Exhibit 10.31
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") is made as of December 12, 2002 by and between North Coast Energy,
Inc., a Delaware corporation ("Borrower"), and Union Bank of California, N.A.,
as Agent (herein called "Agent"), and the other Lenders from time to time
parties to the Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders have entered into that certain
Credit Agreement dated as of September 26, 2000 (as amended, supplemented, or
restated to the date hereof, the "Original Agreement"), for the purposes and
consideration therein expressed, pursuant to which Lenders became obligated to
make loans to Borrower as therein provided; and
WHEREAS, Borrower, Agent, and Lenders desire to amend the Original
Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS AND REFERENCES
ss. 1.1 TERMS DEFINED IN THE ORIGINAL AGREEMENT. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
ss. 1.2. OTHER DEFINED TERMS. Unless the context otherwise requires,
the following terms when used in this Amendment shall have the meanings assigned
to them in this ss.1.2.
"AMENDMENT" means this Third Amendment to Credit Agreement.
"CREDIT AGREEMENT" means the Original Agreement as amended
hereby.
ARTICLE II.
AMENDMENTS TO ORIGINAL AGREEMENT
ss. 2.1. DEFINED TERM. The definition of the term "CONSOLIDATED EBITDA"
in Section 1.1 of the Original Agreement is hereby deleted and replaced with the
following definition of the term "CONSOLIDATED EBITDAX":
"CONSOLIDATED EBITDAX" means, for each period of four consecutive
Fiscal Quarters, the sum of (1) the Consolidated Net Income of Borrower
during such period, plus (2) all interest expense which was deducted in
determining such Consolidated Net Income, plus (3) all income taxes
which were deducted in determining such Consolidated Net Income, plus
(4) all depreciation, amortization (including amortization of good will
and debt issue costs) and other non-cash charges (including any
provision for the reduction in the carrying value of assets recorded in
accordance with GAAP) which were deducted in determining such
Consolidated Net Income, plus (5) all exploration and abandonment
expense which were deducted in determining such Consolidated Net
Income, minus (6) all non-cash items of income which were included in
determining such Consolidated Net Income.
ss. 2.2. INTEREST COVERAGE RATIO. Section 7.14 of the Original
Agreement is hereby amended in its entirety to read as follows:
Section 7.14. INTEREST COVERAGE RATIO. At the end of any Fiscal
Quarter, the ratio of (a) Borrower's Consolidated EBITDAX for the four
immediately preceding consecutive fiscal quarters to (b) Borrower's
Consolidated Interest Expense for such period will never be less than
2.5 to 1.0
ss. 2.3. FIXED CHARGE COVERAGE RATIO. Section 7.15 of the Original
Agreement is hereby amended in its entirety to read as follows:
Section 7.15. FIXED CHARGE COVERAGE RATIO. At the end of any Fiscal
Quarter, the ratio of (a) Borrower's Consolidated EBITDAX for the four
immediately preceding consecutive Fiscal Quarters to (b) Borrower's
Consolidated Fixed Charges for such period will never be less than 1.5
to 1. For purposes of this section, "Borrower's Consolidated Fixed
Charges" means the sum of Borrower's Consolidated Interest Expense,
payments of principal on Indebtedness (other than under this agreement
if the Borrower has the right to redraw the amount so paid), income
taxes paid in cash and dividends on Preferred Stock accrued during such
period, but only to the extent paid in cash during the next Fiscal
Quarter.
ss. 2.4. LIMITATION ON SALES OF PROPERTY. Section 7.5 of the Original
Agreement is hereby amended to add the following paragraph (f) immediately
following paragraph (e):
(f) other property (including Collateral, which
shall be released from the
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Liens of the Security Documents) which is sold for fair
consideration not in excess of $500,000 in the aggregate
(taking into account all such sales of all Restricted Persons)
during the six month period between any two Determination
Dates.
ARTICLE III.
CONDITIONS OF EFFECTIVENESS
ss. 3.1. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective as of the date first above written when and only when each of the
following conditions shall have been satisfied:
(a) Agent shall have received, at Agent's office, each of the
following in form, substance and date satisfactory to Agent: (i) a
counterpart of this Amendment executed and delivered by Borrower and
Majority Lenders; and (ii) a certificate of a duly authorized officer
of Borrower dated the date of this Amendment certifying: (A) that all
of the representations and warranties set forth in ss. 4.1 hereof are
true and correct at and as of the time of such effectiveness; and (B)
as to such other corporate matters as Agent shall deem necessary; and
(b) Agent shall have additionally received such other
documents as Agent may reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
ss. 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce
Agent and Lenders to enter into this Amendment, Borrower represents and warrants
as of the date on which this Amendment becomes effective to Agent that:
(a) The representations and warranties contained in Article V
of the of the Credit Agreement are true and correct at and as of the
time of the effectiveness hereof.
(b) Each Restricted Person is duly authorized to execute and
deliver each Loan Document to which it is a party and Borrower is and
will continue to be duly authorized to borrow and to perform its
obligations under the Credit Agreement. Each Restricted Person has duly
taken all corporate action necessary to authorize the execution and
delivery of each Loan Document to which it is a party and to authorize
the performance of the obligations of it hereunder and thereunder.
(c) The execution and delivery by each Restricted Person of
the Loan Documents to which it is a party, the performance by each
Restricted Person of its obligations hereunder
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and thereunder, and the consummation of the transactions contemplated
hereby and thereby do not and will not conflict with any provision of
law, statute, rule or regulation or of the articles of incorporation
and bylaws of any Restricted Person, or of any material agreement,
judgment, license, order or permit applicable to or binding upon any
Restricted Person, or result in the creation of any lien, charge or
encumbrance upon any assets or properties of any Restricted Person.
Except for those which have been duly obtained, no consent, approval,
authorization or order of any court or governmental authority or third
party is required in connection with the execution and delivery by any
Restricted Person of the Loan Documents to which it is a party, or to
consummate the transactions contemplated hereby and thereby.
(d) When duly executed and delivered, each of this Amendment
and each Loan Document (as amended or affected by this by the
Amendment) will be a legal and binding instrument and agreement of each
Restricted Person that is a party thereto, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency and similar
laws applying to creditors' rights generally and by principles of
equity applying to creditors' rights generally.
(e) The audited annual financial statements of Borrower dated
as of March 31, 2002 and the unaudited quarterly financial statements
of Borrower dated as September 30, 2002 fairly present the financial
position at such dates and the statement of operations and the changes
in financial position for the periods ending on such dates for
Borrower. Copies of such financial statements have heretofore been
delivered to Agent. Since March 31, 2002, no material adverse change
has occurred in the financial condition or businesses of Borrower.
ARTICLE V.
MISCELLANEOUS
ss. 5.1. RATIFICATION OF AGREEMENTS. Each Loan Document, as amended or
affected hereby, is hereby ratified and confirmed in all respects. Any reference
to the Credit Agreement in any Loan Document shall be deemed to refer to this
Amendment also. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein or therein, operate as a waiver
of any right, power or remedy of Agent or Lenders under the Credit Agreement or
any other Loan Document nor constitute a waiver of any provision of the Credit
Agreement or any other Loan Document.
ss. 5.2. SURVIVAL OF AGREEMENTS. All representations, warranties,
covenants and agreements of Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, including without
limitation the making or granting of the Loan, and shall further survive until
all of the Obligations are paid in full. All statements and agreements contained
in any certificate or instrument delivered by any Restricted Person hereunder or
under the Credit Agreement to Agent shall be deemed to constitute
representations and warranties by, or agreements and covenants of, Borrower
under this Amendment and under the Credit Agreement.
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ss. 5.3. LOAN DOCUMENTS. This Amendment is a Loan Document, and all
provisions in the Credit Agreement pertaining to Loan Documents apply hereto and
thereto.
ss. 5.4 GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.
ss. 5.5. COUNTERPARTS. This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT 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.
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
NORTH COAST ENERGY, INC.
By: /s/ Omer Yonel
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Name: Omer Yonel
Title: Chief Executive Officer, Director
UNION BANK OF CALIFORNIA, N.A., as
Agent and Lender
By: /s/ Randall Osterberg
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Name: Randall Osterberg
Title: Senior Vice President
By: /s/ John A. Clark
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Name: John A. Clark
Title: Vice President
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BANK ONE, NA (Main Office Chicago),
Lender
By: /s/ Thomas E. Okamoto
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Name: Thomas E. Okamoto
Title: Associate Director
COMERICA BANK-TEXAS, Lender
By: /s/ Huma Vadgama
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Name: Huma Vadgama
Title: Assistant Vice President
FORTIS CAPITAL CORP., Lender
By:
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Name:
Title:
By:
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Name:
Title:
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CONSENT AND AGREEMENT
North Coast Operating Company (the "Company") and each of the
partnerships party hereto (the "Partnerships") hereby consent to the provisions
of this Amendment and the transactions contemplated herein, and agrees that the
Company's and the Partnership's obligations and covenants under the Credit
Agreement are unimpaired hereby and shall remain in full force and effect. North
Coast Energy Eastern, Inc., f/k/a Peake Energy, Inc., hereby consents to the
provisions of this Amendment and the transactions contemplated herein, and
agrees that its obligations and covenants under its Guaranty of even date with
the Original Agreement in favor of Agent are unimpaired hereby and shall remain
in full force and effect.
Date: December 12, 2002
NORTH COAST ENERGY EASTERN, INC. NORTH COAST OPERATING COMPANY
By: /s/ Omer Yonel By: /s/ Omer Yonel
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Name: Name:
Title: Title:
Capital Drilling Fund 1986-1
Limited Partnership
North Coast Energy 1996-1 Appalachian
Private Drilling Program L.P.
North Coast Energy 1996-2 Appalachian
Private Drilling Program L.P.
North Coast Energy 1997-2 Appalachian
Private Drilling Program L.P.
By: NORTH COAST ENERGY, INC., general partner
By: /s/ Omer Yonel
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Name:
Title:
1