

  	
   

  
	
  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

  
	
  P. O. Box
  27459

  	
  Lending

  
	
  Houston,
  Texas 77227-7459

  	
   

  
	
  Phone:  (713) 232-1247

  	
   

  
	
  Fax:  (713) 561-0345

  	
   

  
					



 


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