EXHIBIT 10.1
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement ("Amendment") is entered into
between WESTERN NATIONAL BANK, a national banking association, as Administrative
Agent, and the lenders party to the Credit Agreement; and Gateway Energy
Corporation, a Delaware corporation, as borrower, and is dated June 25, 2009.
Terms defined in the Credit Agreement between the Administrative Agent, such
lenders and such borrower dated August 23, 2007, as amended (as previously
amended, the "Credit Agreement"), are used herein as therein defined, unless
otherwise defined herein or the context otherwise requires.
R E C I T A L S:
WHEREAS, the Borrower has requested that the Lenders release their Liens on
the Properties known as "Pirates Beach," "Crystal Beach" and "Shipwreck"
(collectively, the "Release"); and
WHEREAS, the Administrative Agent holds approximately $1,750,000 of
insurance proceeds related to the Crystal Beach Terminal ("Insurance Proceeds");
and
WHEREAS, the Lenders are willing to deliver the Release under the terms and
conditions set forth herein; and
WHEREAS, WNB is currently the Administrative Agent and sole Lender under
the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Administrative Agent and the Lenders hereby
agree as follows:
1. The following definition is hereby added to Section 1.1 of the Credit
Agreement as follows:
"First Amendment to Credit Agreement" means the First Amendment to Credit
Agreement dated June 25, 2009, between Administrative Agent, the Lenders and the
Borrower.
2. The following definition located in Section 1.1 of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"Borrowing Base" means the amount most recently determined and designated
by the Administrative Agent as the Borrowing Base in accordance with Section
2.8.1, as such Borrowing Base is reduced in accordance with Section 2.8.2. The
Borrowing Base under Section 2.8.1 is deemed to be $1,861,845.83 as of the date
of the First Amendment to Credit Agreement, and the Borrowing Base shall be
automatically reduced to $1,561,845.83 upon the delivery to the Borrower of the
Release.
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3. Section 2.8.2 of the Credit Agreement is hereby amended and restated in
its entirety as follows:
"2.8.2 The Borrowing Base shall be automatically reduced as of the 1st day
of each month, commencing July 1, 2009, and continuing on the first day of each
month thereafter until the Final Maturity Date. Such reductions in the Borrowing
Base each month shall be in the amount of $0 per month unless redetermined as
herein permitted. At the time of each new Borrowing Base determination under
Section 2.8.1, the Required Lenders in their sole discretion may increase the
amount of such monthly reductions, and the Lenders may decrease the amount of
such monthly reductions. Any decreases in the monthly reductions must be
approved by all of the Lenders and shall be subject to each Lender's complete
credit approval process. There is no duty, implied or explicit, on the
Administrative Agent or the Lenders to ever decrease the amount of the monthly
Borrowing Base reduction amounts."
4. The Borrower shall pay to the Administrative Agent upon execution of
this Amendment,
(a) an engineering fee in the amount of $5,000.
5. The Administrative Agent will not be obligated to deliver any Release
until satisfaction of the following: the creation in favor of the Administrative
Agent by instruments satisfactory to the Administrative Agent of first and prior
Liens on a deposit account in which will be deposited the Insurance Proceeds,
subject to the Borrower's rights in paragraph 6 below.
6. Subject to satisfaction of the condition set forth in paragraph 5 above,
the Administrative Agent will deliver the Release covering the Pirates Beach
Property upon the application of $300,000 of the Insurance Proceeds as a
prepayment of the principal of the Notes.
7. The Borrower shall execute and deliver or cause the appropriate Person
to execute and deliver such certificates, mortgages, amendments to mortgages and
other security instruments as the Administrative Agent may from time to time
reasonably request to reflect the terms of this Amendment.
8. All of the conditions in this Amendment and the Credit Agreement are
solely for the benefit of the Administrative Agent and the Lenders, and no
Person other than the Administrative Agent and the Lenders may rely thereon or
insist on compliance therewith.
9. Ratification. The Borrower hereby ratifies all of its Obligations under
the Credit Agreement and each of the Loan Documents to which it is a party, and
agrees and acknowledges that the Credit Agreement and each of the Loan Documents
to which it is a party shall continue in full force and effect after giving
effect to this Amendment. Nothing in this Amendment extinguishes, novates or
releases any right, claim, Lien, security interest or entitlement of the Lenders
created by or contained in any of such documents nor is the Borrower released
from any covenant, warranty or obligation created by or contained therein.
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10. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that (a) this Amendment has
been duly executed and delivered on behalf of the Borrower, (b) this Amendment
constitutes a valid and legally binding agreement enforceable against the
Borrower in accordance with its terms and (c) the execution, delivery and
performance of this Amendment has been duly authorized by the Borrower.
11. Conditions to Effectiveness. This Amendment shall be effective upon the
execution by all parties of this Amendment and the receipt thereof by the
Administrative Agent.
12. RELEASE OF CLAIMS. The Borrower for itself, its successors and assigns
and all those at interest therewith (collectively, the "Releasing Parties"),
jointly and severally, hereby voluntarily and forever, RELEASE, DISCHARGE AND
ACQUIT the Lender and its officers, directors, shareholders, employees, agents,
successors, assigns, representatives, affiliates and insurers (sometimes
referred to below collectively as the "Released Parties") and all those at
interest therewith of and from any and all claims, causes of action,
liabilities, damages, costs (including, without limitation, attorneys' fees and
all costs of court or other proceedings), and losses of every kind or nature at
this time known or unknown, direct or indirect, fixed or contingent, which the
Releasing Parties, have or hereafter may have arising out of any act,
occurrence, transaction, or omission occurring from the beginning of time to the
date of execution of this Amendment if related to the Note or the other Loan
Documents (the "Released Claims"), except that the future duties and obligations
of the Lender under the Loan Documents and the rights of the Borrower to its
funds on deposit with the Lender shall not be included in the term Released
Claims. IT IS THE EXPRESS INTENT OF THE RELEASING PARTIES THAT THE RELEASED
CLAIMS SHALL INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISING FROM OR ATTRIBUTABLE
TO THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE RELEASED
PARTIES.
13. Counterparts. For the convenience of the parties, this Amendment may be
executed in multiple counterparts, each of which for all purposes shall be
deemed to be an original, and all such counterparts shall together constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page of this Amendment by telecopy, e-mail, facsimile or other
electronic means shall be effective as a delivery of a manually executed
counterpart of this Amendment.
14. Effect. This Amendment is one of the Loan Documents. Except as amended
hereby, the Credit Agreement shall remain unchanged and in full force and
effect, and the Borrower hereby ratifies the terms of the Credit Agreement (as
amended hereby), including, without limitation, the provisions of Section 9.7
thereof.
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15. ENTIRE AGREEMENT. THIS AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF. FURTHERMORE, IN
THIS REGARD, THIS AMENDMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
IN WITNESS WHEREOF, this Amendment is deemed executed effective as of the
date first above written.
BORROWER:
GATEWAY ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
ADMINISTRATIVE AGENT:
WESTERN NATIONAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
LENDERS:
WESTERN NATIONAL BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
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