FIRST AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER
Exhibit
10.2
FIRST
AMENDMENT TO CREDIT AGREEMENT,
CONSENT AND WAIVER
FIRST
AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER
(hereinafter referred to as the “Amendment”)
executed to be effective as of December 19, 2006, by and among CARRIZO OIL
&
GAS, INC., a Texas corporation (“Borrower”),
certain subsidiaries of Borrower, as Guarantors (in such capacity, “Guarantors”),
the
LENDERS party hereto (the Lenders”) and JPMORGAN CHASE BANK, N.A., as
Administrative Agent (in its such capacity, “Administrative
Agent”).
Unless the context otherwise expressly defined herein, capitalized terms used
but not defined in this Amendment have the meanings assigned to such terms
in
the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS,
Borrower, Guarantors, Administrative Agent and Lenders have entered unto that
certain Credit Agreement, dated as of May 25, 2006, (as amended, supplemented
or
otherwise modified from time to time, the “Credit
Agreement”);
and
WHEREAS,
Borrower
has requested that Administrative Agent and Lenders amend the Credit Agreement
to, among other things, (i) permit the incurrence of additional Indebtedness
under the Second Lien Facility, (ii) modify the Leverage Ratio, and (iii)
redetermine the Borrowing Base and Conforming Borrowing Base; and
WHEREAS,
Administrative Agent and Lenders have agreed to do so on the terms and
conditions hereinafter set forth;
NOW,
THEREFORE,
for and
in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged and confessed, Borrower, Administrative Agent and Lenders,
hereby agree as follows:
SECTION
1. Amendments
to Credit Agreement.
Subject
to the satisfaction or waiver in writing of each condition precedent set forth
in Section 3
of this
Amendment, and in reliance on the representations, warranties, covenants and
agreements contained in this Amendment, the Credit Agreement shall be amended
in
the manner provided in this Section 1.
1.1 Additional
Definitions. The
following definition shall be and hereby is added to Section 1.01:
“First
Amendment Effective Date”
means December 19, 2006.
1.2 Amended
Definition.
The
following definition in Section 1.01
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
“Change
in Control”
shall be deemed to have occurred if (a) any “person” or “group” (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on
the
date hereof) other than the Permitted Investors shall own, directly or
indirectly, beneficially or of record, shares representing more than fifty
percent (50%) of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower, (b) a majority of
1
the
seats (other than vacant seats) on the board of directors of the Borrower shall
at any time be occupied by persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated,
or
(c) any change in control (or similar event, however denominated) with respect
to the Borrower shall occur under (and not be waived in accordance with) and
as
defined in the Second Lien Credit Agreement or any indenture or other loan
or
credit agreement or any other debt instrument evidencing any Material
Indebtedness to which the Borrower is a party.
1.3 Borrowing
Base Adjustments. Section 3.05
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
(a) In
the event the Redetermination of the Borrowing Base is not made on or prior
to
May 1, 2007 as a result of the Borrower failing to comply with the requirements
of this Article III
with
respect to such Redetermination on the dates required without giving effect
to
any grace or cure period provided in Article IX
with
respect to any such failure, the Borrowing Base shall be reduced by $1,690,000
on May 1, 2007 and on the first date of each month thereafter (the
“Monthly
Reduction”)
until the Borrowing Base is otherwise redetermined pursuant to this
Article III.
(b) In
the event the outstanding principal balance of the Indebtedness under the Second
Lien Facility exceeds $225,000,000 at any time after the First Amendment
Effective Date, the Borrowing Base then in effect shall be reduced by $1.00
for
every $4.00 of such additional Indebtedness as of the date such additional
Indebtedness is incurred.
1.4 Investment
and Holding Company Status. Section 4.08
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
Investment
Company Status.
Neither the Borrower nor any Restricted Subsidiary is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of
1940.
1.5 Financial
Statements; Other Information. Section 6.01(f)
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
(f) together
with the Reserve Reports required under clause (e)
above, (i) a report, in reasonable detail, setting forth the Swap Agreements
then in effect, the notional volumes of and prices for, on a monthly basis
and
in the aggregate, the Crude Oil and Natural Gas for each such Swap Agreement
and
the term of each such Swap Agreement; (ii) if requested by Administrative Agent
in writing, a true and correct schedule of the Mortgaged Properties, (iii)
if
requested by Administrative Agent in writing, the percentage of the Engineered
Value of the Borrowing Base that the Mortgaged Properties represent and (iv)
a
description of the additional Oil and Gas Interests, if any, to be mortgaged
by
the Credit Parties to comply with Section 6.09
and
the Engineered Value thereof;
1.6 Maintenance
of Properties; Insurance. Section 6.05
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
2
Maintenance
of Properties; Insurance.
The
Borrower will, and will cause each Restricted Subsidiary and use commercially
reasonable efforts to cause each operator of Borrowing Base Properties to,
keep
and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted. The
Borrower shall maintain in effect all insurance required by this Agreement
and
the Collateral Documents, and the Borrower agrees to comply with the
representations and warranties set forth in Section 4.16.
Upon the written request of the Administrative Agent, the Borrower agrees
to
(a) promptly provide the Administrative Agent with certificates or binders
evidencing such insurance coverage on an annual basis, (b) promptly furnish
the
Administrative Agent with copies of all renewal notices and copies of receipts
for paid premiums, and (c) promptly provide the Administrative Agent with
certificates or binders evidencing insurance coverage pursuant to all renewal
or
replacement policies of insurance.
1.7 Mortgages. Section 6.09
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
Mortgages.
No
later than April 2, 2007, and from time to time as requested by the
Administrative Agent and in any event to the extent required under the
Intercreditor Agreement, the Borrower will, and will cause each Guarantor
to,
execute and deliver to the Administrative Agent, for the benefit of the Secured
Parties, Mortgages in form and substance reasonably acceptable to the
Administrative Agent together with such other assignments, conveyances,
amendments, agreements and other writings, including, without limitation,
UCC-1
financing statements (each duly authorized and executed, as applicable) as
the
Administrative Agent shall reasonably deem necessary or appropriate to grant,
evidence and perfect a valid first priority Lien, subject only to Permitted
Liens, in (a) not less than eighty percent (80%) of the Engineered Value
of all
Borrowing Base Properties (excluding any Oil and Gas Interests in the area
known
as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County, Texas) and (b) not less than eighty
percent (80%) of the Engineered Value of the Borrower’s and each Guarantor’s Oil
and Gas Interests in the area known as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County,
Texas.
1.8 Title
Data. Section 6.10
of the
Credit Agreement shall be and hereby is amended in its entirety to read as
follows:
Title
Data.
As
soon as available and in any event no later than April 2, 2007, the Borrower
will, and will cause each Guarantor to, deliver to the Administrative Agent
such
opinions of counsel and other evidence of title as the Administrative Agent
shall deem reasonably necessary or appropriate to verify (i) such Credit
Party’s
title to not less than seventy-five percent (75%) of the Engineered Value
of the
Borrowing Base Properties (excluding any Oil and Gas Interests in the area
known
as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County, Texas), (ii) such Credit Party’s
title to not less than fifty percent (50%) of the Engineered Value of the
Oil
and Gas Interests in the area known as the Camp Hill Field in ▇▇▇▇▇▇▇▇ County,
Texas and (iii) the validity, perfection and priority of the Liens created
by
the Mortgages and such other matters regarding the Mortgages as Administrative
Agent shall reasonably request. The Borrower will, and will cause each Guarantor
to, use commercially reasonable efforts to deliver to the Administrative
Agent,
or its counsel on or before April 2, 2007, reasonably satisfactory evidence
demonstrating that the Borrower or such Guarantor, as the case may be, has
performed all of the title curative actions described on Schedule 6.10. To
the
extent any such title curative
3
action
is not performed on or before April 2, 2007, the Administrative Agent may,
in
its reasonable discretion, reduce the Borrowing Base to account for such
failure
to perform such title curative action and such reduction shall be restored
upon
the performance of such title curative action to the reasonable satisfaction
of
the Administrative Agent.
1.9 Permitted
Indebtedness. Section 7.01(h)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(h) subject
to any adjustment to the Borrowing Base and Conforming Borrowing Base required
under Section 3.05,
Indebtedness under the Second Lien Facility, including Guarantees thereof
by the
Restricted Subsidiaries, in an aggregate principal amount not to exceed
$225,000,000 at any time outstanding;
1.10 Fundamental
Changes. Section 7.04(c)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(c) subject
to the prior written consent of the Required Lenders, any other Disposition
of
Borrowing Base Properties, provided that no such consent is required if
(i) the
Borrower delivers prior written notice of such Disposition to the Administrative
Agent at least thirty (30) days prior to the date of such Disposition,
or such
shorter period of time agreed to by the Administrative Agent, specifying
the
Borrowing Base Properties to be included in such Disposition, the proposed
closing date for such Disposition and the consideration to be received
by the
Borrower and any Guarantors, as the case may be, as a result of such
Disposition, and (ii) the Credit Parties prepay the Borrowings pursuant
to
Section 2.10(b)
in an
amount sufficient to eliminate any Borrowing Base Deficiency as determined
by
the Required Lenders after the receipt of such notice by the Administrative
Agent and in such Lenders’ complete and sole discretion using such
methodologies, assumptions and discount rates as such Lenders customarily
use in
assigning collateral value to Oil and Gas Interests
as of
such date of determination;
1.11 Fair
Market Value.
The
proviso at the end of Section 7.04
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
provided,
however,
that
any Disposition pursuant to clauses
(b) through (g)
shall be
for fair market value.
1.12 Investments,
Loans, Advances, Guarantees and Acquisitions. Section 7.05(j)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(j) investments
made pursuant to the requirements of farm-out, farm-in, joint operating,
joint
venture or area of mutual interest agreements, gathering systems, pipelines
or
other similar or customary arrangements entered into the ordinary course
of
business (including advances to operators under operating agreements entered
into by the Borrower in the ordinary course of business); provided that
any such
single investment in excess of $5,000,000 shall be approved by the Board
of
Directors of the Borrower.
4
1.13 Investments,
Loans, Advances, Guarantees and Acquisitions. Section 7.05(l)
of the
Credit Agreement shall be and hereby is amended to delete the word “and”
from
the end of such section.
1.14 Investments,
Loans, Advances, Guarantees and Acquisitions. Section 7.05(m)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(m) investments,
loans, advances and acquisitions the consideration for which consists
solely of
(A) Equity Interests of the Borrower or (B) the net cash proceeds of
a
substantially contemporaneous issuance of Equity Interest of the Borrower;
and
1.15 Investments,
Loans, Advances, Guarantees and Acquisitions. Section 7.05
of
the
Credit Agreement shall be and hereby is amended by adding the following
as
clause (n)
at the
end of such section.
(n) any
other
investments in any Person having an aggregate fair market value (measured
on the
date each such investment was made and without giving effect to subsequent
changes in value), when taken together will all other investments made
pursuant
to this clause (n)
do not
exceed $5,000,000.
1.16 Leverage
Ratio. Section 7.12(b)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(b) Leverage
Ratio.
(i) The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending June 30, 2006, of (A) Total Net Debt as of the end of
such fiscal
quarter, to (B) Consolidated EBITDAX for the trailing four (4) fiscal
quarter
period ending on such date, to be greater than 3.50 to 1.0.
(ii) The
Borrower will not permit the ratio, determined as of the end of the fiscal
quarter ending September 30, 2006, of (A) Total Net Debt as of the end
of such
fiscal quarter to (B) Consolidated EBITDAX for the trailing four (4)
fiscal
quarter period ending on such date, to be greater than 3.25 to
1.00.
(iii) The
Borrower will not permit the ratio, determined as of the end of any fiscal
quarter ending on or after December 31, 2006, through and including
December 31, 2007, of (A) Total Net Debt as of the end of such fiscal
quarter to (B) Consolidated EBITDAX for the trailing four fiscal quarter
period
ending on such date, to be greater than 3.75 to 1.00.
(iv) The
Borrower will not permit the ratio, determined as of the end of any fiscal
quarter ending on or after March 31, 2008, of (A) Total Net Debt as of
the end
of such fiscal quarter to (B) Consolidated EBITDAX for the trailing four
fiscal
quarter period ending on such date, to be greater than 3.25 to
1.00.
5
For
purposes of determining the Borrower’s compliance with this Section 7.12(b),
Consolidated EBITDAX shall not include the net revenue attributable to
any
assets that are subject to a Lien granted to secure the Non-Recourse
Debt.
1.17 Events
of Default. Article
IX, paragraph (d)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(d) the
Borrower or any Restricted Subsidiary shall fail to observe or perform
any
covenant, condition or agreement contained in (i) Section 6.02,
and
such failure shall continue unremedied for a period of ten (10) days
after the
occurrence thereof, (ii) Section 6.01 and
Section 6.05
(with
respect to insurance), and such failure shall continue unremedied for
a period
of ten (10) days after notice of such failure from the Administrative
Agent to
Borrower or (iii) Section 6.03
(with
respect to the Borrower or any Restricted Subsidiary’s existence),
Section 6.08,
or in
Article
VII.
1.18 Events
of Default.
Article
IX, paragraph (e)
of the
Credit Agreement shall be and hereby is amended in its entirety to read
as
follows:
(e) the
Borrower or any Restricted Subsidiary shall fail to observe or perform
any
covenant, condition or agreement contained in (i) this Agreement (other
than
those specified in clause
(a), (b) or (d)
of this
article) and such failure shall continue unremedied for a period of thirty
(30) days after notice of such failure from Administrative Agent to
Borrower or (ii) any other Loan Document and such failure shall continue
unremedied for a period of twenty (20) days after notice of such failure
from
Administrative Agent to Borrower;
1.19 Redetermined
Borrowing Base; Conforming Borrowing Base. This
Amendment shall constitute a notice of the redetermination of the Borrowing
Base
and the Monthly Reduction pursuant to Section 3.03
of the
Credit Agreement and Administrative Agent hereby notifies Borrower that,
upon
the funding of the additional Indebtedness under the Second Lien Facility
pursuant to the amendment thereto in the form attached hereto as Exhibit
“A”,
the
redetermined Borrowing Base is $54,250,000, and the redetermined Conforming
Borrowing Base is $46,750,000.
1.20 Consent
to Second Lien Amendment.
Administrative Agent and Lenders hereby consent to the amendment of the
Second
Lien Credit Agreement in the form attached hereto as Exhibit “A”.
SECTION
2. Waiver.
Borrower
has failed to comply with the covenants set forth in Sections
6.09
and
6.10
of the
Credit Agreement. As requested by Borrower, the Lenders (or at least
the
required percentage thereof) hereby waive the Event of Default pursuant
to
Article IX,
clause (e)
of the
Credit Agreement arising as a result of Borrower’s failure to comply with the
covenants set forth in Sections
6.09
and
6.10
of the
Credit Agreement. The foregoing waiver is expressly limited as follows:
(a) such waiver is limited to Sections
6.09
and
6.10
for the
period prior to the First Amendment Effective Date, (b) such waiver shall
not be applicable to any provision of the Credit Agreement or any other
Loan
Document other than Sections
6.09
and
6.10
of the
Credit Agreement, and (c) such waiver is a limited, one-time waiver, and
nothing contained herein shall obligate any Lender to grant any additional
or
future waiver of Sections
6.09
and
6.10
of the
6
Credit
Agreement for any other period or grant any additional or future waiver
of any
other provision of the Credit Agreement or any other Loan Document.
SECTION
3. Conditions.
The
amendments to the Credit Agreement contained in Section
1
of this
Amendment and the waiver contained in Section
2
of this
Amendment shall be effective upon the satisfaction of each of the conditions
set
forth in this Section 3.
3.1 Execution
and Delivery.
Each
Credit Party, each Lender and the Administrative Agent shall have executed
and
delivered this Amendment.
3.2 Amendment
of Second Lien Credit Agreement.
Borrower, Guarantors, the lenders party thereto and Credit Suisse,
Cayman
Islands Branch, as Administrative Agent for such lenders, shall have
executed
and delivered an amendment to the Second Lien Credit Agreement dated
as of the
date hereof in the form attached hereto as Exhibit “A”
and the
conditions to its effectiveness shall have been satisfied.
3.3 No
Default.
No
Default shall have occurred and be continuing or shall result from
effectiveness
of this Amendment or the amendment to the Second Lien Credit
Agreement.
3.4 No
Material Adverse Effect.
No
Material Adverse Effect shall have occurred since December 31,
2005.
3.5 Other
Documents.
The
Administrative Agent shall have received such other instruments and
documents
incidental and appropriate to the transaction provided for herein as
the
Administrative Agent or its special counsel may reasonably request,
and all such
documents shall be in form and substance satisfactory to the Administrative
Agent.
SECTION
4. Representations
and Warranties of Borrower.
To
induce the Lenders to enter into this Amendment, the Borrower hereby
represents
and warrants to the Lenders as follows:
4.1 Reaffirmation
of Representations and Warranties/Further Assurances.
After
giving effect to the amendments herein, each representation and warranty
of the
Borrower contained in the Credit Agreement or in any of the other Loan
Documents
is true and correct in all material respects as of the First Amendment
Effective
Date (except to the extent such representations and warranties specifically
refer to an earlier date).
4.2 Corporate
Authority; No Conflicts.
The
execution, delivery and performance by the Borrower (to the extent
a party
hereto or thereto) of this Amendment and all documents, instruments
and
agreements contemplated herein are within Borrower’ corporate or other
organizational powers, have been duly authorized by necessary action,
require no
action by or in respect of, or filing with, any court or agency of
government
and do not violate or constitute a default under any provision of any
applicable
law or other agreements binding upon Borrower or result in the creation
or
imposition of any Lien upon any of the assets of Borrower except for
Permitted
Liens and otherwise as permitted in the Credit Agreement.
4.3 Enforceability.
This
Amendment constitutes the valid and binding obligation of Borrower
enforceable
in accordance with its terms, except as (i) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditor’s rights
generally, and
7
(ii) the
availability of equitable remedies may be limited by equitable principles
of
general application.
SECTION
5. Miscellaneous.
5.1 Reaffirmation
of Loan Documents and Liens.
Any and
all of the terms and provisions of the Credit Agreement and the Loan
Documents
shall, except as amended and modified hereby, remain in full force
and effect.
Borrower hereby agrees that the amendments and modifications herein
contained
shall in no manner affect or impair the liabilities, duties and obligations
of
Borrower under the Credit Agreement and the other Loan Documents
or the Liens
securing the payment and performance thereof.
5.2 Parties
in Interest.
All of
the terms and provisions of this Amendment shall bind and inure to
the benefit
of the parties hereto and their respective successors and assigns.
5.3 Legal
Expenses.
Borrower
hereby agrees to pay all reasonable fees and expenses of special
counsel to the
Administrative Agent incurred by the Administrative Agent in connection
with the
preparation, negotiation and execution of this Amendment and all
related
documents.
5.4 Counterparts.
This
Amendment may be executed in one or more counterparts and by different
parties
hereto in separate counterparts each of which when so executed and
delivered
shall be deemed an original, but all such counterparts together shall
constitute
but one and the same instrument; signature pages may be detached
from multiple
separate counterparts and attached to a single counterpart so that
all signature
pages are physically attached to the same document. However, this
Amendment
shall bind no party until Borrower, the Lenders, and the Administrative
Agent
have executed a counterpart. Delivery of photocopies of the signature
pages to
this Amendment by facsimile or electronic mail shall be effective
as delivery of
manually executed counterparts of this Amendment.
5.5 Complete
Agreement.
THIS
AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT
THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
5.6 Headings.
The
headings, captions and arrangements used in this Amendment are, unless
specified
otherwise, for convenience only and shall not be deemed to limit,
amplify or
modify the terms of this Amendment, nor affect the meaning thereof.
[Remainder
of page intentionally blank]
8
IN
WITNESS WHEREOF,
the
parties have caused the First Amendment to Credit Agreement, Consent
and Waiver
to be duly executed by their respective authorized officers to be
effective as
of the date first above written.
| BORROWER: | ||
| CARRIZO OIL & GAS, INC. | ||
| |
|
|
| By: |
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Title:Vice President and Chief Financial Officer | ||
|
GUARANTORS:
|
||
| CCBM, INC. | ||
| |
|
|
| By: |
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
|
Title:
Vice President
|
||
|
CCLR,
INC.
|
||
| |
|
|
|
By:
|
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
||
|
Title:
Vice President
|
||
|
ADMINISTRATIVE
AGENT AND
LENDER:
|
||
|
JPMORGAN
CHASE BANK, NATIONAL
ASSOCIATION,
individually
and as
Administrative
Agent
|
||
| |
|
|
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
|
||
|
Title:
Senior Vice
President
|
||
EXHIBIT
A
FORM
OF SECOND LIEN CREDIT AGREEMENT AMENDMENT