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EXHIBIT 4.1
SEVENTH AMENDMENT
TO
FIRST AMENDED, RESTATED, AND COMBINED LOAN AGREEMENT
BY AND BETWEEN CARRIZO OIL & GAS, INC.
AND COMPASS BANK
This Seventh Amendment to the Loan Agreement (this "Seventh 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 27th day of August 1999, and shall be
effective as of that date for all purposes.
W I T N E S S E T H:
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 and
the Sixth Amendment thereto dated April 23, 1999 (collectively, the "Loan
Agreement"). Capitalized terms used, but not defined herein, shall have the
meanings prescribed therefor in the Loan Agreement.
Borrower has requested that the Loan Agreement be further amended and
that the Bank waive Borrower's noncompliance with certain covenants in the Loan
Agreement, and the Bank has agreed to such request, subject to the terms and
conditions set forth in this Seventh Amendment.
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:
I. Specific Amendments to Loan Agreement.
Article I, Definitions, is hereby amended by adding the following
definitions thereto:
"Metro Prospect" means those certain Oil and Gas Properties
described in Schedule B attached to the Seventh Amendment.
"Seventh Amendment" means the Seventh Amendment to this
Agreement executed by Borrower and Bank on August 27, 1999.
Section 2.09, Mandatory Prepayment of the Notes, is hereby amended by
adding the following text at the end of such Section:
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Notwithstanding the foregoing provisions of this Section,
however, at the time that each Monthly Borrowing Base
Reduction becomes applicable on the first day of each calendar
month, Borrower shall contemporaneously prepay so much of the
principal of the Note as is necessary to ensure that no Loan
Excess results from the application of such Monthly Borrowing
Base Reduction.
Subsection 2.10(a), Borrowing Base Oil and Gas Properties, is hereby
amended by replacing the first sentence of that section with the following text:
The Borrowing Base attributable to the Borrowing Base Oil and
Gas Properties is established at $3,750,000.00 effective as of
August 2, 1999, and continuing until redetermined as set forth
herein; provided, however, that the Borrowing Base value
attributable to the Borrowing Base Oil and Gas Properties
shall be reduced to $300,000.00 at the earlier of: (i) the
consummation of the sale by Borrower of the Metro Prospect or
(ii) October 1, 1999. The proceeds derived by Borrower from
any such sale of the Metro Prospect may be included in the
Borrowing Base as Borrowing Base Cash, provided that such
proceeds are deposited into an account that has been
specifically pledged to Bank pursuant to a Security Instrument
that is acceptable to Bank, in its discretion.
Subsection 2.10(c), Borrowing Base Securities, is hereby amended by
adding the following sentence at the end of that subsection:
Notwithstanding the foregoing, the Borrowing Base value
attributable to Borrowing Base Securities that are shares of
stock in R&B Falcon Corporation shall never exceed at any time
$5,000,000.00 in the aggregate.
Article III, Conditions, is hereby amended by adding the following
Section 3.21.
3.21 Conditions Precedent in Connection with the Seventh
Amendment. The Seventh Amendment shall not be binding on the Bank until
satisfaction of the following conditions precedent:
(a) Receipt of Seventh Amendment and Compliance Certificate.
Bank shall have received multiple counterparts of the Seventh
Amendment, as requested by Bank, and the Compliance Certificate duly
executed by an authorized officer for Borrower.
(b) Accuracy of Representations and Warranties and No Event of
Default. 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 Seventh Amendment with the same effect as though
such representations and warranties had been made on such date; and no
Event of Default shall have occurred and be continuing or will have
occurred upon the execution of the Seventh Amendment.
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(c) Legal Matters Satisfactory to Special Counsel to Bank. All
legal matters incident to the consummation of the transactions
contemplated by the Seventh Amendment shall be satisfactory to the firm
of Porter & Hedges, L.L.P., special counsel for Bank.
(d) No Material Adverse Change. No material adverse change
shall have occurred since the date of this Agreement in the condition,
financial or otherwise, of Borrower.
Article V, Affirmative Covenants, is hereby amended by adding the
following new Sections 5.29 through 5.36:
5.29 Proceeds from Hedging Transactions. Following the
occurrence and during the continuation of an Event of Default or
Unmatured Event of Default, if and so long as there is then Loan
availability under that part of the Revolving Commitment that is
supported by the Borrowing Base attributable to the Borrowing Base Oil
and Gas properties (in excess of $300,000 of coverage for outstanding
Letters of Credit), promptly deliver to Bank one hundred percent (100%)
of all proceeds received by Borrower or, if not received, cause to be
delivered to Bank all proceeds which Borrower is entitled to receive
arising from the early termination of any Hedging Transaction, such
proceeds to be applied against the outstanding balance owing on the
Notes.
5.30 Hedging Transaction Reports. If and so long as there is
then Loan availability under that part of the Revolving Commitment that
is supported by the Borrowing Base attributable to the Borrowing Base
Oil and Gas properties (in excess of $300,000 of coverage for
outstanding Letters of Credit), for each Hedging Transaction to which
Borrower is a party, if any, deliver to Bank, on or before the
forty-fifth (45th) day after the end of each calendar month, a detailed
report setting out Borrower's position as of the end of such calendar
month, including, but not limited to, Borrower's settlement payments
and receipts during such calendar month and settlement payables and
receivables as of the end of such calendar month.
5.31 Aged Accounts Reports. Deliver to Bank, on or before the
forty-fifth (45th) day after the end of each calendar month, a detailed
aging accounts receivable report and a detailed aging accounts payable
report effective as of the end of such calendar month, all such reports
to be prepared in accordance with GAAP.
5.32 Production Volume Reports. If and so long as there is
then Loan availability under that part of the Revolving Commitment that
is supported by the Borrowing Base attributable to the Borrowing Base
Oil and Gas Properties (in excess of $300,000 of coverage for
outstanding Letters of Credit), deliver to Bank, on or before the
forty-fifth (45th) day after the end of each calendar month, a monthly
report of oil, gas and liquids production volumes by major field and
the total production of all fields during such calendar month.
5.33 Payment of Contract Operators. Pay, within thirty (30)
days after the receipt of any billings or sooner if so required by the
terms of any applicable operating agreement, all fees, expenses and
charges due from Borrower to contract operators (as such term is
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generally understood in the oil and gas industry) for operations
provided by contract operators relating to the Borrowing Base Oil and
Gas Properties, except any such fees that are diligently being
contested in good faith by appropriate proceedings.
5.34 Payment of Royalties. If and so long as there is then
Loan availability under that part of the Revolving Commitment that is
supported by the Borrowing Base attributable to the Borrowing Base Oil
and Gas properties (in excess of $300,000 of coverage for outstanding
Letters of Credit), pay, within sixty (60) days after the last day of
each calendar month or sooner if so required by any applicable lease or
statute, all royalties, overriding royalties, production payments or
other payments payable by Borrower to the owners of such interests in
the Borrowing Base Oil and Gas Properties with respect to oil and gas
produced during such calendar month, unless Borrower has created and
maintains a suspense account for separate accounting of any such
payments that are payable but not yet due under the terms of the
applicable lease and applicable laws. Any such payments made into such
suspense account shall be accounted for in accordance with all
applicable laws of the state in which the Borrowing Base Property to
which such payment relates is located.
5.35 Payment of Royalties Reports. If and so long as there is
then Loan availability under that part of the Revolving Commitment that
is supported by the Borrowing Base attributable to the Borrowing Base
Oil and Gas Properties (in excess of $300,000 of coverage for
outstanding Letters of Credit), deliver to Bank, on or before the
sixtieth (60th) day after the end of each calendar month, a monthly
report of royalties, overriding royalties, production payments or other
payments paid by Borrower to the owners of such interests (or into a
suspense account as described in Section 5.34) in the Borrowing Base
Oil and Gas Properties with respect to oil and gas produced during such
calendar.
5.36 Proceeds from Asset Sales. Following the occurrence and
during the continuation of an Event of Default or Unmatured Event of
Default, promptly deliver to Bank one hundred percent (100%) of all
proceeds received by Borrower or, if not received, cause to be
delivered to Bank all proceeds which Borrower is entitled to receive
arising from any sale of Borrower's assets, such proceeds to be applied
against the outstanding balance owing on the Notes; provided that any
such sale of assets must be made in compliance with Section 6.06
hereof.
Section 6.01, Other Indebtedness, is hereby amended by deleting the
word "and" immediately preceding clause (d) and adding the following clause (e)
at the end of that Section:
and (e) as of the effective date of the Seventh Amendment, the
Indebtedness evidenced by those certain vendor notes as
specifically described on Schedule A attached to the Seventh
Amendment.
II. Certain Waivers. Bank hereby waives non-compliance by Borrower
with the covenants set forth Section 6.01 of the Loan Agreement, solely to the
extent that Borrower was not in compliance with such covenants prior to the
execution of the Seventh Amendment as the result of the existence of the
Indebtedness evidenced by those certain vendor notes described on Schedule A
attached to the Seventh Amendment.
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III. Reaffirmation of Representations and Warranties. To induce
Bank to enter into this Seventh Amendment, Borrower hereby reaffirms, as of the
date hereof, 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 Seventh Amendment and
the performance by Borrower of its obligations under this Seventh
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 Seventh 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.
IV. Defined Terms. Except as amended hereby, terms used herein
that are defined in the Loan Agreement shall have the same meanings in this
Seventh Amendment.
V. Reaffirmation of Loan Agreement. This Seventh 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.
VI. 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.
VII. Governing Law. THIS SEVENTH 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 Seventh 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 Seventh 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.
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VIII. Severability. Whenever possible each provision of this Seventh
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Seventh 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
Seventh Amendment.
IX. 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 this agreement, which shall
constitute one and the same agreement among all parties hereto.
X. Section Captions. Section captions used in this Seventh
Amendment are for convenience of reference only, and shall not affect the
construction of this Seventh Amendment.
XI. Successors and Assigns. This Seventh 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.
XII. 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.
XIII. Notice. THIS SEVENTH 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed as of the day and year first above written.
BANK BORROWER
COMPASS BANK CARRIZO OIL & GAS, INC.
By: By:
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Kathleen J. Bowen Frank A. Wojtek
Vice President Vice President
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SCHEDULE "A"
Vendor Notes
See attached pages.
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SCHEDULE "B"
Metro Prospect Description
PROPERTY DESCRIPTION
I. WELLS-DEWITT COUNTY, TEXAS
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WELL NAME PROPERTY INTEREST WORKING NET REVENUE
DESCRIPTION HOLDER INTEREST INTEREST
PERCENTAGE PERCENTAGE
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Musselman Rambler Field Carrizo Oil and Gas, Inc. 25.0000 18.2500
Wells (Metro)
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II. LEASES-DEWITT COUNTY, TEXAS
Oil, Gas and Mineral Lease dated January 21, 1997, between Musselman Ranches,
Inc., Jamie B. Musselman, President, Josephine B. Musselman, Paul A. Musselman
and wife Dorothy Musselman, and Eleanor G. Musselman, as Lessors, and Allegro
Investments, Inc., as lessee, and Memorandum of Lease effective January 21,
1997, between the same parties, recorded in Volume 18, Page 555, Official
Records, DeWitt County, Texas.
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COMPLIANCE CERTIFICATE
I, Frank A. Wojtek, Vice President of CARRIZO OIL & GAS, INC.
(the "Company"), pursuant to Section 3.20 of the First Amended, Restated, and
Combined Loan Agreement dated as of August 28, 1997, as amended, by and among
COMPASS BANK ("Bank") and the Company (the "Agreement") do hereby certify, as of
the date hereof, that to my knowledge:
1. 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. 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 27th day of August 1999.
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Frank A. Wojtek
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