EXHIBIT 4.1
TWELFTH AMENDMENT
TO
FIRST AMENDED, RESTATED, AND COMBINED LOAN AGREEMENT
DATED AUGUST 28, 1997
BY AND BETWEEN CARRIZO OIL & GAS, INC.
AND COMPASS BANK
This Twelfth Amendment to the Loan Agreement (this "Twelfth Amendment")
by and between CARRIZO OIL & GAS, INC., a Texas corporation (the "Borrower"),
and COMPASS BANK, an Alabama state chartered bank, formerly a Texas chartered
bank (the "Bank"), is entered into on this 25th day of July 2001.
WITNESSETH:
Borrower and Bank entered into a First Amended, Restated, and Combined
Loan Agreement dated August 28, 1997, as amended by the First Amendment thereto
dated December 23, 1997, the Second Amendment thereto dated December 30, 1997,
the Third Amendment thereto dated July 30, 1998, the Fourth Amendment thereto
dated September 24, 1998, the Fifth Amendment thereto dated March 22, 1999, the
Sixth Amendment thereto dated April 23, 1999, the Seventh Amendment thereto
dated August 27, 1999, the Eighth Amendment thereto dated November 11, 1999, the
Ninth Amendment thereto dated December 15, 1999, the Tenth Amendment thereto
dated November 3, 2000 and the Eleventh Amendment thereto dated April 4, 2001
(collectively, the "Loan Agreement").
Borrower has requested, among other things, that Bank grant certain
waivers and amend certain provisions of the Loan Agreement, and Bank has agreed
to such requests, subject to the terms and conditions set forth in this Twelfth
Amendment.
Capitalized terms used, but not defined herein, shall have the meanings
prescribed therefor in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by Borrower and Bank, and each intending
to be legally bound hereby, the parties agree as follows:
1. Specific Amendments to Loan Agreement.
Article I, Definitions, is hereby amended by adding the following
definitions thereto:
"CCBM" means CCBM, INC, a Delaware corporation, a wholly owned
Subsidiary of Borrower.
"Permitted CCBM Indebtedness" is the Indebtedness of CCBM
described on Schedule 1.01(b) of this Agreement.
"Twelfth Amendment" means the Twelfth Amendment to this
Agreement executed by Borrower and Bank on July 25, 2001.
Section 5.19, Tangible Net Worth Requirement, is hereby amended by
replacing the sum "$34,000,000.00" that appears therein with the sum
"$49,000,000.00," and by replacing the date "December 31, 1999" that appears in
two different places therein with the date "March 31, 2001".
Section 5.20, Cash Flow to Debt Service Ratio, is hereby amended by
replacing in its entirety the text of subparagraphs (a) and (b) thereof with the
following:
(a) "EBITDA" shall be defined as the sum of net income plus
interest (net of interest income), taxes, depletion, depreciation,
amortization, any other non-cash charges, and capitalized "cash" income
not reflected in the consolidated income statements of Borrower and its
Subsidiaries, less non-cash income items of Borrower and its
Subsidiaries, and all capitalized general and administrative expenses,
including capitalized expenses relating to full-time staff salaries
allocated to projects; provided, however, that any items of EBITDA that
relate exclusively to Oil and Gas Properties of CCBM that are not
included in the Borrowing Base Properties shall, for purposes of this
Section 5.20, be excluded from the calculation of EBITDA.
(b) "Debt Service" shall be defined as the sum of (i) actual
cash principal and interest amounts (including any capitalized interest
payments) that Borrower or any of its Subsidiaries is obligated to pay
during such quarter on Indebtedness other than in connection with this
Agreement and (ii) cash principal and interest amounts (including any
capitalized interest payments) required to be paid by Borrower during
such quarter in connection with this Agreement (excluding payments made
pursuant to the Chase Transaction, the repayment of the Subordinated
Promissory Note and the repayment of the Permitted CCBM Indebtedness);
provided that the interest under (i) and (ii) above shall be net of
interest income.
Section 6.01, Other Indebtedness, is hereby amended by deleting the
word "and" that appears immediately before clause (g) thereof, and by deleting
the period from the end of such section and adding the following text:
and (h) the Permitted CCBM Indebtedness.
Section 6.03, Loans, Advances or Investments, is hereby amended by
substituting a semicolon in place of the period at the end of such section, and
adding the following text thereto:
provided, however, that Borrower shall be permitted to
contribute initial capital to CCBM in connection with the formation of
CCBM, not to exceed $1,000 and thereafter, provided no Event of Default
or Unmatured Event of Default has occurred and is continuing, and no
Event of Default or Unmatured Event of Default would otherwise result
from any such payment, Borrower shall be entitled to contribute or
otherwise loan or advance to CCBM such funds as are necessary to permit
CCBM to make the scheduled payments described on Schedule 1.01(b)
hereto relating to the Permitted CCBM Indebtedness.
The Agreement, is further amended by adding thereto new Schedule
1.01(b) in the form attached to the Twelfth Amendment.
I. Certain Waivers. Bank hereby waives Borrower's compliance with the
negative covenants in Sections 6.01, 6.03 and 6.04 of the Agreement to the
extent, but solely to the extent, necessary to permit CCBM to acquire on a basis
that is entirely nonrecourse to CCBM and/or Borrower an undivided fifty percent
(50%) interest in approximately 120,000 net acres of coalbed methane leases
("Coalbed Methane Leases") covering lands in the states of Wyoming and Montana
pursuant to the Purchase and Sale Agreement, the Assignment, the Promissory Note
and the Deed of Trust (collectively the "RMG Transaction Instruments") described
on Exhibit "A" to the Twelfth Amendment.
2. Conditions Precedent in Connection with the Twelfth Amendment.
The Twelfth Amendment shall not be binding on the Bank until satisfaction of
the following conditions precedent:
(a) Receipt of Twelfth Amendment and Compliance Certificate.
Bank shall have received multiple fully executed counterparts of the
Twelfth Amendment, as requested by Bank, and the Compliance Certificate
duly executed by an authorized officer for Borrower.
(b) Receipt of RMG Transaction Instruments. Bank shall have
received true and complete copies of multiple fully executed
counterparts of the RMG Transaction Instruments described on Exhibit
"A" attached to this Twelfth Amendment, as requested by Bank, duly
executed by an authorized officer for Borrower and the other parties to
such RMG Transaction Instruments.
(c) Accuracy of Representations and Warranties and No Event of
Default. After giving effect to the Twelfth Amendment, the
representations and warranties contained in Article IV of the Loan
Agreement shall be true and correct in all material respects on the
date of the Twelfth Amendment with the same effect as though such
representations and warranties had been made on such date; and after
giving effect to the Twelfth Amendment, no Event of Default shall have
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occurred and be continuing or will have occurred upon the execution of
the Twelfth Amendment.
(d) Legal Matters Satisfactory to Special Counsel to Bank. All
legal matters incident to the consummation of the transactions
contemplated by the Twelfth Amendment shall be satisfactory to the firm
of Porter & Hedges, L.L.P., special counsel for Bank.
(e) Legal Fees. All reasonable legal fees and expenses owed by
Bank to Porter & Hedges, L.L.P. in connection with the Loan Agreement
shall have been paid by Borrower.
(f) No Material Adverse Change. No material adverse change
shall have occurred since the date of the Loan Agreement in the
condition, financial or otherwise, of Borrower.
3. Reaffirmation of Representations and Warranties. To induce Bank to enter into
this Twelfth Amendment, Borrower hereby reaffirms, as of the date hereof, after
giving effect to the Twelfth Amendment, its representations and warranties
contained in Article IV of the Loan Agreement and in all other documents
executed pursuant thereto, and additionally represents and warrants as follows:
A. The execution and delivery of this Twelfth Amendment and
the performance by Borrower of its obligations under this Twelfth
Amendment are within Borrower's power, have been duly authorized by all
necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene
or conflict with any provision of law or of the articles of
incorporation, charter or bylaws of Borrower or of any agreement
binding upon Borrower.
B. The Loan Agreement as amended by this Twelfth Amendment,
represents the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with its terms, subject as
to enforcement only to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
C. No Event of Default or Unmatured Event of Default has
occurred and is continuing as of the date hereof.
D. The RMG Transaction Instruments delivered by Borrower to
Bank pursuant to Section III(b) of the Twelfth Amendment are true and
complete copies of the originals of each of said documents.
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4. Defined Terms. Except as amended hereby, terms used herein that are defined
in the Loan Agreement shall have the same meanings in this Twelfth Amendment.
5. Reaffirmation of Loan Agreement. This Twelfth Amendment shall be deemed to be
an amendment to the Loan Agreement, and the Loan Agreement, as further amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.
6. Entire Agreement. The Loan Agreement, as hereby further amended, embodies the
entire agreement between Borrower and Bank and supersedes all prior proposals,
agreements and understandings relating to the subject matter hereof. Borrower
certifies that it is relying on no representation, warranty, covenant or
agreement except for those set forth in the Loan Agreement as hereby further
amended and the other documents previously executed or executed of even date
herewith.
7. Governing Law. THIS TWELFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. This Twelfth Amendment has been entered into in Harris
County, Texas, and it shall be performable for all purposes in Harris County,
Texas. Courts within the State of Texas shall have jurisdiction over any and all
disputes between Borrower and Bank, whether in law or equity, including, but not
limited to, any and all disputes arising out of or relating to this Twelfth
Amendment or any other Loan Document; and venue in any such dispute whether in
federal or state court shall be laid in Harris County, Texas.
8. Severability. Whenever possible each provision of this Twelfth Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Twelfth Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Twelfth Amendment.
9. Execution in Counterparts. Each party hereto acknowledges that this Agreement
may be executed in several counterparts by each party at different times and in
different locations; that each separate counterpart bearing the signature of any
party may be effectively delivered to the other parties by the delivery of an
electronic facsimile sent via telecopier; that each party so delivering any such
counterpart shall be bound by its facsimile signature thereon; and that the
signature pages from counterparts signed by each party may be collated into one
or more copies of
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this agreement, which shall constitute one and the same agreement among all
parties hereto.
10. Section Captions. Section captions used in this Twelfth Amendment are for
convenience of reference only, and shall not affect the construction of this
Twelfth Amendment.
11. Successors and Assigns. This Twelfth Amendment shall be binding upon
Borrower and Bank and their respective successors and assigns, and shall inure
to the benefit of Borrower and Bank, and the respective successors and assigns
of Bank.
12. Non-Application of Chapter 346 of Texas Finance Codes. In no event shall
Chapter 346 of the Texas Finance Code (which regulates certain revolving loan
accounts and revolving tri-party accounts) apply to this Loan Agreement as
hereby further amended or any other Loan Documents or the transactions
contemplated hereby.
13. Notice. THIS TWELFTH AMENDMENT TOGETHER WITH THE LOAN AGREEMENT, 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 BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Twelfth
Amendment to be duly executed as of the day and year first above written.
BANK BORROWER
COMPASS BANK CARRIZO OIL & GAS, INC.
By: By:
------------------------------------- ----------------------------------
Kathleen J. Bowen Frank A. Wojtek
Vice President Vice President
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SCHEDULE 1.01(b)
PERMITTED CCBM INDEBTEDNESS
The Indebtedness evidenced by that certain non-recourse promissory note
in the amount $7,500,000 dated June 29, 2001, executed by CCBM, Inc. as Maker,
payable to the order of Rocky Mountain Gas, Inc. ("RMG"), as Payee, said note
bearing interest at the rate of eight percent (8%) per annum with principal
payable in forty-one (41) equal monthly installments of $125,000.00, each, with
a balloon payment of $2,375,000.00 due forty-two (42) months from the date of
the note, the Indebtedness evidenced by said note being non-recourse to CCBM
and/or Borrower, and being secured only by CCBM's interest in the Coalbed
Methane Leases purchased by CCBM with the note; and
Contingent liability in the aggregate amount of $5,000,000.00
representing CCBM's proportionate share of costs and expenses to be incurred in
the performance of RMG's 2001/2002 drilling program, as said drilling program is
described in Section 2.1 of the Purchase and Sale Agreement dated June 29, 2001
between CCBM, as Purchaser, and RMG, as Seller.
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EXHIBIT "A"
COAL BED METHANE LEASE ACQUISITION DOCUMENTS
1. Purchase and Sale Agreement dated June 29, 2001, between CCBM, as
Purchaser, and RMG, as Seller.
2. Partial Assignment of Bill of Sale and Conveyance dated June 29, 2001, from
RMG and U.S. Energy Corp., collectively as Assignor, to CCBM, an Assignee.
3. Promissory Note dated June 29, 2001, by CCBM, as Maker, payable to the
order of RMG, as Payee, the terms of which are described on Schedule
1.01(b) attached to this Twelfth Amendment.
4. Mortgage and Financing Statement from CCBM, as Grantor, to RMG, as
Mortgagee, dated June 29, 2001, covering CCBM's interest in the Coalbed
Methane Leases to secure payment of the promissory note described in
item 3, above.
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COMPLIANCE CERTIFICATE
I, Frank A. Wojtek, Vice President of CARRIZO OIL & GAS, INC.
(the "Company"), pursuant to Article III(a) of the Twelfth Amendment to the
First Amended, Restated, and Combined Loan Agreement dated as of August 28,
1997, by and among COMPASS BANK ("Bank") and the Company (the "Agreement") do
hereby certify, as of the date hereof, that to my knowledge:
1. After giving effect to the Twelfth Amendment, no Event of Default
(as defined in the Agreement) has occurred and is continuing, and
no Unmatured Event of Default (as defined in the Agreement) has
occurred and is continuing;
2. No material adverse change has occurred in the business prospects,
financial condition, or the results of operations of the Company
since the date of the previous Financial Statements (as defined in
the Agreement) provided to Bank;
3. After giving effect to the Twelfth Amendment, each of the
representations and warranties of the Company contained in Article
IV of the Agreement is true and correct in all respects.
This certificate is executed this 25th day of July 2001.
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Frank A. Wojtek